International Software Industry Survey

Transcription

1 International Software Industry Survey Call for international collaboration February 8, 2010 Authors: Jukka Ylitalo Mikko Rönkkö Juhana Peltonen Jussi Autere Olli-Pekka Mutanen BIT Research Centre, Aalto University School of Science and Technology, Finland

2 International Software Industry Survey Executive summary The Federation of Finnish Technology Industries and Aalto University (former Helsinki University of Technology) are looking for partners to expand the Finnish Software Industry Survey into other European countries. The Finnish Software Industry Survey was first commissioned in 1997 to map the size the software industry in Finland and apart from the initial years has run at Helsinki University of Technology until present day. For the last more than ten years, the survey has provided timely information and insights on the development of the Finnish software industry. Recently the survey project has received broader international attention and got very positive press in EUSoft strategy process. Moreover, several research organizations have contacted us about cooperating on a similar survey in their countries. Hence, we are now planning to expand the survey outside Finland. Therefore we seek both public and private sector organizations to collaborate in expanding the Finnish Software Industry Survey into an international software industry survey. This document describes the survey and initial plans to expand it abroad. The document may be freely distributed to any parties potentially interested in joining the initiative. Further information regarding the survey and international collaboration can be obtained from researcher Jukka Ylitalo ([email protected]).

3 International Software Industry Survey Table of Contents Part 1: Overview of the survey Introduction The purpose of the survey Brief history Financial and human resources Running the survey...5 Part 2: International expansion of the Survey Motivation to expand the survey outside Finland Proposed changes to the survey Non-disclosure and IPR considerations Contact information Conclusions...15 Appendix References Glossary Academic publications Publications citing the main report of the survey...18

4 International Software Industry Survey 1 1 Part 1: Overview of the survey 1.1 Introduction The Finnish Software Industry Survey has for 12 years followed the current state of the Finnish software industry. The survey produces firm-level data in order to map the current state and future prospects of the Finnish software industry. Helsinki University of Technology 1 has been executing the survey since 2000 and has developed the survey in several ways during the past years. The survey provides an in-depth analysis of the development of the Finnish software industry. This is accomplished by using state-of-the-art statistical techniques and methods, and thus differentiating the survey from typical barometer surveys that report the data descriptively instead of thorough statistical analyses. The scope of the survey has widened during the recent years from the initial focus on software product companies to cover more ground in software industry and now includes all firms operating in the Finnish software industry 2.. The survey project publishes results two times a year. The first publication is a press release and a press conference that is held when the initial results are complete. This typically takes place after the summer vacations. After all analyses are complete, we publish a main report containing all results of the survey. The report covers the recent developments in the industry and includes also one or more theme sections. Typically, the report is published in print and on the Internet 3. In addition to these two main releases, the survey results are communicated in presentations in seminars and conferences, and after the survey report is complete, the data is used for academic 1 Helsinki University of Technology is part of Aalto University from the beginning of See Appendix for more information. 2 We defined software industry broadly as encompassing all industries where software goods are developed and traded, and industries where services related to software development and systems implementation are provided. 3 The main reports for the recent years are available for download at the projects website at In year 2009 we experimented with internet only publication.

5 International Software Industry Survey 2 publications. The main report of the survey has become the the most cited report on the Finnish software research. Recently, the main report has received attention also at the European level and has been cited in various publications and reports 4. As a results from increased visibility, several institutes in other European countries have expressed their interests in running similar surveys in their countries. Expanding the survey to cover multiple countries within Europe would have several benefits on both national and European level. This document provides an overview of the background, current situation, and recent developments of the Finnish Software Industry Survey, and presents a call for research institutes across European countries to participate the internationalization effort of the survey. 1.2 The purpose of the survey The survey is conducted in close cooperation with several organizations closely linked to Finnish software industry. There are several value propositions related to the survey: First of all, the survey provides Finnish software firms with a valuable tool for following the development of the industry. Furthermore, the survey enables firms to benchmark their own performance relative to their competitors by providing the participating firms with mass-tailored company reports comparing their responses against the other firms in the industry. For the sponsors of the survey, the study offers extensive information on the current size, growth, and internationalization of the industry. It also provides tools for policymakers to identify the barriers of growth and success and help develop the competitiveness and performance of the software industry. 4 See Appendix for a list of publications citing the main report of the survey.

6 International Software Industry Survey 3 The survey also generates great amounts of data that can be used in academic publications and theses. Therefore it offers researchers a valuable tool to produce highquality research, and several conference and journal papers as well as master's theses and dissertations has been written by using the data produced by the survey. For the research organization, the survey provides invaluable longitudinal data from an interesting industry. This kind of data are rare and thus using the data for additional more academic analyses is a great opportunity for a researcher Brief history The Finnish Software Industry Survey has for 12 years followed the current state of the Finnish software industry. The partners and researchers running the survey have changed over the years: The very first run was conducted by Helsinki Region Centre of Expertise 6 in The very first survey was an internal project with the purpose of showing that there is an active software product industry in Finland. The second survey survey was in 1999 again as an internal project of the Helsinki Region Centre of Expertise. Between 2000 and 2006 the survey was commissioned by Centre of Expertise for Software Product Business 7, and was subcontracted Helsinki University of Technology winning the contract each time. After this, the Centre of Expertise for Software Product Business program ended creating a discontinuity in the project. Since the survey was already established, Helsinki University of Technology decided to continue the survey as an internal project until the future of the survey was decided. Eventually this the funding was arranged by contacting various public and private organizations close to software industry and forming a consortium, where The Federation of Finnish Technology Industries 8 and TEKES 9 took a central role. This arrangement has been in effect for the last three years. 5 See appendix for a list of publications where the data is used. 6 Centers of Expertise are a part of the Finnish innovation system. See 7 Centre of Expertise for Software Product Business is a part of the Helsinki Region Centre of Expertise programme. 8 See Appendix for more information. 9 The Finnish Funding Agency for Technology and Innovation. See Appendix for more information.

7 International Software Industry Survey 4 After the discontinuity, the survey project has been developed intensively to provide more relevant and reliable results regarding to the Finnish software industry and to make it a better tool for data collection for dissertation work and other academic publications. The most visible changes were introducing annual research themes, expanding the coverage of the survey from software product firms to the broader software industry, introducing company reports, and generally improving the research methods and reporting. 1.4 Financial and human resources The survey is executed by researchers of the Aalto University for almost a decade, and the research team has accumulated a significant amount of experience in this type of survey research. The personnel working in the survey comprises several researchers with various of backgrounds, thus constituting a team with strong industry, entrepreneurial, and academic experience added with technical and methodological expertise. The survey is funded mostly by public and industry organizations. The budget of the project has varied between years between around thousand euros up to 200 thousand euros in In 2008 and 2009 the budget was considerably higher than in the previous years due to some additional commitments of the survey team to other projects bundled with the survey 10. Furthermore, the scope of the survey has expanded in the last few years and new more advanced analysis tools and systems have been introduced, thus expanding the work-load and costs related to the project. However, the costs of the project could probably be pushed down if the scope and quality are scaled down and all additional reports and analyses are dropped. 10 In 2008 the survey was bundled to a larger Growth Forum initiative, which was a project initiated by the Finnish Software Entrepreneurs Association and Microsoft Oy to support the growth and internationalization of the Finnish software industry. See

8 International Software Industry Survey Running the survey This part of the document describes how the survey has been implemented in the last couple of years 11. The research design is strongly motivated by the book Mail and internet surveys: the tailored design method (Dillman, 2007). Currently we use both paper and online questionnaires and contact the firms with postal mail, , and in some cases also telephone. The survey project has the following stages: 1. Creating the questionnaire 2. Compiling the mailing list 3. Collecting the data 4. Analyzing the data 5. Writing the report 6. Creating company specific reports Additionally, some partners often require custom reports or additional analyzes tailored for them Creating the questionnaire The survey form is developed by using the questionnaire from the previous year as a starting point to enable across-years comparisons. In practice there is a set of questions that have stayed the same over years making up roughly one third of the survey form. Rest of the space is allocated for one or several research themes that change between years 12. The research themes are chosen based on interest of different researchers 11 The implementation is described in more detail in the main report of the survey. For 2009, see 12 The questionnaire form for 2009 can be found at

9 International Software Industry Survey 6 participating in the project as well as the steering group that represents the funding partners Compiling the mailing list Compiling the mailing list can be a non-trivial task for two reasons. First, we want to cover as many as possible of the firms that do software business, but the official industry classification in Finland identifies firms only based on their primary industry. However, this is not a big problem nowadays since NACE rev 2.0 is in use and it would be possible to do a survey by using just industry code as criterion with little loss in the quality of the survey. Second, the trade register data where bulk of the company contact information comes, does not include addresses for all firms. Due to this, the addresses that we have are collected from several different databases. The web-based form has been done with Digium Enterprise survey software during the past few year. The normal license of the software does not allow us to give third party access to our user accounts, so for the next run we will most likely change the software. All respondents are identified with a response code enabling us to match responses to the data from previous years and third-party data Collecting data We collect data with paper-based and web-based questionnaires. To maximize the response rate, each firm is contacted by using a pre-notice letter, the main survey package, invitation, reminders, and telephone calls to most important (largest) firms. The printing and mailing is outsourced to a mailing company. In addition to our own data collection, we use several third party data in producing the report. These are obtained through research cooperation agreements with other research units or purchased from data providers. Currently our best data source is the Amadeus database, that includes financial and other information from most companies in Europe.

10 International Software Industry Survey Analyzing data and writing the main report The data analyses consists of two partly over-lapping parts: preparing the data and writing the analyses files. The first part consists of preparing the raw data to the form it can be used in analyses. This mostly comprises inspecting the data for inconsistencies resulting mostly from typing errors. In the second part, analysis files are constructed to produce the tables and figures for the main report. Writing of the main report is usually started when the first results become available, and it is done partly parallel to the data analyses. Prior to 2008 run of the survey, most analyses, tables, and graphs were done with Excel. During 2008 we switched to statistical software called Stata. Also, during this year we compiled all data across years to a single database to enable more sophisticated analyses over time. In addition to producing tables and figures, we do tests for statistical significance for most of the analyses. This has not always been the case, but since data is already in statistical software, the overhead of doing this is very small Writing company-specific reports The company reports include several figures that show the firm's location relative to the other companies that responded to the survey. The company reports are generate for each company participating the survey, and it has become a highly valued feature of the project. The company reports were first done in 2007 to motivate firms to respond to the survey. Producing the reports requires some programming skills, so the initial plan is that Aalto University produces these reports at least for the first international run of the survey Schedule Planning of the survey is usually started at the beginning of the year. The project starts by mapping of the existing domestic and international research studies regarding the software industry and the themes of the particular year. This is followed by creating the

11 International Software Industry Survey 8 questionnaire form. These steps usually take place from March to April. Compiling the mailing list can be done simultaneously to the survey form. Data collection is typically performed during late spring and early summer, but for the last two years there have been some delays. The point of mailing the survey form serves as a deadline for questionnaire development and mailing list construction, and shifts the emphasis from planning the survey to recording the responses and starting data analyses. Usually the initial sending date is set to early May. Data analysis is usually started after the mailing of the survey when first responses are available. With the statistical software, the analysis files can be constructed quite far with only a few responses, and just the data files are updated when more responses become available. The drafting of the report is also started parallel to data analysis. The questionnaire is commonly closed at the beginning of August, after which the efforts are directed to analyzing the data and writing the report. The most essential results of the survey are published at a press conference in the late August. The final report is usually scheduled for publishing at the end of October. The steps described above are illustrated below in Figure 1 regarding the run of Creating the questionnaire Compiling the mailing list Collecting the data Analyzing the data Writing the report Creating firm specific reports Month Figure 1: Realized time table for the project in 2009

12 International Software Industry Survey 9 2 Part 2: International expansion of the Survey This section presents our current plans to expand the survey outside Finland. We explain the motivation for the expansion of the survey and elaborate our initial ideas on how the international survey could be implemented. 2.1 Motivation to expand the survey outside Finland During 2010, the software industry survey will be expanded in selected number of European countries. The 2008 report of the survey got very positive press in EUSoft strategy process and we have been contacted by several researchers who wish to do a similar survey in their country. The effort to expand the survey internationally has several motives. Internationalization of the survey provides value on three levels: European, national, and firm level. At the European level, the survey would have three benefits: First of all, it would better enable identifying barriers of growth and success of the software industry in Europe by providing the tools to view the field through the perspective of the firms rather than statistical. Based on the fiscal reports, this way the survey would potentially help in developing the competitiveness and performance of the industry. Second, the complexity of the markets as perceived by software entrepreneurs was recognized as one of the key issues in European software markets in the EUSoft position paper in The survey would address this issue by increasing the firms' knowledge and familiarity with European markets, thus providing greater potential for internationalization of the small firms. Third, the expansion of the survey would increase the collaboration between researchers and other institutes across the Europe and thus creating potential for more high-quality research, which in turn provides better understanding of the software industry. On the national level, the survey provides an opportunity to benchmark the national software industries to other European countries. This is beneficial as it enables

13 International Software Industry Survey 10 identifying the strengths and weaknesses of the industry and can thus be used when planning industrial and innovation policies. At the firm level, the survey provides a channel to follow the development of the industry not only nationally, but also in European level. Furthermore, the survey enables benchmarking their own performance not only to the other domestic firms, but also to the firms in other European countries. These two combined, the survey increases familiarity with European markets, which in turn encourages intra-european expansion and creates new potential for growth. From academic perspective, Expanding the survey internationally offers a wider database to be used in academic publications. It increases the number of responses and thus enhances the analysis resources. Moreover, data from several countries at the firm level is very valuable especially for research on international business and international entrepreneurship studies. Furthermore, expanding the survey outside a single country helps to establish the survey as an entity that is not under threat if a particular research group does not receive funding. In the longer run, one possibility is to create an international consortium similar to the Global Entrepreneurship Monitor (GEM) survey. GEM research program is an annual assessment of the national level of entrepreneurial activity, and is currently the largest survey-based study of entrepreneurship in the world with 54 countries participating in Proposed changes to the survey The purpose is to expand the data collection to a number of other European countries. The survey will produce one full report of the survey results in English and shorter country annexes in native languages. The survey will also be rebranded and we will establish internet presence at a new site at instead of the current web page under Aalto University. During the first year, Aalto University will lead the project by providing the materials 13 For more information, see

14 International Software Industry Survey 11 and doing bulk of the statistical analyses. Also, Aalto University plans to host the online survey form. After the first run, the responsibilities will be divided more evenly. In the following, we elaborate on how we plan to plan to execute the survey in The first run of the international version of the survey is going to be run by a group of participants from several European countries. However, we do not expect to cover the whole Europe in the first year, but the purpose is rather to establish the foundation for enlargement during the next few years. Everything presented below is subject to change Creating the questionnaire The survey form for 2010 will be divided into three separate sections: The first part contains questions that are stable over years. These questions are followed every year which enables collecting longitudinal data about trends on general descriptive data. The second part is for a special research theme that changes each year. The theme section is the same for all participating countries. The third section is free for each country organization to use how they see fit. During the first year, Aalto University is prepared to plan and develop the questions for the first two sections of the questionnaire. However, if another organizations are willing to take part in this task, we are more than happy to develop the survey form in collaboration. In the following years, the purpose is to widen the question development so that all participating countries will be able to contribute to development of the theme section Compiling the mailing list The simplest way to construct the mailing list would be to use NACE classification codes and official company records. This should be used for two reasons: First,

15 International Software Industry Survey 12 compiling the mailing list becomes significantly simpler than before as firm lists and addresses are fairly easy to obtain. Second, the sampling frames will be similar in all countries allowing better comparison of the results. If NACE codes are used, the biggest task in mailing list construction will be obtaining the addresses for firms. This can, however, be simplified to some extent by using some specific databases Collecting data For data collection, there are currently two options: Data can be collected similarly to the previous years by using paper and online questionnaires, or the survey can be run only as an online survey. The first option would have the benefit to obtain more responses to the survey, but the latter would require less resources and makes the data collection more agile and simple. Recording the responses will be done by using a single survey software hosted on the project website and available to all participants. This approach has two advantages: First, it allows easily controlling the questionnaire form and reduces unnecessary work related to managing multiple survey systems in parallel. Second, all responses can be recorded in to a single database from which they can easily be processed. The survey will be localized using English as the base language. Each country will manage their own communications, process undelivered mails, and update their mailing lists. Each country will provide the updated contact lists before each ing round as well as the reminder message in their own language to be sent our from Aalto University's computers. This approach has three advantages: First, invitations and reminders will be sent at the same time. Second, managing individual response links will be easier. Third, we already have mass-mailing software specifically designed for this project Analyzing data and writing report The survey will produce a main report in English and country specific reports in their

16 International Software Industry Survey 13 native languages. Aalto University will take the main responsibility in writing the English report for the first international run. It will be up to the other country organizations to translate the report into their native languages if they so choose. Aalto University will be doing most of the data analysis in 2010 regarding the main report of the survey. The reason why Aalto University is willing to take a large role is that we want to make participating in the study as easy as possible for new partners. Furthermore, this has the main benefit of obtaining a uniform analysis. Naturally, we are more than happy to divide the analysis and writing tasks more evenly also during this year Writing company reports The company-specific reports will by default be done regarding the questions in the first two sections. This way these firm reports can be constructed as a single run time using a single template. Producing the reports requires some programming skills, so for the cost-efficiency the initial plan is that Aalto University produces these reports at least for the first international run of the survey. Additionally, each country can of course do their own firm reports if they will Financing the survey There are currently three options for funding: The first is that the funding will be organized separately for each country. In this model each country organization will arrange their own funding to cover data collection expenses and writing of a countryspecific report. The second option is to get funding from the EU to fund the project as a consortium and run the survey with this funding. The third and the most likely scenario is that the survey is financed in combination of national and EU funding. We are currently working on the option of getting EU to fund the project and will update the interested participants in the further negotiations. The obligatory tasks for each participating country will include at minimum data

17 International Software Industry Survey 14 collection. More specifically, this includes constructing and updating the mailing and ing lists, translating the questions to their native language, managing communications, and endorsing the survey. The level of involvement to the survey can be further increased by, for example, planning their own question sets for the last part of the questionnaire form, writing a country-specific annex, and taking work-load in writing process of the main report 2.3 Non-disclosure and IPR considerations The data collected during the survey is available for each participating country. This data comprises responses from all countries that have participated to the survey in that year. The data can be freely used for analyses, papers, and other publications as the participants see fit. However, confidentiality of the responses is an important consideration and no single respondents must be subject to identification from the results. 2.4 Contact information The new website of the project can be found at More information about the survey and the current plans for the internationalization effort can be obtained from Jukka Ylitalo, Researcher [email protected] Tel Skype: jukka_ylitalo Mikko Rönkkö, Research Manager [email protected] Tel Skype: mikko_ronkko

18 International Software Industry Survey Conclusions The Finnish software industry survey has for over a decade followed the current situation and future prospects of the Finnish software industry. The survey has established its position as an important part of the Finnish software industry research and the main report has become widely cited in both Finnish and European level. The survey will expand to a number of European countries in The international expansion of the survey would provide value in all European, national, and firm level, as well as provide several advantages for academics and the survey as an entity. We seek both academic and private sector organizations to collaborate in expanding the Finnish Software Industry Survey into an international software industry survey. The initial planning of the internationalization effort has been started and several parties have already expressed their interest in running the survey in their countries. Further information can be obtained from researcher Jukka Ylitalo ([email protected]). 3 Appendix 3.1 References Dillman, D. (2007). Mail and internet surveys: The tailored design method. 3.2 Glossary Aalto University was established at the beginning of 2010 from the merger of three Finnish universities: Helsinki University of Technology, The Helsinki School of Economics, and The University of Art and Design Helsinki. Aalto University consists of three schools corresponding the three former universities: the School of Science and Technology, the School of Economics, and the School of Art and Design. More information can be found at BIT Research Center is a research center of Aalto University, School of Science and Technology. It consists of 12 research groups and focuses on the research areas

19 International Software Industry Survey 16 around business, innovation and technology. More information can be found at TEKES (the Finnish Funding Agency for Technology and Innovation) is the main public funding organisation for research, development and innovation in Finland. TEKES is a non-profit organisation and finances about 1500 R&D projects and 600 public research projects at universities, research institutes and polytechnics each year. More information on TEKES can be found at The Federation of Finnish Technology Industries is a representative of the technolgy industry in Finland and actively drives the benefits of the industry. This organization also participated in drafting the EUSoft Position paper in 2008 ( _Paper_software_ pdf). For more information, see Academic publications This is a list of peer reviewed academic papers written using the results and data from the project. Väisänen, J., Helander, N., Rönkkö, M., and Seppänen, M (2008) Examining Innovativeness of Open Source Software Companies paper presented in EBRF 2008 Touru, A-M. and Rönkkö, M. (2008) Interationalization Challenges of Small Finnish Software Firms - Comparing Theory and Practice paper presented in EBRF 2008 Mutanen, O-P. and Rönkkö, M. (2008) Growth Challenges of Small Finnish Software Firms - Comparing Theory and Practice paper presented in EBRF 2008

20 International Software Industry Survey 17 Rönkkö, M. and Valtakoski, A. (2008) Business Models of Software Firms paper accepted for presentation in HICSS 2009 Rönkkö, M., Järvi, A., and Mäkelä, M. (2008) Measuring and Comparing the Adoption of Software Process Practices in the Software Product Industry in Proceedings of the International Conference on Software Process 2008 Rönkkö, M. and Mäkelä, M. M. (2008) Contingency Effects of Strategy on Software Product Development Capabilities paper presented in 2008 Academy of Management Meeting Ojala, A. and Tyrväinen, P. (2007) Market Entry and Priority of Small and Medium-Sized Enterprises in the Software Industry: An Empirical Analysis of Cultural Distance, Geographic Distance, and Market Size Journal of International Marketing Vol 15, No. 3 pp Kontio, J., Jokinen, J-P., Mäkelä, M. M. and Leino, V. (2005) Current Practices and Research Opportunities in Software Business Models Proceedings of the seventh international workshop on Economics-driven software engineering research Hietala, J., Kontio, J, Jokinen, J.-P. and Pyysiäinen, J.-P. (2004) Challenges of Software Product Companies: Results of a National Survey in Finland in Proceedings of the Metrics 2004 Conference Arenius, P. and Autio, E. (2002) International Social Capital and Its Effects on Resource Acquisition in Born Global Firms paper presented at 2002 Academy of Management Meeting Autio, E. Arenius, P. and Sapienza, H. J. (2002) Efforts for Technology Sharing in International Collaborative Relationships of New Software Firms working paper

21 International Software Industry Survey Publications citing the main report of the survey Some examples of the reports and academic publications citing the main report of the Finnish Software Industry Survey: Ala-Rami, K., & Inkinen, T. (2008). Information technology, communication and networking in software companies of northern Finland. International Journal of Knowledge Management Studies, 2(3), Eriksson, P., Henttonen, E., & Merilainen, S. (2008). The growth strategies of women-controlled SMEs: a case study on Finnish software companies. International Journal of Business Excellence, 1(4), EUSoft Position Paper. (2008). (p. 38). Syntec Informatique. Retrieved from n_paper_software_ pdf Jaakkola, H., & Heimbürger, A. (2009). Cross-Cultural Software Engineering. Informatologia, 42(4), Jääskeläinen, M. M., Maula, M., & Murray, G. (2007). Public Financing of Young Innovative Companies in Finland. Ministry of Trade and Industry, Helsinki, Finland. Ojala, A., & Tyrvainen, P. (2009). Impact of psychic distance to the internationalization behavior of knowledge-intensive SMEs. European Business Review, 21(3), Ronkko, M., Jarvi, A., & Makela, M. M. (2008). Measuring and Comparing the Adoption of Software Process Practices in the Software Product Industry. Lecture Notes in Computer Science, 5007, 407. Towards a European Software Strategy - Working Group 2: Technology and

22 International Software Industry Survey 19 Business Trends in the Software Industry. (2009).. European Comission. Vähäniitty, J., Lassenius, C., Rautiainen, K., & Pekkanen, P. (n.d.). Long-term Planning of Development Efforts by Roadmapping a Model and Experiences from a Small Software Company. Yalaho, A. (2009). Managing Offshore Outsourcing of Software Development Using the ICT-supported Unified Process Model (Dissertation). University of Jyväskylä.