secrets of software success servaas oostrik gert-jan beukenkamp

Secrets of Software Success

Servaas Oostrik

Gert-Jan Beukenkamp

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.

Outline

• Introduction

• Research methodology

• Book review

• Critique

• Conclusion

• Discussion

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

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 ????

Outline

• Introduction


• Book review

• Critique

• Conclusion

• Discussion

Research methodology

• Interviews– 100 companies

• size

• geography

• business type

• performance

– experts• academic, and consultants

• related industries


15%

41%

32%

12%

Very large

Large

Medium

Start-up

Size

39%

9%

52% USA

Asia

Europe

Geography

21%

34%

45%

Mass marketpackaged

Enterprisesolutions

Professionalservices

Business type


• Interviews– 100 companies

• size

• geography

• business type

• performance

– experts• academic, and consultants

• related industries


• Compounded success measure– annual growth rates– average return on sale

• Ranking in accordance with overall success

ROS

GrowthOverallsuccess

34 successful companies

32 average companies

34 less successful companies

Comparison between

upper and lowercompanies

Interviewerevaluation

Outline

• Introduction


• Book review

• Critique

• Conclusion

• Discussion

Book review

1 A new business called “software”2 Exceptional software leaders are the rule3 Winning the war for software talent4 Software development5 Marketing gods make software kings6 Professional software services7 Grow your partners to grow yourself8 The landscape of the future

A new business called“software”

• Industry segmentation

– Software services

– Software products

• Enterprise solutions

• Mass-market packaged software


low medium high Degree ofstandardization

Salesunits

Professional service

Enterprise solutions

Packagedmass-market

software

Product business

Services business

1

10.000

10,000,000


• Enterprise solutions VS Mass-market software

– Customization VS standardization

– Long installation VS instant installation

– Few customer VS mass-market


Professional software Product softwareMarginal costs Almost constant Almost zero

Market structure Highly fragmented Higher concentration

Regionalappearance

Mainly regional, someglobalization

Highly globalized

Customerrelationship

One to one One to few, one to many

Most importantnumber to watch

Capacity utilization rate Market share(installed base)

Relevance ofmanagementareas

1.Human resources2.Software development3.Marketing and sales4.Strategy

1.Strategy2.Marketing and sales3.Human resources4.Software development

Book review


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

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

Book review


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

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

Book review


Software development

• Common characteristic: FAILURE– Time – Budget – Missing features– Cancellation before completion

Chance of failure higher than success


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


Upstream phase

Downstream phase

Requirements analysis

Design

CodingIntegrating & testing

Maintenance

Time

Degree ofuncertainty


• Reasons for failure software products (I)– Overly optimistic developers

• Too optimistic schedule

• Murphy’s law

– Adding of people• Work can not be partitioned

• Increase communication time


• 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


• 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


Upstream phase

Downstream phase

Requirements analysis

Design

CodingIntegrating & testing

Maintenance

Time

Degree ofuncertainty


• 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


• 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


• 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

Book review


Marketing gods make software kings

• Success depends on marketing– recovering R&D

• Marketing for dominant position– owning standards– achieving “lock-in”– market leadership enforces buying decision


• 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


• 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


• 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


• 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)


• 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

Book review


Professional software services

• One-to-one relationships

• Not aggressive

• Building trust

• Reputation is vital

• Most have experienced a project failure


• 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 firm’s success stories• Packaging the firm’s software services• Building on previous success


• 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

• Don’t accept all the wishes

Book review


Grow your partners to grow yourself

• Partnering– Exceptional efforts are undertaken

• Training

• Pampering

– Large partner clubs• Factor 4

– Equality of partners• Direct relationship


• Strategic imperative– Closing the gaps– Focusing on key competencies– Accelerating time to market– Increasing market penetration

• A new level of equality among partners– R&D partners– Complementary product or service partners– Marketing partners– Implementation and maintenance partners


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


• 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

Book review


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

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

Outline

• Introduction


• Book review

• Critique

• Conclusion

• Discussion

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

Critique

• Baan is praised– But?– Stock value to nearly 1$

• What about goodwill– Stock overestimation

• Conclusions seem easily drawn – Deductive reasoning

Critique

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

Outline

• Introduction


• Summary

• Critique

• Conclusion

• Discussion

Conclusion

Professionalsoftware services

Enterprisesolutions

Mass-Marketsoftware

1.Peoplemanagement

1.Partnering 1.Marketing

2.Human resourceassignment

2.Servicestrategy

2.Partnering

3.Development 3.Marketing 3.Globalization

4.Marketing 4.Peoplemanagement

4.Peoplemanagement

5.Partnering 5.Development 5.Development

Conclusion

• Pleasure to read

• Many interesting insights– Great personal stories

• Good overview software business evolution

Conclusion

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

Outline

• Introduction


• Summary

• Critique

• Conclusion

• Discussion

Discussion

secrets of software success servaas oostrik gert-jan beukenkamp

Documents

software development3

software developmentbook

software firms

software product companies1959

yourselfthe landscape

human resources2

human resources4

tailormade solutionsera