Business models in the enterprise software markets: Drivers behind software providers’ decisions concerning their business models

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School of Business | Master's thesis
Degree programme
Information and Service Management (ISM)
Software types can be roughly divided into two categories – tailored software and standard software. The evolution of enterprise software has started from a client-specific tailored software and moved forward to the standard software focusing on wider market needs. Recently, more service-oriented solutions as Software as a Service (SaaS) model enabled by the development of cloud computing have started to gain market share increasingly. Decisions and business models of individual software companies are steered by numerous drivers. Clients’ needs and buying behavior are in the center of software providers’ business but they only cover a part of all drivers. For example, software ecosystems, the vendors (which usually are multinational technology providers) orchestrating them, and the relationships with other stakeholders do influence on the software providers’ business. In addition, internal drivers as the history of a company, personnel’s know-how, limited resources, strategic goals and visions have an impact in the company’s decision-making. Also, trends and transformations covering the whole industry as well as the permanent evolution of technologies and software platforms shape the requirements for the business models of software providers frequently. The most remarkable changes that have influenced on the business of software providers in recent years have been for instance the growth of cloud-based services, increasing interests in artificial intelligence solutions, changes in buying behavior and decision making in organizations operating in different industries and the competition between software ecosystems and platforms. The diversity of needs in the enterprise software markets ensures that there is and will be demand for both, tailored software projects and standard software solutions. Software providers are often small companies who must concentrate on only one or a few business models in order to survive and keep up the pace in constantly transforming markets. So, many of them face difficult decisions; whether to invest on project-oriented business that generates revenue as a stable, constant stream or on the SaaS model which, in the best scenario, scales all the way to the global markets.
Thesis advisor
Kuosmanen, Timo
enterprise software markets, software providers, business models, software ecosystems, Software as a Service
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