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Copyright © 2015 Dr. Karl Popp (1)

LEVERAGING SOFTWARE ECOSYSTEMS – PRAGMATICS OF SUCCESS


Agenda

• The magic of ecosystems of companies• The theory of software ecosystems

– Types of ecosystems– Goals

• Pragmatics of software ecosystems– Questions on software ecosystems get pragmatic answers


Magic of ecosystems


Your Company’s Networks Might Matter More than Its Strategy

• Uber, the world’s largest taxi company, owns no vehicles.

• Alibaba, the most valuable retailer, has no inventory.

• Ariba, the largest B2B supplier network, has no inventory.


INTRODUCTION SOFTWARE ECOSYSTEMS


Software Ecosystem

Products,Assets orServices Payments

StandardsBodies

CustomersSoftware vendor

SoftwarePartners

System Integrators

Compe-titors

Open Source Commu-

nity

Suppliers

Acqui-sition

Targets


Sell

Software

Exchange of products, services,payments

CustomerSupplier

Partner

Products,Assets orServices

Payments

ProvideSoftware

Sell Software

Endo

rse

Soft

war

e

Ref

erra

l Fee

System Integra-

tors

Educate

Consul-

tants Serv

ices

fees

Serv

ices

Revenue

Software vendor

Revenue License Fee


Types of ecosystems

SupplierEcosystem

CustomerEcosystem

Partner Ecosystem

System Integra-

tors

StandardsBodies

Customers

Partners

Compe-titors

Acquisi-tion

Targets

Suppliers

Open Source Commu-

nity


GOALS FOR SOFTWARE ECOSYSTEMS


Financial goals

• Monetize on the partner ecosystem– Increase existing or create new revenue

streams– E.g. by letting partners sell products or by

charging fees for certification• Save cost

– Lower cost of development, support, maintenance, education, marketing

– E.g. by outsourcing tasks to partners like support, maintenance, sales, training


Product related goals

• Strengthen market presence – Diversified partnership strategies for regional

and local markets• Strengthen software vendor´s offerings

– Partners fill whitespaces and provide complementing solutions

• Innovate and co-innovate solutions– A sound innovation strategy of a software

vendor contains a mix of internal and external innovation.


Network effect related goals

• Maximize ecosystem gravity– Hypothesis: increasing the number of

participants in the ecosystem attracts even more new members for the ecosystem.

• Maximize retention of participants in the ecosystem – Retention of participants in the ecosystem is

based on two important factors: incentives and lock-in.


PRAGMATICS SOFTWARE ECOSYSTEMS


Q 1: Is finding partners is a high effort activity?

• Answer: NO• Why:

– There always exists an ecosystem– Expectation of revenue pulls partners into a

company´s ecosystem


Q 2: Is educating partners a high effort activity?

• Answer: Depends on approach• Example

– SugarCRM offers most of its source code under open source license

– „Partners never talked to us, they downloaded the code and changed it.“

• Strategy:– APIs, SDKs, Developer networks, Software

stores lead the way


Q 3: Will the partner ecosystem work?

• Answer: YES• Strategy:

– Be a keystone, not a dominator.– Grow low-impact partnerships massively.– Staff high-impact partnerships

with growth of ecosystem.


Summary

• Every company has a software ecosystem

– Leverage it!• You will be successful if:

– Partners can execute on revenue expectations– You establish low entry thresholds for partners

to enter the ecosystem– You establish niches for partners and offers

help to partners


Background information

Business Models in the software industry

http://softwarebusinessmodels.net

Profit from Software EcosystemsISBN-13: 978-3842300514Business Models, partnership models and ecosystems in the software industryExamples from over 50 software companies

http://softwarebusinessmodels.net/

http://softwarebusinessmodels.net/

http://www.drkarlpopp.de/BusinessModelleinderSoftwareIndustrie.html



http://www.sap.com/germany/about/investor/ueberblick/akquisitionen/index.epx

http://www.sap.com/germany/about/investor/ueberblick/akquisitionen/index.epx