LEVERAGING SOFTWARE

ECOSYSTEMS
PRAGMATICS OF SUCCESS

opyright 2015 Dr. Karl Popp (1)

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

opyright 2015 Dr. Karl Popp (2)

Magic
ecosys

opyright 2015 Dr. Karl Popp (3)

Your Companys Networks Might Matter More

than Its Strategy

opyright 2015 Dr. Karl Popp (4)

Uber, the worlds largest

taxi company, owns no
vehicles.
Alibaba, the most valuable
retailer, has no inventory.
Ariba, the largest B2B
supplier network, has no
inventory.

INTRODUC
SOFTWARE
ECOSYSTE

opyright 2015 Dr. Karl Popp (5)

Software Ecosystem

Acquisition
Targets

Standards
Bodies

Suppliers

Software
Partners

Software
vendor

Open
Source
Community

Products,
Assets or
Services

opyright 2015 Dr. Karl Popp (6)

Customers

System
Integrators

Payments

Competitors

En
So do
ft rs
w e
ar
e

Payments

opyright 2015 Dr. Karl Popp (7)

Customer

Se
rv
f i
Se ee ces
rv s
ic
es

Sell
Software

e
at
uc ulEd ns
Co nts
ta

Products,
Assets or
Services

Software
vendor

System
Integrators

ue

Supplier

Provide
Software

Revenue

License Fee

ar
ll
Se ftw
So

Re
fe
rr
a

lF

Partner

en
ev
R

ee

Exchange of products,
services,payments

Types of ecosystems
Acquisition
Targets

Partners

Standards
Bodies

Suppliers
Customers
Open
Source
Community

System
Integrators

Supplier
Ecosystem

Partner
Ecosystem

opyright 2015 Dr. Karl Popp (8)

Customer
Ecosystem

Competitors

GOALS F
SOFTWAR

opyright 2015 Dr. Karl Popp (9)

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

opyright 2015 Dr. Karl Popp (10)

Product related goals

Strengthen market presence

Diversified partnership strategies for regional
and local markets

Strengthen software vendors 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.

opyright 2015 Dr. Karl Popp (11)

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.

opyright 2015 Dr. Karl Popp (12)

PRAGMATI
SOFTWARE
ECOSYSTE

opyright 2015 Dr. Karl Popp (13)

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
companys ecosystem

opyright 2015 Dr. Karl Popp (14)

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

opyright 2015 Dr. Karl Popp (15)

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.

opyright 2015 Dr. Karl Popp (16)

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

opyright 2015 Dr. Karl Popp (17)

Background information

Business

http://softwarebusinessmodels.net
Models
in the software industry

opyright 2015 Dr. Karl Popp (18)

Profit from Software Eco

systems

ISBN-13: 978-3842300514
Business Models, partnership
models and ecosystems in the
software industry
Examples from over 50 softw
are companies