Who Is out There? Exploring the Effects of Trust and Perceived Risk on SaaS Adoption Intentions

Abstract

Software as a Service (SaaS) is a relatively new organizational application sourcing alternative, offering organizations the option to access applications — via the Internet — that are remotely hosted on offsite servers instead of installing equivalent applications in-house, thus presumably saving costs. Although SaaS has been offered since the late 1990s, so far it has not become a dominant sourcing alternative for organizational core applications, in spite of the fact that most leading IT companies now offer remotely-hosted organization-wide applications. This study conceptualized and empirically tested a model of the effects of the perceived risk of SaaS and trust in the SaaS vendor community on the organizational intention to adopt SaaS at this early stage of the SaaS market. Three novel, risk-related constructs were developed: perceived risk of SaaS, perceived risk of systems unavailability, and perceived risk of data insecurity. Likewise, three new trust-related constructs were also conceived: trust in the SaaS vendor community, perceived capabilities and perceived reputation of the SaaS vendor community. An empirical test of the model demonstrated the negative effect of perceived risk and the positive effects of trust in, and the reputation of, the SaaS vendor community, on the intention to adopt SaaS. Trust in the SaaS vendor community was also found to strongly affect all three risk concepts.