FINNISH SOFTWARE PRODUCT BUSINESS IN BRIEF
The offerings of the software industry can be roughly divided into three categories: software products, customer tailored software (or customized software), and embedded software. Software products differ from customer tailored software and embedded software in the object of trade and degree of productization. Main characters of software products are:
- Software products are traded on their own, not as part of other products. Although software product business often includes other things, such as installation, training and even customization, the main object being traded is software.
- Pure software products are highly
productized and often referred to as packed, mass-market, or
shrink-wrap software. These kinds of products are delivered to a
large number of customers in exactly the same format - without any
customer tailoring.
Therefore software product companies can be defined as companies that sell software products they themselves design, implement, and maintain. Addition to software product companies, software product cluster includes organizations and companies that provide services, product or support for software product companies.
In Finland, the software industry is still relatively small, although it has grown rapidly during the 1990's. Nowadays, the Finnish software industry consists of about 1100 companies. The companies are mainly owned by their founders and their family members, with only minor foreign and external ownership. European companies have lagged behind the U.S. firms in the packaged software segment, due, e.g., to small and diverse home markets, low degree of productization and internationalization, and weak links to universities (Malerba and Torrisi 1996). This seems to be true also for Finnish companies. The trend, however, seems to be towards greater degrees of both productization and internationalization, i.e., from custom software developed for local markets towards mass-market software intended for international distribution.
Despite the challenging economic situation, Finnish software product companies have been able to adjust to the weakened economic situation. As companies are rather small, their capability to modify business operations in a short-term in order to keep the business running is relatively good. As the downturn of the economy makes growth intentions more difficult, it also forces companies to improve their processes and efficiency.
The Finnish software product industry does not have any industrial classification code of its own, making even basic statistics unavailable. To alleviate this problem, the Centre of Expertise for Software Product Business located in Espoo, has initiated a series of national software industry surveys and has built www.swbusiness.fi service to enhance co-operation between the different players in the industry and to improve the exchange of information concerning the industry.
More information:
Ubiqitous Computing Centre of Expertise
Program Director
Mr Lari Lohikoski
Source: National software industry survey 2003; Erkko Autio, Juhana Hietala, Jyrki Kontio, Markku Maula.