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Software Business

Third International Conference, ICSOB 2012, Cambridge, MA, USA, June 18-20, 2012. Proceedings

herausgegeben von: Michael A. Cusumano, Bala Iyer, N. Venkatraman

Verlag: Springer Berlin Heidelberg

Buchreihe : Lecture Notes in Business Information Processing

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Technik" , Springer Professional "Wirtschaft"

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Über dieses Buch

This book contains the refereed proceedings of the Third International Conference on Software Business (ICSOB) held in Cambridge, MA, USA, in June 2012. The software business refers to commercial activities in the software industry, aimed at generating revenues from the design, delivery, and maintenance of software products and IT services to enterprises and individual customers, as well as from digital content. Although this business shares common features with other knowledge-intensive markets, it carries many inherent features making it a challenging domain for research. The 20 full and 10 short papers accepted for ICSOB were selected from 60 submissions and are organized in sections on software product management, organizational transformation, industry transformation, software platforms and ecosystems, and emerging trends.

Inhaltsverzeichnis

Frontmatter

Full Papers

Software Product Management

Pricing of Software as a Service – An Empirical Study in View of the Economics of Information Theory

Abstract

Software as a Service (SaaS) offerings are continuing to grow in importance. Due to this new form of software delivery, software vendors have to design appropriate pricing models for their SaaS offerings. This paper analyzes a) the disclosure of pricing information and b) the applied price metrics of SaaS business software building on the economics of information theory which recommends information activities (signaling and screening) in order to reduce uncertainty between providers and customers. By means of a content analysis, we investigate the websites of 300 SaaS solutions offered by 259 US-based providers. Our results reveal that especially small and young SaaS providers use their websites to communicate pricing information in terms of signaling. Regarding SaaS providers´ screening activities within the scope of this paper, we find that less than 10% of the offered SaaS solutions apply usage-dependent pricing metrics.

Sonja Lehmann, Tobias Draisbach, Peter Buxmann, Petra Dörsam

Comparison of Software Product Management Practices in SMEs and Large Enterprises

Abstract

The aim of this interpretive qualitative study was to understand how software product management (SPM) activities differ in SMEs (small and medium-sized enterprises) and in large enterprises (LEs). We studied thirteen software organizations representing various types of software products and analyzed the collected data by applying the grounded theory method. As a result, we summarized the observations, explaining the main differences between SMEs and LEs and identified SPM activities that are size-dependent, size-independent, and specific for SMEs and LEs only. Our results indicate that the company size affects goals and activities of SPM. Therefore, companies of different size require different approaches in the adoption of SPM activities.

Andrey Maglyas, Uolevi Nikula, Kari Smolander

Building Products as Innovation Experiment Systems

Abstract

Traditional software development focuses on specifying and freezing requirements early in the, typically yearly, product development lifecycle. The requirements are defined based on product management’s best understanding. The adoption of SaaS and cloud computing has shown a different approach to managing requirements, adding frequent and rigorous experimentation to the development process with the intent of minimizing R&D investment between customer proof points. This offers several benefits including increased customer satisfaction, improved and quantified business goals and the transformation to a continuous rather than waterfall development process. In this paper, we present our learnings from studying software companies applying an innovation experiment system approach to product development. The approach is illustrated with three cases from Intuit, the case study company.

Jan Bosch

Transforming to Product Software: The Evolution of Software Product Management Processes during the Stages of Productization

Abstract

Within the software industry, one can recognize a strong trend towards productization, which is the transformation process from customer-specific software to a standard product. Organizations that originally focussed on building custom software regularly reorient towards a market. In order to grow into a mature product software company, an organization has to introduce and adapt its software product management processes. This paper presents a case study on how software product management processes evolve during the stages of productization at a small software company. We identify productization stages at the case company and describe the situational factors and implemented software product management capabilities during those stages. The paper provides a validation of the productization model, and insight into the development of SPM processes in relation to the productization stages.

Wouter Leenen, Kevin Vlaanderen, Inge van de Weerd, Sjaak Brinkkemper

Organizational Transformation

Consumer Value-Aware Enterprise Architecture

Abstract

To improve the alignment between business and IT, this paper explores how to make Enterprise Architecture (EA) aware of consumer values. Current proposals in enterprise modeling recognize the need for modeling user needs, or values. However they do not classify them nor do they provide means to obtain them. In our study, these are first introduced as basic values captured via Schwartz’s Value Survey, a cross-culturally applicable tool from the world of psychology, which are mapped onto Holbrook’s Typology of Consumer Values. Additionally, because formal models require inputs that are more concrete than abstract, and through this proposal, the indistinct values of consumers can be transformed and formalized to be incorporated into enterprise architecture, represented here by ISO/IEC 42010. The novelty of this work is found in the method for operationalizing consumer values for their alignment and utilization within information systems.

Eric-Oluf Svee, Jelena Zdravkovic, Constantinos Giannoulis

Using Knowledge from End-Users Online for Innovations: Effects of Software Firm Types

Abstract

As firms need to persistently innovate, they search knowledge from sources external to the firm in order to aid their innovation processes. Firms, however, use the wide range of available types of external knowledge sources heterogeneously. In this paper we explore the factors that affect high-technology firms’ utilization of end-users online as a source of knowledge for their innovations. Drawing data from a survey of the Finnish software industry, we find that several firm and environmental characteristics decrease and increase this propensity.

Mikko O. J. Laine

Comparison of Visual Business Modeling Techniques for Software Companies

Abstract

Despite the widespread adoption of business modeling techniques in academic research and business, no research has been done into how efficient and effective business modeling techniques document and communicate business models. This paper compares three visual business modeling techniques with a visual approach and identifies the strong and weak points of each modeling technique, based on applying the techniques to three startups and interviews with industry experts. With this comparison, visual business modeling technique developers can improve their own techniques and software companies can determine which technique to apply in their specific case.

Garm Lucassen, Sjaak Brinkkemper, Slinger Jansen, Eko Handoyo

IP Modularity in Software Ecosystems: How SugarCRM’s IP and Business Model Shape Its Product Architecture

Abstract

We provide a case study of the concept of “IP modularity,” analyzing the case of SugarCRM. The modular architecture of this platform software is aligned with its intellectual property structure in such a way that the firm can derive, from the same code tree, an open source community version and a proprietary version. The software’s IP modular structure also facilitates the development of complements by distributed and anonymous complementors and simplifies downstream customizations, thus enhancing the platform’s attractiveness. We find that SugarCRM implements IP modularity on three different levels of the architectural hierarchy, in some cases down to the source code level. Our study thus extends the concept of IP modularity to comprise the notion of hierarchy levels.

Josef Waltl, Joachim Henkel, Carliss Y. Baldwin

Industry Transformation 1

Is Perceived Domestic Market Attractiveness a Growth Impediment? Evidence from the German Software Industry

Abstract

The German software industry is vital to the German economy’s success. However, it has missed some current trends where software companies lack broader international activity. Existing models that take domestic market size into account can only partially explain the different degrees of internationalized companies between different countries. In addition, they are unable to explain individual companies’ internationalization within a specific country. In our empirical study, an online survey of 869 German software companies, we examined the impact of perceived domestic market attractiveness as an impediment to internationalization. We found that it accounts for a considerable share of companies’ variation in their internationalization activities. Based on our findings, we discuss policy and management implications.

Christian Hoerndlein, Michel Schreiner, Alexander Benlian, Thomas Hess, Arnold Picot

The Emergence of an International New Software Venture from an Emerging Economy

Abstract

This study is positioned at the intersection of legitimation and international entrepreneurship theories. It is a longitudinal ethnographic case study that explores the process of emergence of an international new software venture from an emerging economy and the effect this venture has on the process of industry creation in that economy. Data were collected over a two year period, 2010-2011, via in-depth interviews, observations, and unobtrusive data. Data analysis reveals three different contexts in which legitimation took place: legitimation of the new venture domestically and internationally, and legitimation of the new industry. To acquire cognitive legitimacy and socio-political legitimacy and successfully internationalize, an international new venture needs to design a robust business model targeting both internal and external stakeholders, engage in persuasive argumentation invoking familiar cues and scripts, promote and defend incentives and operating mechanisms in political negotiations, and overcome the country-of-origin effect by pursuing a technology legitimation strategy.

Romeo V. Turcan, Norman M. Fraser

Topics in Software Industry Transformation Research: A Topic Analysis of Major IS Conferences

Abstract

As the information load grows, it becomes increasingly difficult to follow-up new trends in business and management. However, new developments in technologies and markets pose threats and open up opportunities to firms. Especially the software business changes continuously and profoundly. It is therefore necessary for researchers and practitioners to follow up recent developments and to cope with the information overload. We suggest the application of a data mining technique in order to automatically identify topics: Latent Dirichlet Allocation (LDA). Using a sample of 13,799 publications from ICSOB and major conferences on Information Systems, we identify topics relevant to industry transformation research and review their development on a timescale. As proof of concept, we conduct a short case study using Green IT in order to demonstrate that topic analysis can yield relevant results for literature search beyond the results that can be obtained through a simple keyword search.

Anton Pussep, Markus Schief, Benedikt Schmidt, Florian Friedrichs, Peter Buxmann

Software Platforms and Ecosystems

Platform Substitution and Cannibalization: The Case of Portable Navigation Devices

Abstract

Platform competition may engender a substitution process whereby customers and complementors drift from one platform to another. For example, as the aftermath of a competitive race between a general-purpose platform and a single-purpose rival. A case in point is how sales of personal navigation devices (PND) have allegedly been sapped by GPS-enabled smartphones with comparable turn-by-turn navigation functionalities. Using a structural-break unit-root econometric model, the impact of smartphones on the quarterly volume sales of two leading PND manufacturers can be statistically assessed. Such an econometric analysis reveals a significant shift in the level of the underlying stochastic processes and dates the structural change at the third quarter of 2008, when the iOS and Android ecosystems were launched.

Francesco Novelli

Cooperative Advertising in Video Game Software Marketing: A Game Theoretic Analysis of Game Software Publisher – Platform Manufacturer Dynamics

Abstract

We aim to model and analyze possible cooperative advertising strategies in the context of a gaming platform manufacturer and a game software publisher in the video game industry. The analysis takes on a game theoretic approach in understanding the impact of a video game’s total advertising budget and the co-op advertising sharing policy on each player’s preferred strategy and corresponding payoffs. Non-cooperative schemes have been demonstrated in which Stackelberg and Nash equilibriums were identified. These were compared with a cooperative Pareto efficient scheme to understand under which conditions both players would be willing to cooperate. Results show that a non-cooperative simultaneous-move game is never preferred by either player, and there exists at least one Pareto efficient solution where both players are better off than at the Stackelberg equilibrium. However, in order to reach this solution, both parties should be willing to negotiate over the co-op advertising sharing policy.

Gozem Guceri-Ucar, Stefan Koch

A Framework for Software Ecosystem Governance

Abstract

Many software producing organizations do not know how to measure, compare, and analyse their governance policy in software ecosystems. Without sufficient insight into governance, these organizations cannot optimally perform as keystone players. This paper outlines a framework for the analysis of software ecosystem governance for individual companies. With such a framework, software producing organizations can gain strategic advantage over other organizations, in that they can analyse and improve their software ecosystem governance in a structured way, leading to better ecosystem performance and health.

Alfred Baars, Slinger Jansen

Emerging Trends

Current Software-as-a-Service Business Models: Evidence from Finland

Abstract

This paper characterizes the business models of Software-as-a-Service (SaaS) firms based on their value proposition, customer segments, revenue streams, and customer relationship, and analyzes interconnections of these business model elements. The target set of 163 Finnish SaaS and ASP firms was first compared to other software firms and then clustered into four clusters based on indicator data of their business model elements. The comparison reveals that the SaaS and ASP firms have smaller customer and transaction sizes than software firms in general. The resulting classification reveals two different configurations, a pure-play SaaS model and an enterprise SaaS model, and the typical factors of these business models.

Eetu Luoma, Mikko Rönkkö, Pasi Tyrväinen

Advantages of Public Cloud Infrastructure in Different Technology Adoption Lifecycle Stages

Abstract

Independent software vendors (ISV) utilize cloud infrastructure for different reasons. We hypothesize that the motivation to adopt cloud infrastructure-as-a-service (IaaS) changes as the ISV’s product is getting adopted by the market. In this paper we consider how the infrastructure needs of ISVs change along the stages of ISV product’s adoption lifecycle, and analyze the potential benefits of utilizing IaaS in different stages. The analysis is illustrated with the cases of ISV firms with documented use of IaaS. These cases support the hypothesis that different benefits of IaaS are gaining importance along the adoption lifecycle.

Oleksiy Mazhelis, Eetu Luoma, Arto Ojala

Revenue Models of Application Developers in Android Market Ecosystem

Abstract

Mobile application ecosystems have growth rapidly in the past few years. Increasing number of startups and established developers are alike offering their products in different marketplaces such as Android Market and Apple App Store. In this paper, we are studying revenue models used in Android Market. For analysis, we gathered the data of 351,601 applications from their public pages at the marketplace. From these, a random sample of 100 applications was used in a qualitative study of revenue streams. The results indicate that a part of the marketplace can be explained with traditional models but free applications use complex revenue models. Basing on the qualitative analysis, we identified four general business strategy categories for further studies.

Sami Hyrynsalmi, Arho Suominen, Tuomas Mäkilä, Antero Järvi, Timo Knuutila

Industry Transformation 2

The Effects of Software and Service Orientations on Sales Productivity in Canadian Software Companies from 1993 to 2011

Abstract

Software development can be viewed as manufacturing a knowledge-intensive tool. Managers of software companies can either specialize in developing underlying software technologies or specialize in developing services that support software technologies. We explore the revenue generated by product and service orientations in public and private Canadian software firms from 1993-2011. Our analysis finds that service orientation contributes significantly more to service sales productivity than product orientation contributes to software sales productivity. The analysis implies that software firms should strengthen service-oriented capabilities, however we discuss that managers may find specialization in services difficult to do.

David Maslach, Rakinder Sembhi, Rod McNaughton

Value Creation and Firm Integration: First Empirical Insights for the Software Industry

Abstract

The value added created by a firm is a widely used figure. Major elements of a firm’s strategy and business model deal with how the firm creates value and brings it to the customer. This paper focuses on a particular measure which has been broadly applied to measure the degree of vertical integration: value added to sales (VA/S). To our best knowledge, this measure hasn’t been applied in software business research. We hence outline its application in other fields by conducting a broad and structured literature review. First empirical insights are gained by analyzing the VA/S development for 44,171 software firms in the period 2002-2009. These results indicate an increasing degree of vertical integration in the software industry. While practitioners can use the results as a benchmark for their own firms, researchers are provided with a comprehensive literature review, first empirical results on a large sample and avenues for research.

Anton Pussep, Stefan Harnisch, Peter Buxmann

Short Papers

Software Product Management

Introducing Software Ecosystems for Mass-Produced Embedded Systems

Abstract

Embedded systems are today predominantly developed with an integration-centric approach. The paper identifies the need to remove full-scale integration and process synchronisation of involved development teams. The paper presents software ecosystem as an alternative approach to develop embedded software and identifies a set of key activities for how an original equipment manufacturer can introduce an ecosystem. An example of a software ecosystem is presented for the car industry together a case which implemented some of the ecosystem platform properties.

Ulrik Eklund, Jan Bosch

Controlling Lost Opportunity Costs in Agile Development – The Basic Lost Opportunity Estimation Model for Requirements Scoping

Abstract

We present a model for estimating the final keep/cancel decision point, on a per-feature basis, for scope inclusion in a future release. The Basic Lost Opportunity Estimation Model (BLOEM), based on data from a company that uses an agile-inspired software development model, supports feature selection when the time-dependent business value estimates change as the requirements analysis progresses. The initial BLOEM validation, conducted on a set of 166 features, suggests that the model can valuable input to the feature selection process for a given release, helping to control lost opportunity costs due to feature cancellation. Limitations of BLOEM are discussed and issues for further research are presented.

Krzysztof Wnuk, David Callele, Even-Andre Karlsson, Björn Regnell

Organizational Transformation

Costs of Using Hybrid Cloud Infrastructure: Towards a General Framework

Abstract

Cloud computing infrastructure is a state-of-the-art computing as a utility paradigm, offering individuals and organizations instantly-available and scalable computing capacity. Organizations may deploy the cloud infrastructure in own data centers, as a private cloud, or use the public on-demand cloud infrastructure charged on a pay-per-use basis. The organizations may also adopt a hybrid solution, i.e. use public cloud capacity to complement the resources in the private cloud, e.g. during the periods of rapid growth in the demand. One of the important factors that affect the organizations’ decisions to adopt a hybrid cloud is the total cost of acquiring and managing the infrastructure. In this paper, a general framework for cloud infrastructure cost assessment is introduced, wherein for several types of cloud infrastructure resources, the associated cost components and the factors determining these components are considered.

Oleksiy Mazhelis

Strategic Success Factors in Customization of Business Software

Abstract

Customers often ask software vendors for business software customized to their needs and fitting into the existing application landscape. But unlike other areas of research there are just a few isolated results about the factors, which promote success of companies offering customization services for business software and which can serve as a guideline. This paper tries to overcome this weakness by presenting the results of a qualitative exploratory study conducted with German and Swiss software companies in 2011.

Tobias Tauterat, Lars Oliver Mautsch, Georg Herzwurm

What Information on Business Parameters Is Required by Embedded Software Developers to Do an Effective Job?

Abstract

Embedded software design is tightly connected to the functionality and goals of the system it is used to control. For mechatronic systems such as an in-vehicle automotive system, software developers require information on the system goals including business parameters to effectively decide on architecture and functionality. This paper presents results from an case of developing a hybrid electric drive system platform, and presents the information areas that software and system engineers do perceive as important to effectively perform design. We note that business parameters are sought for and elaborate on what information is required. We analyze what these needs are and elaborate on how to address them by using methods from the literature. We conclude that the effort of developing embedded software cannot rely on statically specified business parameters; rather these would be estimated and refined by interaction throughout the development cycle.

Joakim Fröberg, Stefan Cedergren, Stig Larsson

Industry Transformation

Existing System Solutions Redeployment in Remote Developing Country: Lessons Learnt from a Multi-national IT Consulting Firm

Abstract

As one kind of world economic shift, redeploying existing IT solutions from developed countries to developing ones now becomes common practice for many multinational IT consulting and service firms. The redeployment process may encounter many new challenges due to complexity of unfamiliar contexts with various uncertainties. Most project management literatures and best practices do not take this unique category of project into considerations, hence lead to gaps between theory and practice. This paper presents case studies on the practice of remote redeployment practices. Through analyzing collected data, we reported seven aspects that are essential for the success of these projects. The case study brings some novel results, some of them even contradict to that in textbooks.

Yi Wang

The Evolving Structure and Function of Commercial Open Source Software Ecosystems

Abstract

Commercial open source software firms depend on an ecosystem consisting of individuals and organizations to develop and support the necessary source code, services, and delivery conditions. The structure and function of this ecosystem, as a social system and technological platform, evolves based on its membership composition and the ensuing differentiation and integration of these members’ contributions. Based on an explanatory case study, we conclude that researchers and practitioners can benefit from an increased attention to these composition and interactions within a given software ecosystem.

Donald Wynn Jr

Differentiation in Freemium: Where Does the Line Lie?

Abstract

As the freemium business models is becoming a prominent success in the online software market, companies are challenged with the question of how to design freemium pricing schemata. This study investigates 17 freemium companies to help understand which features should be made available for free and which shouldn’t. It is observed that the free-premium transition is typically marked by a significant increase in the privileges, access to value-creating gap-filling features.

Davide Semenzin, Edwin Meulendijks, Wilbert Seele, Christoph Wagner, Sjaak Brinkkemper

Definition of Open Data Services in Software Business

Abstract

New software businesses are extending the software industry via private enterprises that build new and innovative services on top of Open Data (OD) sets released by government and public bodies. What are the tenable value propositions and income-generating mechanisms for these private enterprises and what are the new opportunities for service development? This paper combines conceptual and empirical investigations of OD definition to clarify the benefits open data sets hold for service development.

Yulia Tammisto, Juho Lindman

Emerging Trends

Benefits of Software Renting in Cloud Business

Abstract

In the new era of computing, software can be sold and delivered as a cloud service, and software renting has become a strategic tool to compete in the market. In this multi-case study, software renting was found to help the case firms to (i) differentiate themselves from competitors; (ii) increase their competitive advantage by making the software available for a larger customer group, and (iii) decrease the price of software by using centralized software delivery and maintenance.

Arto Ojala

Backmatter

Titel: Software Business
herausgegeben von: Michael A. Cusumano
Bala Iyer
N. Venkatraman
Verlag: Springer Berlin Heidelberg
Electronic ISBN: 978-3-642-30746-1
Print ISBN: 978-3-642-30745-4
DOI: https://doi.org/10.1007/978-3-642-30746-1