th physical products as well as other nonelec- tronic services. The typical cost structure of an information technology supplier involves high fixed costs for developing the infrastructure and applications, and very low, some- times near zero, marginal costs for actual service provision (Whinston et al., 1997; Bakos, 1998). Through the use of electronic intermediaries, the search and transac- tion costs are further reduced (Bakos, 1998). This further reduces variable costs of service provisioning and service use. Contrary to nonelectronic services that are sometimes very labor intensive (e.g., hospitality services), this difference should explicitly be addressed during service development. 7.2.2 High Degree of Outsourcing Outsourcing is a standard concept that is being considered through making or buying decisions both in manufacturing and in services. In electronic services, Service Delivery Platforms outsourcing particularly plays an important role. First, since service provisioning occurs in the back-office and electronic services can easily be delivered from remote locations there is no need to collocate service production with the service consump- tion (Miles, 2005). Traditional services do not enjoy this opportunity, for example, through the need of attractive locations (think of a down-town café). Second, the high-degree of technical standardization achieved through various Web-service standards (Champion et al., 2002) and efforts to standardize Service Oriented Architectures (Beisiegel et al., 2005), this high-degree of outsourcing is accompa- nied by the necessary technical framework to make outsourcing of individual service components feasible. This is additionally fostered through the increased availability of high-speed networks and current developments in cloud computing (Böhm et al., 2009). The technical standardization allows the easy integration of other providers' components and services can be provided in a network of actors combining many service components (e.g., travel services integrating fl