Eetu Luoma's blog http://www.softwareindustrysurvey.org/blog/10 en Finnish Software Industry is still growing strong http://www.softwareindustrysurvey.org/node/81 <div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p><b>The Finnish software and IT services sector grew over 20 percent in 2014. Game firms and smaller firms contribute most of the growth, while stock listed firms had mixed results.</b></p> <p>This year’s survey is conducted in two parts. The first part focused on the overall state of the industry. The second part, including a survey study with a short questionnaire, shall focus on details of software firms’ growth and internationalisation.</p> <p>Based on Statistics Finland, the Finnish industry grew 20,6 percent last year. Within the industry, the game firms good results explain two thirds of the growth. Rest of firms grew approximately seven percent, which is also more than the total global growth of the industry.</p> <p>We find that our industry has a group of software firms that have been able to exploit the new opportunities of digital marketing and delivery channels as well as the opportunities provided by the consumerism of information technology.</p> <p>The analysis of the stock listed companies in the software and IT services sector indicates a minor decline of 2,2 percent in revenue compared to previous year. The positive aspect of the companies’ result is that the decline is smaller than in previous years and many firms have also been able to increase the revenues.</p> <p>We find that the decline in the revenues is attributed to the structural changes taking place in the industry; the demand is changing from customer-specific projects to cloud services. The current situation seem promising as the firms have been able to develop new capabilities to match the changes in the industry.</p> <p>The interim results for the 2015 survey were presented in a press event on June 25th, and they're available at <a href="http://softwareindustrysurvey.fi/SlidesFinland2015.pdf">http://softwareindustrysurvey.fi/SlidesFinland2015.pdf</a>.</p> <p>We’re now conducting the second part of this year’s survey. Software firms can expect traditional mail and email invitations in any day soon. On behalf of the researchers and collaborators, I invite the companies to join the survey. Thanks to the responses we receive, we were able to contribute valuable information on the current state of the software industry.</p> </div></div></div> Thu, 25 Jun 2015 12:08:48 +0000 Eetu Luoma 81 at http://www.softwareindustrysurvey.org/admin http://www.softwareindustrysurvey.org/node/81#comments Focus on Flexibility: Three Types of Flexibility http://www.softwareindustrysurvey.org/node/80 <div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p>On a general level, we've identified three types of flexibility for software firms and IT services firms from the scientific literature. These are related to the firm's resources and their adaptability:<br /><br /> 1) the capability to enter new markets quickly, 2) to organize into new activities fast, and 3) to react fast to changes in customer demand.<br /><br /> As we reported earlier, in this year's survey, Finnish software companies assess themselves as flexible in all dimensions.</p> <p><a href="http://www.softwareindustrysurvey.org/sites/default/files/Flexibility.png" target="_new"><img src="http://www.softwareindustrysurvey.org/sites/default/files/Flexibility.png" width="100%" /></a></p> <p></p><center><i>Finnish software companies assess themselves as flexible</i></center> <p><br /></p> <p>Based on this year's survey, we analyzed the relatedness of flexibility to the properties of software firms. We examined whether or not flexibility is related to use of cloud platforms, provisioning of platforms to other firms, employing agile development methods, market orientation or experimental approach to business development. Just to name a few.</p> <p>The results of our statistical analyses are visualised in <a href="http://www.softwareindustrysurvey.org/sites/default/files/SWISFlexibilityAnalysis.pdf">the presentation slide set we prepared</a>.</p> <p>We found that the capability to enter new markets quickly is associated with employing experimental approach to business development, over other characteristics of the firm. Further, we learned that capability to organize quickly and to react to changes in demand are associated with many things. It could be summarized that young firms with agile development methods are fast in re-organizing into new activities. However, collecting customer information regularly is also related with this type of flexibility -- but this activity is by no means limited to startup firms. Finally, we discovered that the types of flexibility are partially but not clearly associated with growth and internationalization.</p> <p>The conclusion seems to be that <b>flexibility is mostly associated with experimental approach to business development and with use of customer data</b>. These are then the means that software firms should investigate to improve their flexibility. It would make sense since flexible companies are better off under economic cycles, and the wildly successful firms have also flexibility in their recipe.</p> <p>Our data reveals that both young and established firms collect customer data regularly and apply experimental approach. The means are also available for both software product firms and software services firms.</p> <p>-Eetu</p> </div></div></div> Thu, 02 Oct 2014 17:57:38 +0000 Eetu Luoma 80 at http://www.softwareindustrysurvey.org/admin http://www.softwareindustrysurvey.org/node/80#comments Focus on Flexibility: Leanness of Software Firms http://www.softwareindustrysurvey.org/node/79 <div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p>Flexibility in software industry can be understood as the agility of software development, but also as the firm’s capability to quickly react to changes in the industry and in the customer demand. In this year's analyses we found that the kind of flexibility is strongly associated with experimenting with different business models and collecting information from customers regularly.</p> <p>Eric Ries and Steve Blank call these flexible companies as <a href="http://theleanstartup.com/principles" target="_new">“lean startups”</a>, but the type of flexibility is not limited to young or small firms. Rather the authors suggest a methodology which favours experimentation over elaborate planning, customer feedback over intuition and iterative planning over traditional plan-based development. It's like the agile approach in software development, but the methodology is meant for developing business.</p> <p>In this year's analyses on business models of Finnish software firms, we focus on their business flexibility and how the Finnish firm would score on the leanness suggested by Ries and Blank. Overall, the respondents clearly report experimenting and customer-oriented orientation when searching and developing their business model.</p> <p><a href="http://www.softwareindustrysurvey.org/sites/default/files/Lean.png" target="_new"><img src="http://www.softwareindustrysurvey.org/sites/default/files/Lean.png" width="100%" /></a></p> <p></p><center><i>Frequencies of responses to questions regarding leanness of business development<br />(Click the image to see it in full size)</i> </center> <p><br /></p> <p>Especially customer feedback is preferred over intuition. Most firms report collecting often information from customers about their needs, assessing their products/services against these needs, and deciding promptly on their reactions to new customer needs. These attributes would indicate a customer-oriented strategy.</p> <p>Also, iterative planning seems to be preferred over plan-based development. Most respondents indicate that the firm's the business planning is an ongoing process and that they continually adapt their strategy based upon feedback from the market. Many firms also experiment with different business models and try different approaches until they find a working one.</p> <p>We also found differences in experimentation and customer-orientation between young and more established firms. When talking about companies' strategic decisions, the business planning of software start-ups seems to be more ongoing and involving process than in the established companies, and start-ups also adapt their strategy more based upon feedback from the market. </p> <p>What is the value of these findings then? First, the lean methodology suggests a new way of thinking about the strategy and organization that is applicable to both young and more established firms. And second, should large and established firms have difficulties in reaching preferred level of business flexibility, they should investigate internal ventures and investing in external startups.</p> <p>- Marko and Eetu</p> </div></div></div> Thu, 02 Oct 2014 07:20:35 +0000 Eetu Luoma 79 at http://www.softwareindustrysurvey.org/admin http://www.softwareindustrysurvey.org/node/79#comments Focus on flexibility: Agility in Software Development http://www.softwareindustrysurvey.org/node/78 <div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p>In this year's analyses on flexibility of Finnish software firms, we first focus on the software development activities. Our survey instrument contained questions based on the <a href="http://agilemanifesto.org" target="_new">Agile Manifesto</a>, and we were basically interested in whether the firms favor agile approaches over plan-based approaches in software development. On most of the measured aspects, the respondents clearly report agile orientation. Customer collaboration is preferred over contracting, reactivity favored over fixed plans, and empowering individuals is promoted over fixed processes. Yet, it seems that the Finnish software firms are not willing to give up documentation for the benefit of working software.</p> <p><a href="http://www.softwareindustrysurvey.org/sites/default/files/Agile.png" target="_new"><img src="http://www.softwareindustrysurvey.org/sites/default/files/Agile.png" width="100%" /></a></p> <p></p><center><i>Frequencies of responses to questions regarding kind of software development approaches:<br /> agile approaches to the left and plan-based approaches to the right</i></center> <p><br /><br /></p> <p>We also found differences in agility between software firms. We found that software product firms report more flexible collaboration with customers compared to the software services firms. Younger firms are more likely to emphasize individuals. And more established firms are less inclined to change the plans during the software development projects.</p> <p>Smaller software companies tend to utilize individual strengths more, whereas larger companies tend to standardize their ways of working. Smaller firms also report to be more open to continual customer collaboration and changes during the software development projects. Overall, we found that the size of the company seems to be the strongest explaining factor in the use of agile approaches.</p> <p>We feel that some of these differences are inherently related to the firms’ business models. We also believe that the startup firms have less pressure to standardize their operations, as they are still searching for their business opportunity. Indeed, the young and small firms should seek their advantage from being nimble, customer-oriented and making best use of the expertise of individuals.</p> <p>- Hanna and Eetu</p> </div></div></div> Thu, 25 Sep 2014 08:10:28 +0000 Eetu Luoma 78 at http://www.softwareindustrysurvey.org/admin http://www.softwareindustrysurvey.org/node/78#comments Interim results for the 2014 survey http://www.softwareindustrysurvey.org/node/77 <div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p>Based on Statistics Finland, the Finnish software and IT services sector grew over 11 percent in 2013. According to survey, this growth was thanks to small and medium sized firms, and especially the firms in the games industry. The turnover of biggest firms was mainly decreasing, but at the same time they were able to react to changes in the industry.</p> <p>Before July 2014, a total of 323 companies provided a complete response to the survey and 117 firms completed the survey partially. The interim results were presented in a press event on June 26th, and they're available at <a href="http://softwareindustrysurvey.fi/SlidesFinland2014.pdf">http://softwareindustrysurvey.fi/SlidesFinland2014.pdf</a></p> <p><img src="http://www.softwareindustrysurvey.org/sites/default/files/growthfigure.png" /></p> <p><b>The Finnish industry has reacted on global trends</b></p> <p>The global software markets are growing about +5% per year, led by three trends: Cloud computing and software-as-a-service (SaaS), collaborative and content applications, and data management and analytics software. We find that the Finnish software firms have been able to take advantage the first two of the trends. Especially in the segment of content applications, Finnish games companies had a phenomenally good year. <a href="http://www.neogames.fi/en/industry-info/">Neogames association</a> estimates that the Finnish games industry was growing rapidly with 550 MEur increase in turnover from the last year; more than threefold revenue compared to 2012. This demonstrates the possibilities of internet delivery of applications, but also highlights the need for new type of competence in software business. Overall, the Finnish software SMEs matched the growth of the global industry.</p> <p>Large number of companies is capable of attaining international revenue, but the growth has stabilized. Nordic countries and Western Europe remain important areas for exports, followed by North America, Eastern Europe, and Russia. We speculate that the decelaration of growth in international revenue could be due to a natural balance. Some software firms remain local to serve the the domestic market, while those born-global firms have already gone international.</p> <p>The combined revenues of the public listed IT services companies in Helsinki Stock Exchange decreased -4.6% from 2012. Many have reported changes of customer demand due to economic cycles, but also reacting on changes in demand and trends by offering continuous services, product business, or software rental services. These follow the global trajectory of the software industry. They also require up-front investments, which would explain some of the reductions in revenue. Some of the large firms who have reacted early on put out positive results with increase in revenues.</p> <p><b>Cloud Platforms passed the mobile platforms in software development</b></p> <p>Finnish software firms have adopted cloud computing platforms quickly, as half (50.3%) of the firms report employing the platforms in their software development. Cloud computing is used for cost efficiency by enhancing the IT services provisioning and for new business opportunities.</p> <p>In mobile application development, we find a close race of three major platforms. Android, iOS, and Windows Phone all grew in popularity among software developers compared to previous year. Former Nokia platforms Symbian and Meego are now discontinued, but Qt platform currently developed by Digia is still live and well.</p> <p>Also, more than one third (38%) of respondents offer platform or interface to other software firms for development. This progress can be seen as positive, because these firms report more flexibility than companies on average.</p> <p><b>Focus on software firms’ flexibility</b></p> <p>A major theme in this year’s survey is flexibility, which is understood as the firm’s capability to quickly react to changes in the industry, and to create new products or services to new customer segments. We choose this theme since research has demonstrated positive impact of flexibility to company performance under economic cycles. Also, wildly successful firms like Apple and Amazon have been able to enter adjacent market or create new markets. Applying existing resources to new purposes and organizing to new activities requires flexibility.</p> <p>Our early analysis, with 253 responses indicate that the Finnish software companies assess themselves as flexible in resources and adaptability. Close to 75% of respondents report that their products and services are easily modifiable to new markets and that they can organise into new activities quickly.<br /> Based on our data, this flexibility is strongly associated with providing platforms or interface to others and experimenting with different business models. Also customer orientation (i.e. collecting information from customers regularly) and use of cloud computing are related to improved flexibility. Needless to say, younger firms are more flexible in their moves compared to the more established firms.</p> <p>We will continue analyzing the data and publish detailed results on on the theme of software firms’ flexibility. Stay tuned for more!</p> </div></div></div> Fri, 15 Aug 2014 08:51:43 +0000 Eetu Luoma 77 at http://www.softwareindustrysurvey.org/admin http://www.softwareindustrysurvey.org/node/77#comments Join the 2014 edition of the survey, Follow the results http://www.softwareindustrysurvey.org/node/76 <div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p>I'm delighted to report that this year's edition of the survey is now underway and that the Finnish software companies can expect traditional mail and email invitations on their desk in any day soon. On behalf of the researchers and collaborators, I invite the companies to join the survey. Thanks to the responses we receive, we were able to contribute valuable information on the current state of the software industry. Such information can be used to draw attention to opportunities and development needs that the companies are thinking.</p> <p>The last year's run of the survey was successful in capturing <a href="http://www.kasvufoorumi.fi/tutkimus/" target="_new&quot;"> the essential challenges for software companies' growth </a>. Among other challenges, shortcomings in marketing and sales activities, limited understanding of markets and customers and issues with networking with other companies were identified as important inhibitors of growth. To support the ongoing undertakings to tackle these issues, this year's survey aims at uncovering whether these issues are linked with other aspects of the software firms' strategy or operations.</p> <p>Besides growth, did you know that companies like Amazon, Wordpress and Prezi deploy their software to production multiple times every day? This is not attributable only to the software development practices and cloud computing, but their secret sauce most likely include also other forms of flexibility and swiftness. In this year's survey, we're keen to understand how well Finnish software firms are doing in this regards. In other words, <a href="http://www.n4s.fi/en/" target="_new&quot;"> to support the ongoing research on software firm's flexibility</a>, this survey will analyse the software firms' current capabilities and competences for (business) agility and speed.</p> <p>I have the privilege to coordinate this year's survey research efforts. The survey has been prepared together with a team of researchers from University of Jyväskylä and Aalto University, and we've received great help from our collaborators in Ohjelmistoyrittäjät ry, Teknologiateollisuus ry and TIVIA ry. We shall publish our results just before the holidays in July and, as usual, write blog posts on this site with tentative results along the way.</p> <p>Regards,</p> <p>-Eetu</p> </div></div></div> Tue, 03 Jun 2014 12:16:41 +0000 Eetu Luoma 76 at http://www.softwareindustrysurvey.org/admin http://www.softwareindustrysurvey.org/node/76#comments