Universiteit UtrechtSWOT Analysis in the software industryMethod EngineeringGeorgios Kormaris !"#!$%&$&$%%' SWOT Analysis in the software industry Table of contentsI. Introduction....................................................3II. SWOT Analysis: method description...........4III. SWOT Analysis: example............................4IV. ac!"round and related literature................4V. #eferences....................................................4VI. Appendix......................................................4List of figures$i"ure %: A &asic SWOT Analysis matrix..............................................4$i"ure ': SWOT Analysis for (icrosoft )see Appendix for larger version*.................................................................................................. 4List of TablesTa&le %: The steps that ha+e to &e followed in order to carry out a successful SWOT Analysis.................................................................... 4,eor"ios -ormaris ' SWOT Analysis in the software industryI. IntroductionIn the past twenty to thirty years many chan"es and de+elopments ha+e ta!en place in thesoftware industry which started off durin" the ./s mainly in the 0nited States of Americaand experienced a re+olutionary &oom since the %12/s )Steinmueller3 %114*. Therearemanydifferent waysandmethodsofde+elopin"softwareandplannin"thestrate"y of a software de+elopment company and as it is shown in many recent researchpro5ects.(ost of these pro5ects are usually concerned with the way that software is de+eloped andnot the waythat the strate"y of the company as a whole is planned)6usumano3(ac6ormac!3 -emerer3 7 6randall3 '//3*. Another important factor is which techni8uesand methods are usedtoanaly9e company:s en+ironment and howthe strate"yisformulated and implemented.In this paper we will try to analy9e in detail a +ery popular method for strate"ic plannin"which has &een mostly used for product portfolio plannin" and;or strate"ic plannin" onan a&stract le+el ) one for each element of the SWOT analysis.Figure 1: A &asic SWOT Analysis matrixAs it is 8uite +isi&le in $i"ure % we also ha+e some other cate"ori9ations within matrix ofSWOT Analysis> elements concernin" the or"ani9ation itself which are called Internal)Strengthsand Weaknesses *3 elements which are a&out the company and its relationship with its en+ironment3named External )Opportunities and Threats*3 elements which are Helpful for the or"ani9ation )Strengths and Opportunities* and elements which are Harmful for the or"ani9ation )Weaknesses and Threats*.,eor"ios -ormaris 4 SWOT Analysis in the software industry$irst of all we ha+e to define the four main &uildin" &loc!s of our dia"ram> Strengths:The stren"ths of anor"ani9ationare the core competencies of thecompany3 the !ey factors which ena&le it to excel in certain aspects and "ain all !indsof profit3 whether that is purely economical3 or"ani9ational or other. Weanesses: As wea!nesses we define the flaws that an or"ani9ation has3somethin" which means that these wea!nesses mi"ht lead to serious pro&lems in thecompany:s strate"ic plannin"andmi"ht e+enleadtoworsesituations3 suchas&ecomin" a serious threat for the or"ani9ation:s existence. Opportunities: Thesearecertainstepswhichwill helpacompanytoperform&etter3 "enerate more profits etc. The opportunities can &e of many differentperspecti+es3 such as enterin" a new mar!et3 or in creatin" a new &usiness unit andetc. Threats: As threats we name the potential reasons which mi"ht harm a company3such as a new entrant in the main mar!et of operation3 a &i" economical recessionand other reasons which mi"ht threaten the current position of an or"ani9ation.

esour!es3 meanin" the a+aila&le resources which are ena&lin" the company tode+elop and deli+er the software which it sets out to pro+ide to its customers. "apa#ilities3 that is the critical success factors which the company possesses andthat "i+e it a competiti+e ad+anta"e. $uality3 which is 8uite clear as a term3 referrin" to the 8uality of the products ;ser+ices pro+ided &y the company and to the 8uality of the internal or"ani9ationof the company3 such as the 8uality of the &usiness processes. Effi!ien!y3 meanin" how efficient the company is ha+in" a solid structure whereall different departments3 units and processes are properly or"ani9ed andcommunicate well3 in order to ha+e a smooth operation of the company. "ustomer responsiveness3 which is not only referrin" to the o&+ious3 that is howmany customers does a company ha+e3 &ut also to howextensi+e is thedi+ersification of a company:s products3 what different price le+els exist and howsatisfied are those customers.,eor"ios -ormaris 4 SWOT Analysis in the software industry Innovation3 whichis a&out thele+el of acompany:sdesiretoin+est innewtechnolo"ies3 followtechnolo"ical &rea!throu"hs3 !eepupwiththeemer"in"&usiness trends and in which extend is part of the profits reDin+est in research 7de+elopment.!"ternal analysis: The external analysis of an enterprise is a tas! which is a &it morecomplicated )see ac!"round and related literature*3 &ut it mainly is an analysis of thecurrent competition and of the mar!et in which the company operates.In order to "i+e an example of external analysis factors we will mention some external&arriers and dri+ers as they are mentioned in )ernroider3 '//'*: %arketing & distri#ution in foreign !ountries "ulture3 which refers to certain restrictions or difficulties in communication thatmi"ht arise due to different lan"ua"es and other cultural aspects. Trade; commercelawissues3 whicharesometimes different fromcountrytocountry and mi"ht cause pro&lems when tryin" to enter new mar!ets. E' regulations that mi"ht &e rather complicated and restricti+e in the standards of8uality that must &e followed in order to mar!et a software product in the C0 %arket si(e "urren!y !onversion )to *+Steps and #eli$erablesIf we were to descri&e how a "enerali9ed process of carryin" out a successful strate"yplannin"procedureforasoftwarede+elopment company3 oneshould"othrou"hthefollowin" steps3 which include SWOT Analysis )ernroider3 '//'*>Step #eli$erable1.,re SWOTEefine current situation3 create a mission statement and a&stract &usiness "oals.%.SWOT AnalysisAnalysis of the or"ani9ation:s external competiti+e en+ironment)Eefine @Opportunities- and @Threats-*&.SWOT AnalysisAnalysis of the or"ani9ation:s internal operatin" en+ironment)Eefine @Strengths and @Weaknesses*'.,ro SWOTSelection of strate"ies(.,ro SWOTImplementation of strate"ies,eor"ios -ormaris . SWOT Analysis in the software industryTable 1: The steps that ha+e to &e followed in order to carry out a successful SWOT Analysis.III. SWOT Analysis: e"ample Since we ha+e explained the SWOT analysis principles3 how it should &e carried out andhowit islin!edtotheen+ironment ofacompany3 it istimetoactuallydescri&eanexample for this method.$or our example we will try to carry out a SWOT Analysis of (icrosoft3 a famous andinternational companywhichcreates software)suchasthe(icrosoft WindowsVistaoperatin" system and others* and other !inds of technolo"y e8uipment and "ad"ets.Step 1.$irst of all we need to define the mission of (icrosoft: As it is mentioned in (icrosoft:s we&site the company:s mission is defined as followsAAt%i!rosoft. ourmissionandvaluesaretohelppeopleand#usinessesthroughtheworld reali(e their full potentialBSource: http:;;www.microsoft.com;a&out;default.mspxF+alues Step %. and Step &.Figure %: SWOT Analysis for (icrosoft )see Appendix for larger version*,eor"ios -ormaris G SWOT Analysis in the software industryIn the next two steps )474* certain decisions ha+e to &e ta!en and implemented3 a&outthestrate"yof (icrosoft3 for examplewhether moremoneywill &ein+estedinthe@Online office: emer"in" mar!et or will (icrosoft 5ust try to fi"ht ,oo"le3 since it seemsthat is the main competitor.I+. ,acground and related literatureInorderto"ainsomemoreinsi"ht inthecreationoftheSWOT Analysismethod3 itwould &e useful to !now some more details a&out its ori"in> this is where we come to aparadox3 since +ery little is actually !nown on how the method was de+eloped. There actually are no papers that first present the method3 since it was created durin" aresearch pro5ect funded &y a lar"e num&er of companies ma!in" it rather confidential.As it is mentioned in an article of www.&usiness&all.coma&out SWOT Analysis and itsori"in3 ASWOT analysis !ame from the resear!h !ondu!ted at Stanford esear!h Institute from/0123/0425 The #a!kground to SWOT stemmed from the need to find out why !orporateplanning failed5 The resear!h was funded #y the fortune 622 !ompanies to find out what!ould#edonea#out thisfailure5 Theesear!hTeamwere%arion7osher.7rOtis8enepe. Al#ert Humphrey. o#ert Stewart. 8irger 9ie5:As it is 8uite easy to understand3 SWOT Analysis can &e used in many different areas ofmana"ement3 sinceitisamethodwhich"i+esmana"erstheopportunitytoanaly9eacertain pro&lem and put to paper the pros and cons of a situation3 a company etc. Thus it helps them to &e"in their research in the certain pro&lem and pro+ides the &asicconcepts in order to decide what the next mo+e will &e. $or example it is also used for (ar!etin" mana"ement3 in order to define whether it isprofita&le to enter new mar!ets of create new products etc. )Wilson 7 ,illi"an3 '//4*.Another interestin" 8uote from this article would &e the followin"> AA SWOT analysismeasuresa#usinessunit. apropositionoridea;a,EST analysismeasures a market.BThis &rin"s us &ac! to the external aspect of the SWOT Analysis method is the way thatthe Cxternal en+ironment is percei+ed &y a company and how it is analy9ed. ein" morespecific3 software companies ha+e to pay really close attention to their externalen+ironment3since competition and mar!et status play a hu"e role in the success of asoftware company.As mentioned in)ernroider3 '//'*3 many companies tend to use another3complementary3 method in order to analy9e their external en+ironment and in continuumto define certain @Opportunities: and @Threats:.Thetwomost commonlyusedmethodare,ESTandthe6