Evolution of secondary software businesses
understanding industry dynamics
pp. 381-401
in: Ana M Bernardos, Karlheinz Kautz (eds), Open it-based innovation: moving towards Cooperative it transfer and knowledge diffusion, Berlin, Springer, 2008Abstract
Primary software industry originates from IBM's decision to unbundle software-related computer system development activities to external partners. This kind of outsourcing from an enterprise internal software development activity is a common means to start a new software business serving a vertical software market. It combines knowledge of the vertical market process with competence in software development. In this research, we present and analyze the key figures of the Finnish secondary software industry, in order to quantify its interaction with the primary software industry during the period of 2000–2003. On the basis of the empirical data, we present a model for evolution of a secondary software business, which makes explicit the industry dynamics. It represents the shift from internal software developed for competitive advantage to development of products supporting standard business processes on top of standardized technologies. We also discuss the implications for software business strategies in each phase.