Architectural Control and Value Migration in Layered Ecosystems: The Case of Open-Source Cloud Management Platforms

• Main Authors: TEE, Richard, Woodard, C. Jason
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2013
• Subjects: cloud computing; platforms; product interfaces; layered business ecosystems; information systems and management; Databases and Information Systems; Management Information Systems; Systems Architecture
• Online Access: https://ink.library.smu.edu.sg/sis_research_smu/34; https://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=1033&context=sis_research_smu
• Institution: Singapore Management University

Our paper focuses on strategic decision making in layered business ecosystems, highlighting the role of cross-layer interactions in shaping choices about product design and platform governance. Based on evidence from the cloud computing ecosystem, we analyze how concerns about architectural control and expectations regarding future value migration influence the design of product interfaces and the degree of openness to external contributions. We draw on qualitative longitudinal data to trace the development of two open-source platforms for managing cloud-based computing resources. We focus in particular on the emergence of a layered "stack" in which these platforms must compete with both vertically integrated service providers and horizontally focused commercial software vendors. We find that the two platforms adopt distinctly different strategies, which presents an intriguing puzzle since their functionalities are nearly identical. Building on prior theory, we explain these differences in terms of the structure of interdependencies between each platform's lead sponsor and the firms operating in adjacent layers of the ecosystem. While our findings are preliminary due to the ongoing nature of the research, we speculate about their implications for the literatures on modularity and innovation, technology and industry evolution, and strategy in business ecosystems.