Pragmatic software ecosystem success

2. 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

3. Magic ofecosystems

4. 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.

5. INTRODUCTION SOFTWARE ECOSYSTEMS

6. Software Ecosystem Standards Bodies SoftwarePartners Acqui-sition Targets Software vendor Customers Suppliers Open Source Commu-nity System Integrators Compe-titors Products, Assetsor Services Payments

7. Exchange of products, services,payments Partner Revenue Referral Fee Sell Software Endorse Software Revenue License Fee Supplier Software vendor Customer Sell Software Provide Software Services fees Educate Consul- tants Services Products, Assetsor Services System Integra-tors Payments

8. Types of ecosystems Supplier Ecosystem Partner Ecosystem Standards Bodies Acquisi-tion Targets Partners Suppliers Customer Ecosystem Customers Open Source Commu-nity System Integra-tors Compe-titors

9. GOALS FOR SOFTWARE ECOSYSTEMS

10. 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

11. 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.

12. 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.

13. PRAGMATICS SOFTWARE ECOSYSTEMS

14. Q 1: Isfindingpartnersis a high effortactivity? • Answer: NO • Why: • Therealwaysexists an ecosystem • Expectationofrevenuepullspartnersintoa company´secosystem

15. Q 2: Iseducatingpartners a high effortactivity? • Answer: Depends on approach • Example • SugarCRMoffersmostofitssourcecodeunder open sourcelicense • „Partners nevertalkedtous, theydownloadedthecodeandchanged it.“ • Strategy: • APIs, SDKs, Developer networks, Software storesleadtheway

16. Q 3: Will thepartnerecosystemwork? • Answer: YES • Strategy: • Be a keystone, not a dominator. • Growlow-impact partnershipsmassively. • Staff high-impact partnershipswithgrowthofecosystem.

17. 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

18. Background information • Business Models in the software industry http://softwarebusinessmodels.net Profit from Software Ecosystems ISBN-13: 978-3842300514 Business Models, partnership models and ecosystems in the software industry Examples from over 50 software companies