Download - Basics of Software Business
SB Program
University of Jyväskylä
Basics of Software Business
ITK260
Fall 2003, Rauli Käppi
In cooperation with Oulu and Helsinki SB-programs
Special thanks to Oulu SB-line, who has been the major contributor for this material
SB Program
University of Jyväskylä
Additional credits for the course
Total of 7 more lectures (including guest lectures) Attending 6 lectures gives you +0,5 to your final grade Attending 4 gives you +0,25 to your final grade Passing the exam is mandatory to earn Any extra credit –
failed exams will not be added with any credits
SB Program
University of Jyväskylä
Schedule for the rest of the courseTime Place
Friday 3.10. at 14-16 Agora
Thursday 9.10. at 14-16 Agora
Tuesday 14.10. at 14-16 Agora
Friday 24.10. at 16-18 Agora
Thursday 30.10. at 8-10 Agora
Thursday 6.11. at 8-10 Agora
Wednesday 12.11 at 10-12 Agora
Exam 14.11 at 12-16
Second exam 1.12. At 12-16
Agora
SB Program
University of Jyväskylä
Focus for the rest of the course
European, Nordic and Finnish perspective Emphasis on Tailoring (projektiliiketoiminta) and product
businesses Interest in smaller companies and their challenges Comparison to the lectured issues in U.S. perspective Some consideration to legislative issues Guest speakers
SB Program
University of Jyväskylä
Motivation…
SB Program
University of Jyväskylä
Analysis of the situation
Software industry is already the most significant industry segment in U.S.
The SW industry is forecasted to rise to be the fourth main industry segment in Finland in 10 years time
The SW business area has been growing in Finland even during the past few years (of slow growth)
Even stronger growth is expected as the overall economic situation improves
SB Program
University of Jyväskylä
What is the aim of software business education in JYU / Finland?
Still a relatively new and a growing field The education of software engineering / programming
does not alone provide sufficient skills and knowledge for this area
The education in economics does not offer enough substance in the area of IT
The aim is to offer education to be used in marketing and product development of SW companies
SB Program
University of Jyväskylä
JYU SB-focus Merging with EC? Vision update in
progressSESEHi-Hi-
Tech Tech mgmmgm
ttECEC ISISDD
SBSB
SW-product bus.-in start-ups-In established-components/families
SW-tailoring bus.-project bus.-turnkey solutions-contracting
SW-related services-augmented product-edu, maint. support-service contracting
SB Program
University of Jyväskylä
Multiple skills are required in a SW product company
Product development and technology transfer Technical productisation Business models and revenue logic Planning and monitoring of finances Legislative issues (of IT) Marketing Sales and distribution Exporting Management
SB Program
University of Jyväskylä
Then to business…
SB Program
University of Jyväskylä
Lecture focus
It is assumed that you are already familiar with different classifications of software business (Secrets of Software Success, etc.)
The lecture focus moves from the world market to European market and finally to the Finnish market
You should be able to form a picture of key market areas for each of the previous
Software product business has been given some emphasis
SB Program
University of Jyväskylä
SB Program
University of Jyväskylä
SB Program
University of Jyväskylä
Total ICT spending 2001 by country 2001 (WITSA and IDC 2002)
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University of Jyväskylä
SB Program
University of Jyväskylä
SB Program
University of Jyväskylä
European IT vertical market, 2001 (EITO 2002)
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University of Jyväskylä
A short look on selected countries
Sweden– like Finland, strong electronics industry
Denmark– like Finland without Nokia, small and developed software industry
Germany– applications for industry are central, interest in developing business
processes, a few internationally known software applications Austria
– a passage of software products and hardware to east-European countries Ireland
– specialised in localisation, the European base for large U.S. software companies, has a growing own SW industry
Israel– spin-offs from the military industry, security- and encryption software,
good connections to U.S. financers and markets
SB Program
University of Jyväskylä
Software company survey in Finland 2003Helsinki University of Technology, Software Business and Engineering institute, Institute of Strategy and International Business
Finnish software product industry 2001 = 900 mill. € 2002 = 1+ billion €
Growth 14% from previous year mostly achieved from domestic markets (domestic market growth 20%)
Export is some 40% of the total revenue and remained on the same level as earlier
Currently tight economical situation
There are expectations of faster future growth
SB Program
University of Jyväskylä
Personnel of software product business
Employs some 10 000 professionals
Companies estimate only modest increase in personnel
By average 34% of the personnel works in Product Development (PD)
Sales and marketing is the second biggest personnel group
80% of the companies stated that the personnel know-how is aligned with the needs of the company
SB Program
University of Jyväskylä
Company age and development focusThe situation has normalised during past years – the relative amount of start-ups has gone down
Starting completely new products has become less common
Improving existing products’ level of productisation is seen important
SB Program
University of Jyväskylä
International software business
46 % carried out international SW business (37% 2001)
A large portion of the companies were in the early phase of their internationalisation
Export activity to 8,1 countries by average
Export revenue 6,5M€ by average (median 0,8M€)
Total value of export 400 million €
The expectation for annual growth for export 42% and domestic expected market growth 24%
SB Program
University of Jyväskylä
The process for internationalisation31% of the companies started their export at the age of 0-2 years
First export sale - median at 6 years
Most common markets in order: Sweden, USA and Germany
Average time to reach the market was 10 months
Most common approaches were direct sales and using a foreign reseller / agent
A small amount went international very late
SB Program
University of Jyväskylä
SB Program
University of Jyväskylä
Summary
The majority of Finnish (and other European) SW companies are small in the international business context
The internationalisation process as a whole is still in an early stage
The growth of the business came from domestic market year 2002, export business had almost no growth
The centers of IT-business are Helsinki (some 50%), Tampere, Turku, Jyväskylä and Oulu
The level of productisation is still relatively low
SB Program
University of Jyväskylä
Summary cont.
Product business is still a relatively small part of the whole IT business
Tailoring and hardware market are both bigger than software product business in terms of revenue
Product business has interesting qualities from the viewpoint of academic research (markets, processes, alliances, strategies, etc.) and is (often) a strong interest and focus area