Model for Evolution of a Vertical Software Industry

  • Pasi Tyrväinen
Part of the Contributions to Management Science book series (MANAGEMENT SC.)


The interaction of the primary and secondary software industries appears to follow a common pattern, which has been described in the model for evolution of a vertical software industry (Tyrväinen et al. 2008). The evolution is seen as iterating through several phases, shown in Fig. 1 and described below.

The first phase of the model is called the Innovation phase, where the vertical industry enterprises seeking to gain competitive advantage implement their core business processes with some innovative software developed in-house. In service-oriented businesses this means automating manual work with information systems and in companies developing and producing hardware products this means implementing most of the software needed to use their equipment by in-house R&D personnel. In both cases the vertical industry enterprise invests increasingly in ICT and the number of software personnel tends to grow gradually. In case the enterprise has to cut back on software workforce during economical downturn this can be done by relocating these employees to other duties in which they can perform well due to their industry competence. Some of the software development professionals may also become self-employed by establishing micro ventures and capitalizing on their expertise with new types of systems, thus serving as agents of technology diffusion.


Productization Phase Software Industry Software Interface Innovation Phase Retail Banking 
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Copyright information

© Springer-Verlag Berlin Heidelberg 2009

Authors and Affiliations

  1. 1.Department of Computer Science and ISUniversity of JyväskyläJyväskyläFinland

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