Business models in the software industry

Abstract

Business models describe the strategic direction of a firm and have significant impact on the success of innovations. While the term business model is broadly used, a comprehensive definition in the context of the software industry has not yet been provided. In this paper, we conceptualize a software industry business model, supporting the description of software firms' business models in a standardized manner. Our model aggregates and unifies findings from a literature review in three disciplines, generic and software industry specific business model concepts as well as economic properties of the software industry. The resulting business model concept comprises 20 elements. A first empirical proof of concept among 10 software business models confirms the applicability of the presented concept. The business models are instantiated based on the proposed framework and the interviewees confirm the applicability, relevance, and importance of the proposed business model. © 2012 IEEE.