The Software Business
The July/August issue of IEEE Software looks at the software business from the perspective of software engineering, true to its mission. But the IEEE Computer Society family of magazines offers the opportunity to look at this topic through the lens of many different perspectives, offering a more complete vision to the reader. As a starting point, “Software Business Industry Models” (login required for full text) by Karl Michael Popp discusses business models for the software business, and shows their applications for three leading companies: Google, Microsoft, and SAP.
“Developing Cloud Business Models: A Case Study on Cloud Gaming” (login required for full text) by Arto Ojala and Pasi Tyrväinen is an article on the exciting, hot topic of the cloud. It explores the changing business model of a company trying to offer its services on the cloud. But what about the cloud services themselves? If you want to do business on the cloud, how do you choose the best provider for your business? Here, IEEE Internet Computing helps us by offering its perspective (“Comparing Public-Cloud Providers” (login required for full text) by Ang Li, Xiaowei Yang, Srikanth Kandula, and Ming Zhang) on choosing the best cloud provider, completing an all-around examination of the cloud.
In 1997, the book Co-Opetition by Adam M. Brandenburger and Barry J. Nalebuff talked about how competitors in the IT business often cooperate to achieve common goals (like collectively establishing a market or ecosystem). This involves sharing — but in a way that their competitive goals are not compromised. “Sharing Source Code with Clients: A Hybrid Business and Development Model” (login required for full text) by Mikko Riepula explores a fascinating and innovative business model in which a supplier shares source code with his client, and convincingly demonstrates how this seemingly self-destructive behavior can actually strengthen competitive positions. In contrast, “The Phish-Market Protocol: Secure Sharing Between Competitors” (login required for full text) by Tal Moran and Tyler Moore examines the problem of sharing between competitors from the perspective of privacy and security, and how IT can provide the answers to the very problems it creates through “coopetition.”
For more information on the software business, take a look at the Related Resources below.
John Favaro is a senior consultant at Intecs SpA, where he is deputy director of research. His current interests include value-based management of IT and strategic positioning of software enterprises. He’s also IEEE Software‘s associate editor in chief for management. Contact him at john at favaro dot net.
Shari Lawrence Pfleeger is director of research for Dartmouth College’s Institute for Information Infrastructure Protection, a consortium of 27 major universities, national laboratories, and nonprofit research centers. Her research interests include cybersecurity, technology transfer, and risk management. Pfleeger has a PhD in information technology and engineering from George Mason University. Contact her at pfleeger at dartmouth dot edu.
Here are a number of resources that anybody interested in the software business should know about. Some were mentioned in the July/August issue of IEEE Software and in the main introduction to this theme.
In The Business of Software (2004), Michael Cusumano provided an early discussion of an issue that has become central in the software business since the advent of technologies such as the cloud: should software be marketed as a product or service?
A 1997 business strategy classic that still holds lessons for us today (and spawned a new area of study) was Co-Opetition by Adam M. Brandenburger and Barry J. Nalebuff. It discussed strategies of cooperation and competition that are popular in the software business today, where companies work together to create “ecosystems” where they can then compete with each other.
A prominent gadfly in the software business is Nicholas Carr, whose 2004 book Does IT Matter? shook the industry to its foundations and provoked angry responses from some of the software community’s best-known figures. Carr’s thesis that most software was becoming a commodity was considered a landmark by some, heresy by others. His 2008 book The Big Switch discussed the move to the cloud that I have devoted two articles to in this theme.
Since 2010, the software business has a new forum in the shape of the International Conference on the Software Business. The second edition of ICSOB was held in June 2011 in Brussels.
A useful online discussion forum frequented by many in the software business is the LinkedIn Value Management Group.
In The Business of Software, Cusumano advanced the proposition that the software business was different from others. But in this video interview, Al Davis comes to a different conclusion based upon his own experience as a serial software entrepreneur over the years; for him, the software business is about meeting customer needs, just like in any other business.