The Software Industry

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1 Peter Buxmann Heiner Diefenbach Thomas Hess The Software Industry Economic Principles, Strategies, Perspectives Springer

2 Part I Basics 1 The Rules in the Software Industry Software and Software Markets: Unique Characteristics of the Software Industry The Beginnings of the Software Industry Types of Software Provider and Users' Selection Criteria Software Providers in the Wider and Narrower Sense The Selection of Software Business Models for Software Companies Revenue from Services in the Software Industry 16 2 Economic Principles in the Software Industry Properties of Digital Goods Network Effects on Software Markets: The Winner Takes it All...' Network Effects: Basics and Definitions Impact of Network Effects on Software Markets Structure of Software Markets Network Effects as a Competitive Factor A Case Study: Two-Sided Network Effects and Platform Strategies in the Digital Games Industry Limitations of Network Effect Theory The Standardization Problem Approach and Background The Central Standardization Problem as An Optimization Problem The Decentralized Standardization Problem: A Game Theoretical Approach 37

3 viii. Contents The Standardization Problem: Lessons Learned Transaction Cost Theory: In Search of the Software Firm's Boundaries Starting Point and Elements of Transaction Cost Theory Division of Labor Among Companies: A Transaction Cost Theory Perspective Structural Changes to Transaction Costs: The Move to the Middle Excursion: Intermediaries and Transaction Costs Software Development as a Principal-Agent Problem Incentive-Compatible Compensation and Efficient Control Principal-Agent Relationships: Definitions and Basic Principles Incentive-Compatible Compensation Schemes Control Systems 52 3 Software Vendor Strategies Cooperation and Acquisition Strategies Cooperation in the Software Industry Mergers and Acquisitions in the Software Industry Sales Strategies Structuring of Sales Systems: Organization and Sales Channels in the Software Industry Organization of Relationships with Sales Partners and Key Accounts Key Performance Indicators as a Sales Performance Management Tool in the Software Industry Pricing Strategies Background Pricing Models for Software Products Pricing Strategies of Software Providers: Empirical Findings Approaches to Pricing for Custom Software Providers Development Strategies Structuring of the Software Development Process Software-Supported Software Development HR Management in Software Development 107

4 Contents ix Part II Specific Issues 4 Outsourcing and Offshoring of Software Development Overview Forms of Outsourcing and Offshoring Motives for Outsourcing and Offshoring Cost Savings Greater Flexibility Concentration on Core Competencies Acquisition of Knowledge and Skills Exploitation of the "Follow-the-Sun" Principle Selection of Locations by Software Providers Outsourcing by Software User Organizations Outsourcing of the Development of New Custom Software Outsourcing Modifications to Standard Software Outsourcing the Further Development and Maintenance of Application Software User Satisfaction with Onshore, Nearshore, and Farshore Providers Nearshoring Versus Farshoring: Distance from the Customer as a Success Factor? Cultural and Language Barriers in Offshore Projects The Importance of Face-to-Face Meetings to Project Success Time Difference: Challenges and Opportunities Outsourcing by Software Providers The Status Quo of Specialization and the Division of Labor: Insights from Three Case Studies Future Division of Labor in the Software Industry Platform Concepts Overview Product Platforms in the Software Industry Cost Structure of Platform-Based Software Development Organizational Support for Implementing Product Platforms Add-on: Industrialization as a Management Concept for the Software Industry Industry Platforms in the Software Industry Openness of Industry Platforms Management of Complementers 165

5 Contents 6 Software as a Service: The Application Level of Cloud Computing Overview Basic Principles of Cloud Computing SaaS: Applications and Examples SaaS from the User's Perspective: Opportunities and Risks Background Empirical Study on Opportunities and Risks for SaaS Users SaaS from the Provider's Perspective: Pricing Strategies and Business Models Basic Considerations Empirical Study of SaaS Providers' Pricing Strategies and Business Models Case Study to Compare Usage-Based and Usage-Independent Pricing Models Open Source Software Overview Features of Open Source Software Open Source Projects: Principles and Motivation of Software Developers Organizational Structures and Processes in Open Source Projects Contributor Motivation Open Source Software: The User Perspective Commercial Software Vendors' Involvement Open Source ERP Systems 202 References ' 211 Index 221

The Software Industry

The Software Industry The Software Industry Economic Principles, Strategies, Perspectives Bearbeitet von Peter Buxmann, Heiner Diefenbach, Thomas Hess 1. Auflage 2012. Buch. XII, 223 S. Hardcover ISBN 978 3 642 31509 1 Format

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