Cloudonomics: The Business Value of Cloud Computing, + Website

Continuously Earned Trust

In the classic The Evolution of Cooperation, Professor Robert Axelrod, from the University of Michigan, explores the implications of a game-theoretic computer tournament where players receive a sequence of greater or lesser payoffs by playing the “Iterated Prisoners’ Dilemma.”3 The simulation models sequences of iterations where a player can:

• Cooperate with the other and receive a good payoff
• Successfully take advantage of the other and receive a higher payoff
• Be taken advantage off and receive a zero payoff
• Achieve parity in noncooperation and receive a low payoff

Players used different strategies, such as random choice in each step, or “tit-for-tat,” where a player matched the other’s prior move. Axelrod showed that cooperation can spontaneously arise, but one key was repeated interactions. SaaS drives the evolution of cooperation, because each month another “iteration” of the relationship occurs.

With SaaS, the provider must continuously earn your trust and satisfaction. Sure, you can’t always migrate between providers easily, so the switching costs must be lower than the pain is great, but SaaS providers have great incentive to deliver an excellent customer experience—there is not much runway to let quality issues fester.