External Factors in the Software Industry - Case Study Example

Abstract

Brief explanation of business software industry

The business software industry is made up of businesses that come up with software, maintain such software as well as publication of the software. Software businesses mainly incorporate the use of two business models which can be used alone or concurrently within the same organization. They are license based business model and cloud based business model. Due to the often intangible nature of software products and their ease of being transferred quickly through the internet, the software industry has been plagued by the catastrophe of copyright infringement and piracy. In view of this, Microsoft founded the Business Software Alliance, a non-profit making business organization to advocate and protect the interests of the software industry. The main goal of the Business Software Alliance therefore is to champion for the use and supply of legal software across the globe. While playing as the watchdog of the industry, BSA has the mandate to safeguard IP Rights of its members and enforce the use of legal software through sponsoring and supporting the passing of favorable legislations. To achieve its mandate in the software industry, the Business Software Alliance conducts educational programs for its consumers and also penalizes those found guilty of copyright infringement. Additionally, the organization performs an investigative role to track violators of software licensing requirements, through software audits (Peng, 2016).

The structure-conduct-performance model in software industry

The business software alliance has been vigor to point out the benefits that the right licensed software brings to software businesses and to the economy at large. A research sponsored by the business software alliance reveals that having licensed software enhances efficiency and productivity through decreasing contact to security exposures such as viruses. This leads to reduced system breakdowns, IT cost repairs and stoppages. In addition, licensed software includes other cost cutting services like access to upgrades, reinforcements, and producer maintenance services and training seminars. Similarly, these benefits end up aiding business organizations cut costs thereby fuelling extra investments. The resulting performance of such investment brings more organizational based production which at the end results in the growth of the national economy. However, there are contrary prepositions that aver that software piracy favors economic development more than licensed software. The supporters of this preposition argue that software piracy affords its users the productive advantages of software minus the need of meeting the overhead expenses notwithstanding the fact that piracy is illegal. However, research conducted by business software alliance in collaboration with INSEAD settles such prepositions by uncovering their hidden myths. The findings of the research reveal that right licensed software increases the growth of the national economy more than three times as much as the pirated software (Dingsøyr & Lassenius, 2016).

The Five-Forces Model in business software industry

Porter's five forces model is no longer significant to the modern day business software industry. The five forces model worked effectively in business circumstances of the 20th century, when the main corporate approach was aimed at inside-out goals like outfoxing the competitors and maintaining profitability curves without thinking so much on the value delivery to the consumers (Dingsøyr & Lassenius, 2016).

Additionally, the Porter’s model was favored by the relative predictability of the market forces and their regularity. On the other hand, the modern day market forces are very volatile and difficult to correctly predict forcing a business organization to come up with novel business models within the going concern of the business in order to aid the business stay afloat. The five forces model is very limited when dealing with flexible and vigorous industry such as the software industry that experiences constant changes since the model is founded upon rigid market conditions. Additionally, it is difficult to use the five forces model to forecast future developments as regards to the consumer wants in the software industry since the consumers of the software products are also confronted by indeterminate and unsettled markets. What renders the five forces model even more unreliable is the fact that Mr. Porter at the time of coming up with the five forces model did not have the required professional experience in the industry to efficiently substantiate his model (Dingsøyr & Lassenius, 2016).

The strategic group in the business software industry

Strategic group offer the currently called interactive catalog software, existing on a pay-as-you-go basis, centered on a flexible construction. The result of this is to let users enjoy an interactive catalog with no need of buying any additional software or alter the configuration. Therefore, Strategic group in the software industry give full whenever required expansion capabilities as well as implementations. A big Cloud framework foundation and Cloud database help software business groups create, examine, and come up with custom needed business applications regardless of the need to invest in systems software. Some Cloud platforms, for instance the Microsoft Azure, provide an interactive Cloud catalogs on their own, which makes them compete openly with dedicated database organizations (Herbsleb, Kästner & Bogart, 2016).

Threats and opportunities in the software industry

There is resilient competition among software producers. The software industry is in a always in a cut throat competition among the various producers of software which may lead to illegal business practices such as the use of unlicensed software. Therefore the Software Alliance is often faced with the threat of proliferation of illegal software in the market in addition to piracy (Herbsleb, Kästner & Bogart, 2016).

Increase in potential lawsuits. Due to the nature of the work that the Software Alliance does, it is inevitable to avoid law suits commenced by the organization and also others against the organization. Therefore, in the event where a person commences a legal action against the Software Alliance and successfully wins the claim, the organization is forced to pay huge sums of money in settlements. Additionally, even the actions commenced by the organization are also very costly due to the amounts of legal fees involved in successfully prosecuting them, notwithstanding the fact that lawsuits are highly time consuming. Since the software alliance will most likely continue to conduct its operations in the same way, the likelihood of potential lawsuits is exponentially huge (Chatterjee, 2016).

The growth of the smartphone industry presents a unique opportunity upon which the software alliance can launch its operations. This is because even though the consumer appetite for smartphone is increasing greatly more than the need for computers and laptops, very few instructions are there to protect against the use of unlicensed software in the smartphones. Therefore, the business software alliance can expand their operations even to cover the use of software in the smartphones (Chatterjee, 2016).

Key success factors (KSFs) in the software industry

Flexibility. The business software industry is a highly evolving undertaking fuelled by rapid changes of technological development. Therefore, any business organization in this industry must be flexible enough to embrace and cope up unpredictable market changes (Peng, 2016).

Leadership and software talent. It is imperative in business software industry for the personnel in leadership positions to have a good background understanding of software technology. The importance for this is to ensure that they have an excellent understanding of the industry to make informed decisions that propel their business organizations forward and in line with legal institutional frameworks in place. Additionally, the personnel should be skilled in good entrepreneurial practices and be willing to take risks. The nature of business software industry is characterized by the level of risk that an organization is willing to take. However, before taking such risks, there should be well researched knowledge on the viability of the risk and that the potential returns expected from undertaking such risk should outweigh the risk involved (Peng, 2016).

Networking. The business software industry requires huge capital investments to start and conduct research in order to keep as a going concern. Such investments are often times out of the reach of a single business organization which therefore calls for the need to network with other like business organizations with a view to pulling up of resources. Additionally, even where a single firm can raise the required money investments, it may still need to network and form alliances with other business organizations in the industry for the pulling up of skilled personnel and expertise in conducting research. Networking is also important in marketing where the products produced by various business firms in the industry are similar or complimentary to each other (Peng, 2016).

Customer relations. For any business organization to succeed in software industry, it must develop and cultivate good customer relations with its market share. Business software industry is highly influenced by fluctuating customer tastes and preferences which therefore call for need to gain a market share that is made of loyal customers to the business firm. Customer loyalty is gained through constantly meeting the expectations of customers through products of quality innovation and reliability. Additionally, having a strong marketing and advertising presence is vital to keep the firm relevant their customer base and also to attract new customers to the firm’s business products (Peng, 2016).

Operational efficiency. The success of a business organization in the software industry is based upon its ability to maximally exploit its resources without unregulated wastage. Additionally, it is imperative for any business organization in the software industry to keep confidential their trade secrets in order to prevent them from falling in the unscrupulous hands of software pirates and other competitors (Peng, 2016).

Viability of the business software alliance strategy

The strategy of Business Software Alliance to form partnerships with various software companies such as Apple and Microsoft offers it a huge grip of the software industry which goes a long way in the form of goodwill from major industry players which helps the organization play its mandate of protecting against copyright infringement. Additionally, alliances with various governments around the world helps the organization enforce its directives with the aid of enforcement structures of these governments as well as favorable legislative structures in such jurisdictions which help in curbing and nailing down perpetrators of copyright infringement. Moreover, the presence of the organization in more than sixty countries around the world gives it an international appeal and outreach helping it to champion for the rights of its members all around the world and in turn attract even more membership into the organization (Bonaccorsi, Giannangeli & Rossi, 2006).

Recommendations and conclusion

Strengthen Strategic partnership. The best way of maintaining compliance with the best software practices in the industry is by the business software alliance strengthening its strategic partnerships. Some of the partners making up the membership of the business software alliance comprise the biggest software manufacturers in the industry. Therefore having strong alliances with such partners will help the organization control the compliance of a very big segment of the market. The organization should also strive to form new alliances in order to expand its reach on the market to ensure it fully meets its objective (Chatterjee, 2016).

The software alliance should come up with alternative ways of ensuring compliance with its software requirements in the market in order to avoid unnecessary litigation. It is often said that ultimately there is no winner in litigation therefore if the organization is to make impact in the market, there is need to find alternative methods of complying with its directives as well as punishing those infringing such requirements. The organization should incorporate things like money compensation as well as revoking of membership of any member found infringing software guidelines given by the organization (Herbsleb, Kästner & Bogart, 2016).

In conclusion, the software industry is one that faces unique market forces that may not be found in other industries. In addition, the nature of the software products which are generally the creation of the mind and there intangible in nature makes them easy to distribute and share over the internet even without the knowledge of the owner. This therefore creates the need to have institutions which protect against such vices which have the potential of crippling this very essential sector of human civilization and world economy. However, such institutions such as the business software alliance are often faced with very unique problems in the work which calls for adequate learning of the software industry and dynamics by such organizations.