Secrets of Software Success

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Secrets of Software Success

• Servaas Oostrik
• Gert-Jan Beukenkamp

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Secrets of Software SuccessManagement insights
from 100 software firms around the world

• Hoch, D.J.
• Roeding, C.R.
• Purkert, G
• Lindner, S.K.
• Müller, R.

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Outline

• Introduction
• Research methodology
• Book review
• Critique
• Conclusion
• Discussion

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Introduction

• Evolution software business
• Era I -professional services firms
• 1949 to 1959
• tailor-made solutions
• Era II - software product companies
• 1959 to 1969
• emerging software products

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Introduction

• Evolution software business
• Era III - enterprise solution providers
• 1969 to 1981
• software separation
• Era IV - Consumer mass-market software
• 1981 to 1994
• PC-based
• Era V - Internet value added services
• 1994 to ????

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Outline

• Introduction
• Research methodology
• Book review
• Critique
• Conclusion
• Discussion

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Research methodology

• Interviews
• 100 companies
• size
• geography
• business type
• performance
• experts
• academic, and consultants
• related industries

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Research methodology
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Research methodology

• Interviews
• 100 companies
• size
• geography
• business type
• performance
• experts
• academic, and consultants
• related industries

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Research methodology

• Compounded success measure
• annual growth rates
• average return on sale
• Ranking in accordance with overall success

34 successful companies
Growth
Comparison between upper and lower companies
Overall success
32 average companies
ROS
34 less successful companies
Interviewer evaluation
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Outline

• Introduction
• Research methodology
• Book review
• Critique
• Conclusion
• Discussion

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Book review

• A new business called software
• Exceptional software leaders are the rule
• Winning the war for software talent
• Software development
• Marketing gods make software kings
• Professional software services
• Grow your partners to grow yourself
• The landscape of the future

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A new business calledsoftware

• Industry segmentation
• Software services
• Software products
• Enterprise solutions
• Mass-market packaged software

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A new business calledsoftware
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A new business calledsoftware

• Enterprise solutions VS Mass-market software
• Customization VS standardization
• Long installation VS instant installation
• Few customer VS mass-market

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A new business calledsoftware
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Book review

• A new business called software
• Exceptional software leaders are the rule
• Winning the war for software talent
• Software development
• Marketing gods make software kings
• Professional software services
• Grow your partners to grow yourself
• The landscape of the future

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Exceptional software leaders are the rule

• The essential characteristics of leaders (I)
• personal traits
• deal with high levels of uncertainty
• constant awareness
• take risks, aim high
• accept failure (quickly)
• keep multiple options

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Exceptional software leaders are the rule

• The essential characteristics of leaders (II)
• management views
• create dynamic organizations
• use flat structures
• make use of teams
• knowledge diffusion
• awareness of company-growth

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Book review

• A new business called software
• Exceptional software leaders are the rule
• Winning the war for software talent
• Software development
• Marketing gods make software kings
• Professional software services
• Grow your partners to grow yourself
• The landscape of the future

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Winning the war for software talent

• Skilled workers are scarce
• Need for new recruitment practices
• recruit students
• recruitment via personnel
• use financiers networks
• global sourcing
• reallocation near recruits
• WWW-recruitment

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Winning the war for software talent

• Motivating workers (to join)
• allow personal work styles
• use profit-sharing schemes
• create strong corporate culture
• high internal job turn-over
• creating career opportunities

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Book review

• A new business called software
• Exceptional software leaders are the rule
• Winning the war for software talent
• Software development
• Marketing gods make software kings
• Professional software services
• Grow your partners to grow yourself
• The landscape of the future

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Software development

• Common characteristic FAILURE
• Time
• Budget
• Missing features
• Cancellation before completion
• Chance of failure higher than success

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Software development

• High uncertainty
• Unclear customer requirements
• Design not entirely predictable
• Changing requirements
• Changing technology

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Software development
Degree of uncertainty
Requirements analysis
Downstream phase
Design
Coding
Integrating testing
Maintenance
Upstream phase
Time
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Software development

• Reasons for failure software products (I)
• Overly optimistic developers
• Too optimistic schedule
• Murphys law
• Adding of people
• Work can not be partitioned
• Increase communication time

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Software development

• Reasons for failure software products (II)
• Underestimating efforts product-project process
• Broader design
• Technical environments
• External pressures
• Marketing/management
• Customers
• Feature creep
• Having to make changes during development

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Software development

• How to improve the mission I
• Preparing for uncertainty
• Establish product feature flexibility
• Adapt to upstream-downstream
• Spend time to save time
• Invest in people
• Create powerful team structures
• Retaining top talent

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Software development
Degree of uncertainty
Requirements analysis
Downstream phase
Design
Coding
Integrating testing
Maintenance
Upstream phase
Time
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Software development

• How to improve the mission I
• Preparing for uncertainty
• Establish product feature flexibility
• Adapt to upstream-downstream
• Spend time to save time
• Invest in people
• Create powerful team structures
• Retaining top talent

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Software development

• How to improve the mission II
• Improve the process
• Involve project stakeholders
• Involve end-users
• Involve marketing
• Frequent project reviews with all stakeholders
• The daily build
• Teams test and debug every day
• Finds defects between interacting models
• Morale effects

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Software development

• A new trend?
• Componentware
• Reusing components
• Enormous benefits
• Platinum has already begun
• Difficulties
• Large up-front investment
• Mindset developers in need of change
• Awards for stealing codes

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Book review

• A new business called software
• Exceptional software leaders are the rule
• Winning the war for software talent
• Software development
• Marketing gods make software kings
• Professional software services
• Grow your partners to grow yourself
• The landscape of the future

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Marketing gods make software kings

• Success depends on marketing
• recovering RD
• Marketing for dominant position
• owning standards
• achieving lock-in
• market leadership enforces buying decision

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Marketing gods make software kings

• How to create a dominant position (I)
• careful positioning
• build strong product-portfolio
• careful customer selection
• global approach
• careful targeting
• use self-fulfilling approach
• create market leadership before launch
• product try-outs

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Marketing gods make software kings

• How to create a dominant position (II)
• careful targeting
• use monitored piracy
• creates large customer base
• use third-party sales channels
• pre-installation
• system integration
• aggressive advertising
• brand vs technology
• business propositions

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Marketing gods make software kings

• How to sustain dominant position
• release upgrades in close intervals
• create need for upgrade
• use early promotion
• increase switching costs
• use Public Relations
• CEO as strong image

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Marketing gods make software kings

• Breaking dominant position (I)
• when?
• Upside potential
• strategic importance to product portfolio
• large or growing market potential
• low entry barriers
• new technologies
• low switching costs
• weak competitor(s)

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Marketing gods make software kings

• Breaking dominant position (II)
• how?
• Buy market leader
• lower switching costs or offer switching
  advantages
• use different business model
• provide or use different platform
• use strategic alliance

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Book review

• A new business called software
• Exceptional software leaders are the rule
• Winning the war for software talent
• Software development
• Marketing gods make software kings
• Professional software services
• Grow your partners to grow yourself
• The landscape of the future

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Professional software services

• One-to-one relationships
• Not aggressive
• Building trust
• Reputation is vital
• Most have experienced a project failure

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Professional software services

• Trust builders I
• Sponsoring hot-topic IT conferences
• Discussion circles
• Selective gathering
• Building online web communities
• Creating trustworthy image
• Using the best consultants
• Publishing the firms success stories
• Packaging the firms software services
• Building on previous success

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Professional software services

• Trust builders II
• Deepening customer relations
• Tracking customer satisfaction
• Going the extra mile
• Asking for critique
• Appointing relation managers for each client
• But stay tough!!
• Negotiate prices
• Dont accept all the wishes

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Book review

• A new business called software
• Exceptional software leaders are the rule
• Winning the war for software talent
• Software development
• Marketing gods make software kings
• Professional software services
• Grow your partners to grow yourself
• The landscape of the future

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Grow your partners to grow yourself

• Partnering
• Exceptional efforts are undertaken
• Training
• Pampering
• Large partner clubs
• Factor 4
• Equality of partners
• Direct relationship

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Grow your partners to grow yourself

• Strategic imperative
• Closing the gaps
• Focusing on key competencies
• Accelerating time to market
• Increasing market penetration
• A new level of equality among partners
• RD partners
• Complementary product or service partners
• Marketing partners
• Implementation and maintenance partners

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Grow your partners to grow yourself

• BUSINESS WEBS
• Creating incentives to join the web
• Incentives to supply new software
• Incentives to demand existing software
• Software webs
• The more the powerful
• Friends and enemies in one
• Shapers
• Adapters

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Grow your partners to grow yourself

• Retaining key partners
• Trust
• Monitoring partner performance
• Certified partners
• Product experts participating in implementation
• Playing in more than one web
• Building privileged relationships in a sub-web

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Book review

• A new business called software
• Exceptional software leaders are the rule
• Winning the war for software talent
• Software development
• Marketing gods make software kings
• Professional software services
• Grow your partners to grow yourself
• The landscape of the future

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The landscape of the future

• Future implies growth
• growth from products
• internet applications
• embedded software
• growth of new partnerships
• growth from geographical expansion
• global markets

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The landscape of the future

• Future implies quality and productivity gains
• the fully digitized business system
• offshore outsourcing
• New balance between services and products
• one-stop shopping
• componentware
• servicization
• network based services

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Outline

• Introduction
• Research methodology
• Book review
• Critique
• Conclusion
• Discussion

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Critique

• Major lack in research methodology
• Minimal framework
• Experience surveys
• Two measures for success
• Three year period
• Omission middle group
• Money oriented/impressed by leaders

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Critique

• Baan is praised
• But?
• Stock value to nearly 1
• What about goodwill
• Stock overestimation
• Conclusions seem easily drawn
• Deductive reasoning

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Critique

• American way
• Focus on US companies
• Praise American work
• American style

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Outline

• Introduction
• Research methodology
• Summary
• Critique
• Conclusion
• Discussion

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Conclusion
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Conclusion

• Pleasure to read
• Many interesting insights
• Great personal stories
• Good overview software business evolution

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Conclusion

• However!
• Typically American
• Lack of scientific depth
• Example oriented
• Baan is out of the picture
• Title to promising

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Outline

• Introduction
• Research methodology
• Summary
• Critique
• Conclusion
• Discussion

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Discussion