Openbare Versie
Final Thesis University of Groningen
Faculty of Management and Organization 2006
Researcher : Rutger de Groot Principal: COMPANY X
Supervisor : Drs. O. C. J. Lappöhn Martijn van Veen
Drs. H. Van Uitert Patrick Hooykaas
A Decision Model for Selecting Ecosystem Partners
Achieving growth through status-based selection
For reasons of confidentiality the names, figures and tables have been changed or left out of the thesis.
Preface
When looking back on my internship, I must admit that this has been my most challenging assignment ever. Although my major is in process technology I have to say that my interest in the Information Technology industry has increased tremendously. I developed an understanding about the competitive forces that shape the IT business from a totally different perspective. Moreover, I learned how one of the most influential IT companies in the world addresses these dynamics in order to gain a competitive advantage. The complexity of this matter really fascinated me and helped with finalizing my research.
COMPANY X has provided me the opportunity to graduate on this very interesting subject which essentially touches the fundaments of their strategy, for which I am very grateful. This was not possible without the help of all the people that spent significant time on interviews and other questions I continuously had in mind for them.
Special thanks go out to my COMPANY X supervisors Martijn van Veen and Patrick Hooykaas who made my wonderful internship at COMPANY X possible. I also would like to thank my parents for making my education possible and my sister, brother and girlfriend for their support throughout the years.
I hope you enjoy reading!
Rutger de Groot
Management Summary
This research is about the establishment of a decision model for selecting ISV’s with regard to the MKB markt. The aim of this model is to select new ISV’s with status-based selection criteria in order to positively influence the opinions and expectations of other ISV’s and by doing so achieve growth.
The trigger for this research is the changing way of doing business. Advances in IT and changing consumer demand are responsible for this. Where product selling used to fulfil customers’ needs nowadays customers demand complete solutions which means that cooperation becomes the pivot on which everything hinges. In order to provide solutions the STG needs to cooperate with ISV’s that supply the software. Also the advances in IT bring other competitive forces into play. Indirect network externalities bring in a coordination problem between hardware manufacturers (the STG) and complementors (ISV) that is market-mediated. Moreover, social interaction effects discerned in opinions and expectations play an important role in hardware sales of the STG. Hardware platforms are highly dependent on opinions and expectations for their present and future sales. Companies do not want to invest in a technology that will not become widely accepted.
In order to cope with the forces just mentioned a business ecosystem perspective was adopted throughout this research. This perspective helps to understand the dynamics of inter-company relationships and collaboration in the STG’s environment. A business ecosystem can be defined as “a collection of companies that are dependent on each other. These companies
form a complementary system to deliver a range of activities around a business or technology wherein they work cooperatively and competitively”. This definition exactly
describes the organization of companies in technology-intensive markets such as the STG is in. In today’s technology-intensive markets competition does not take place between individual companies anymore but between whole ecosystems. Therefore it is necessary that the STG attracts many ISV’s in order to stay ahead of competition.
To incorporate the preceding dynamics and concepts in the decision model three research questions were defined that functioned as guiding lines for the research:
1. Which selection criteria can be derived from a business ecosystem perspective? 2. What information about the MKB markt is important for using the selection criteria?
3. What information about Independent Software Vendors is important for using the selection criteria?
The business ecosystem concept with its underlying network externalities, social interaction effects and the goal of ecosystem expansion call for special selection criteria that have a positive influence on opinions and expectations and hereby positively influence ecosystem growth. For this reason the concept of embeddedness was also introduced. This concept states that economic action and outcomes are affected by the social structure of the overall network of organizations. Status plays an important role in this concept. It has signalling properties that fits in with the kind of selection criteria that are looked for. From the literature study it was therefore concluded that status determinants would be used for the selection criteria. The determinants were cast into hypotheses which hypothesized that attracting ISV’s based on the status determinants would have a positive influence on opinions and expectations and hereby achieve ecosystem growth. After the hypotheses were empirically tested through a questionnaire it was concluded that each determinants had more or less the hypothesized effect. Only the determinants that showed a clearly positive influence were consecutively adopted as selection criteria and put into the decision model.
The second and third research questions were designed to bring in practical relevance. In order to cut the selection criteria to the STG’s and the MKB markt’ situation several practical inputs were addressed to incorporate in the decision model. A segment-solution matrix eventually was introduced that can be used for investigating ISV coverage on the MKB markt by looking at the segment-solution combinations. This way decisions for attracting new ISV’s are guided better.
The status-based selection criteria were combined with the segment-solution matrix to form the decision model. This model implicitly takes the dynamics of the STG’s environment into account and selects new ISV’s to expand the ecosystem with based on these dynamics accordingly. For a clear description of the decision model I refer to chapter seven.
Table of Contents
PREFACE...3
MANAGEMENT SUMMARY ...4
CHAPTER 1 - INTRODUCTION ...9
1.1 THESIS STRUCTURE...9
1.2 COMPANYXAND THE SYSTEMS &TECHNOLOGY GROUP...10
CHAPTER 2 - RESEARCH DESCRIPTION ...12
2.1 PROBLEM STATEMENT...12
2.1.1 CURRENT SITUATION...12
2.1.2 THE PROBLEM...14
2.2 PILOT STUDY...14
2.2.1 HOW CAN A BUSINESS ECOSYSTEM BE DEFINED?...15
2.2.2 IS THE USE OF A BUSINESS ECOSYSTEM PERSPECTIVE JUSTIFIED?...16
2.2.3 HOW CAN SOLUTIONS BE DEFINED? ...16
2.2.4 WHICH ACTORS ARE PRESENT ON THE SMB MARKET? ...17
2.2.5 HOW DOES STG CURRENTLY REACH THE SMB MARKET? ...20
2.2.6 HOW DOES THE STG SEGMENT THE SMB MARKET? ...21
2.2.7 CONCLUSIONS...22 2.3 PROBLEM DEFINITION...24 2.3.1 RESEARCH OBJECTIVE...24 2.3.1.1 Definitions ...24 2.3.2 RESEARCH QUESTIONS...25 2.3.3 RESEARCH RESTRICTIONS...25 2.4 DATA COLLECTION...26 2.4.1 DOCUMENTATION...26 2.4.2 INTERVIEWS...27 2.4.3 QUESTIONNAIRES...27 2.5 CONCEPTUAL MODEL...27
2.6 RELEVANCE OF THE STUDY...28
CHAPTER 3 - LITERATURE STUDY ...29
3.1 THE BUSINESS ECOSYSTEM...29 3.1.1 TYPES OF ECOSYSTEMS...30 3.1.2 ECOSYSTEM HEALTH...30 3.1.3 OPERATING STRATEGIES...31 3.1.3.1 Keystone Strategy...32 3.1.3.2 Dominator strategy ...33 3.1.3.3 Niche strategy...34 3.1.4 DEVELOPMENT OF AN ECOSYSTEM...35 3.1.4.1 Birth...35 3.1.4.2 Expansion ...36 3.1.4.3 Leadership ...37 3.1.4.4 Self-Renewal/Death...37
3.1.6 CONCLUSION...38
3.2 COOPERATION...39
3.2.1 INDIRECT NETWORK EXTERNALITIES...39
3.2.2 SOCIAL INTERACTION EFFECTS...41
3.3 BUSINESS RELATIONSHIPS...42
3.3.1 PARTNER SELECTION LITERATURE...42
3.3.2 THE PROBLEM WITH STRATEGIC ALLIANCE LITERATURE...43
3.3.3 EMBEDDEDNESS...43
3.3.3.1 Status ...45
3.4 CONCLUSION...47
CHAPTER 4 - HYPOTHESES ...49
4.1 STATUS-BASED SELECTION CRITERIA...49
4.1.1 SURROUNDING NETWORK...49
4.1.2 EXPERTISE...50
4.1.3 PAST AND PRESENT PERFORMANCE...51
4.1.4 HYPOTHESES RATIONALE...53
4.2 CONCLUSION...54
CHAPTER 5 - EMPIRICAL STUDY...55
5.1 QUESTIONNAIRE...55
5.1.1 QUESTIONNAIRE OR SEMI-STRUCTURED INTERVIEWS?...55
5.1.2 POPULATION...56 5.1.3 QUESTIONS...56 5.2 RESULTS...58 5.2.1 RESPONSE...58 5.2.2 RELIABILITY...58 5.2.3 VALIDITY...60
5.2.4 HYPOTHESES:TRUE OR FALSE?...61
5.2.4.1 Hypothesis 1; Surrounding Network of the ISV...61
5.2.4.2 Hypothesis 2; Expertise of the ISV ...62
5.2.4.3 Hypothesis 3; Past Performance of the ISV ...62
5.2.4.4 Hypothesis 4; Present Performance of the ISV ...62
5.3 CONCLUSION...64
CHAPTER 6 - MARKET SEGMENTS AND SOLUTION DOMAINS ...65
6.1 MARKET SEGMENTS...65
6.2 SOLUTION DOMAINS...66
6.3 THE SEGMENT-SOLUTION MATRIX...66
6.4 CONCLUSION...67
CHAPTER 7 - DECISION MODEL...68
7.1 THE MODEL...68
7.2 CONCLUSION...70
8.1 CONCLUSIONS...71
8.2 RECOMMENDATIONS...73
8.2.1 PRACTICAL RECOMMENDATIONS...73
8.2.2 REMARKS REGARDING RESEARCH...73
ABBREVIATIONS...75
LITERATURE ...76 APPENDIX 1...ERROR! BOOKMARK NOT DEFINED. APPENDIX 2...ERROR! BOOKMARK NOT DEFINED. APPENDIX 3...ERROR! BOOKMARK NOT DEFINED.
Chapter 1
- Introduction
This thesis deals with the establishment of a decision model that can be used for selecting ecosystem business partners. The context of this thesis is as follows. The Systems & Technology Group (STG), the hardware division of COMPANY X, has arrived in a period in which extensive cooperation with other companies is needed. This is mainly driven by a very competitive Small & Medium sized Business market (SMB market) where an increase in speed and flexibility is needed because product and process lifecycles become shorter and the market demands for heterogeneity in solutions. Moreover, customers shop for complete solutions that consist of software, hardware and services which are provided by different companies. Therefore, many industries are nowadays moving towards networked and integrated supply chains in order to cope with strong deviations in demand and the changing configurations required by the market. This teaming with and organizing of many complementary organizations around for instance the STG hardware platform can be put under the denominator of business ecosystems. In this thesis the focus is on ecosystem expansion. This entails growth in the number of complementary organizations affiliated to the network and hereby increasing market coverage of the STG hardware platform. An essential first step in ecosystem expansion is the selection of specific business partners that can positively influence the growth of the ecosystem. This thesis describes the multiple steps and decisions that are taken in order to establish the decision model.
1.1
Thesis Structure
This thesis is structured in chapters. The first chapter is an introduction to the thesis and the Division X. The thesis starts in chapter 2 with the research description. This chapter is followed by a theoretical part which highlights the business ecosystem concept and some of its underlying theories concerned with the subject. The conclusion of this chapter points to possible ecosystem selection criteria. These criteria are a new contribution to scientific literature and are cast into hypotheses in the fourth chapter. These hypotheses will consecutively be tested in an explorative empirical study of which the outcomes will be covered in the fifth chapter. Chapter six will address the information available about market
segments and solution areas important for making the decision model practically useful. In the seventh chapter the decision model will be addressed. The last chapter will address the conclusions and recommendations.
1.2
COMPANY Xand the Systems & Technology Group
COMPANY Xstands for International Business Machines and has a history that dates back to 1911 when the company was founded as the Computing- Tabulating- Recording Company (C-T-R) in New York State. At the moment COMPANY Xis the world's largest information-technology company. The main activities are in software and hardware production, IT financing, IT and business consulting and IT service providing.
COMPANY X is the Dutch subsidiary of COMPANY X Corporation and has approximately 5500 employees. COMPANY X is organized into multiple business groups like Software Group, Business Consulting Services, COMPANY X Global Services and the Division X . This thesis is focused on the Division X.
The STG is a business group that focuses on lead generation and sales of COMPANY X hardware on the Dutch market. It is organized in a matrix structure around brands and
Chapter 3. Literature Study Chapter 5. Empirical Study Chapter 2. Research Description Chapter 7. Decision Model Chapter 4. Hypotheses Chapter 8. Conclusions & Recommendations C on ce pt ua l Pa rt E m pi ri ca l Pa rt Chapter 6. Market Segments and
Solution Areas Prac
tic
al
Pa
sectors. The brands comprise four types of servers, printers and storage. The sectors are based on revenue per customer. This results in three sectors comprising large, medium and small customers in which the last two are combined into the SMB sector. This thesis does not consider all the brands individually instead it encapsulates these under the wider term hardware. Moreover, this thesis is also focused on a smaller segment within the SMB market, the Activation and Acquisition accounts. More explanation about the segmentation will follow later on. In the figure below the preceding text is graphically depicted.
Chapter 2
- Research Description
This chapter covers the research description. First the current situation and the problem will be addressed. In the second paragraph the outcomes of the pilot study will be covered in order to clarify subjects concerned with the problem situation. Consecutively the problem definition will be addressed in the third paragraph. Furthermore, data collection, the conceptual model and the relevance of this study will be covered in the last three paragraphs.
2.1
Problem Statement
2.1.1 Current Situation
Since the founding of Company X, the company’s strategy has been to aim for the “higher” market segment. This strategy evolved from the product set that COMPANY X produced in its early days; mainframes. Executing this strategy has brought COMPANY X high revenues throughout the years. However, nowadays this high-end market is highly saturated and fierce competition is cutting revenues. Besides competition on the high-end segment another factor can be held responsible for this decline. Namely, Low-end players are selling increasingly more to customers on the high-end segment and thus exacerbating the loss of revenue. A logical consequence emanating from this situation is that COMPANY X starts focussing on the underlying almost unexploited (in Company X’s case) SMB segments. Market intelligence estimates that the SMB Netherlands market has a hardware value of approximately 1.6 Billion Euros. Therefore, the Division X now only having a small SMB market share, has set its sights on this segment and has deployed several initiatives accordingly. Chapter 3. Literature Study Chapter 5. Empirical Study Chapter 2. Research Description Chapter 7. Decision Model Chapter 4. Hypotheses Chapter 8. Conclusions & Recommendations C on ce pt ua l Pa rt E m pi ri ca l Pa rt Chapter 6. Market Segments and
Solution Areas Prac
tic
al
Pa
Central in STG’s approach of the SMB segment is cooperation with many business partners. These business partners are supported with marketing-, technical- and sales support. Also stimulation of these partners to increase opportunity identification and cooperation among each other play an important role in reaching the SMB segment. The thought behind this is creating an environment in which opportunity identification and fulfilment is completely done by the business partners. The approach just described can be put under the denominator of business ecosystems.
Several characteristics that pertain to the differences between the SMB - high end segment and solutions favour an approach of cooperation. The two most important ones will be addressed next:
First, of all the customers on the SMB market are smaller, have a much narrower geographical focus, are more numerous and account for a smaller revenue per customer when compared to the customers in the high-end segment. In order to have a positive balance in fulfilling these SMB opportunities and the costs associated with them an approach in which identification and fulfilment done by business partners in cooperation with the STG is preferred.
Second, there is a trend that changes the nature of the sales process. Where the sales process used to be focused on selling products nowadays the focus is on solution selling. This emanates from the customers’ demand for total solutions and not parts of the total solution. The determinants of both types are totally different which means solution selling has important strategic implications in such that cooperation becomes the pivot on which everything hinges. The shift from product selling to solution selling and its determinants are shown below.
Trend
Product Selling Solution Selling
•Made for markets •Repetitive activity •Done quickly •Cost effective •Features-selling •Low content •Highly controlled •Customer centric •Managed process •Done right •Resource intensive •Consultative-selling •High context •Highly collaborative
2.1.2 The Problem
The changing way of doing business and smaller customers on the SMB market force the STG to cooperate with many business partners. Together they can produce various solutions which possibly fulfil the customers’ needs and keep development costs down. Conversely the changing way of doing business and the necessity to keep costs down also forces “possible business partners” to commit to a certain hardware producer. As a result communities of companies arise in order to serve the customers. These communities are known as business ecosystems. The formation of ecosystems also brings new rules to competition. Where competition used to take place between individual companies nowadays competition takes place between ecosystems (Iansiti and Levien, 2004a, b; Moore, 1997). Therefore, to make sure that the STG stays ahead of competition it is very important that it organizes a powerful network of business partners around itself. The main problem accompanying this situation is the selection of new business partners to expand the ecosystem with and hereby achieve growth.
Problem: Lack of insight into which business partners should be selected to expand the ecosystem with.
2.2
Pilot Study
The preceding paragraph covered the main problem that triggered this research. Because a number of subjects need further clarification a pilot study was held first. A pilot study is used in such a way that insight into the problem situation can be acquired. The gathered information can then be used for the formulation of the problem definition (Van der Zwaan, 1995). The pilot study will be addressed in this paragraph.
The pilot study will be approached from different perspectives, the so-called multiform-view (Leeuw 1996). To guarantee a multiform-view, semi-structured interviews were held. Employees throughout the STG organization with a focus on the SMB market were interviewed. The interview-questions and its results can be found in the appendix 1.
• How can a Business Ecosystem be defined?
• Is the use of a business ecosystem perspective justified? • How can Solutions be defined?
• Which actors are present on the SMB market? • How does STG currently reach the SMB market? • How does COMPANY Xsegment the SMB market?
• Which conclusions can be drawn with respect to the problem situation?
2.2.1 How can a business ecosystem be defined?
Take the world around us into consideration. Countless organizations collaborate to provide some sort of services or join forces to manufacture and distribute for example a single personal computer. In other words; they work together to co-produce value (Normann & Ramírez, 1993). A direct parallel can be drawn to biological ecosystems in which everything is connected in an intricate manner (Henderson, 1989). Removing one organism has implications for the rest of the ecosystem. Although not perfect, the analogy of biological ecosystems and business ecosystems simplifies, provides a point of departure and gives insight into the complex and fast moving economical environment consisting of vast business communities today (Iansiti & Levien, 2004a).
According to Moore (1997) a business ecosystem can be defined as:
“A business ecosystem is a collection of companies that are dependent on each other. These companies form a complementary system to deliver a range of activities around a business or technology wherein they work cooperatively and competitively”
Further elaboration on business ecosystem theory will follow later on in this research. In the next sub paragraph the justification for the use of this perspective will be addressed.
2.2.2 Is the use of a business ecosystem perspective justified?
In the past decades many sciences have engaged in explaining the complexities of inter-company business relationships and collaboration. Economics, sociology, business administration, technical sciences and psychology have all tried to take on this complex puzzle from their perspectives (Göthlich, 2003). Although a lot of insightful and inspiring contributions were made the different perspectives were not all encompassing and mostly lacked the general context. The advent of great advances in IT has urged the need for a more encompassing theory. The business ecosystem concept can be used to increase our understanding of inter-company relationships and collaboration (Göthlich, 2003). The business ecosystem concept in fact draws from many different views concerned with cooperation and relationships. It integrates these into a macro-perspective, which can be regarded as an eclectic paradigm (Göthlich, 2003). According to Moore (1997) viewing the world as business ecosystems will give companies a competitive advantage over those that view the world through traditional perspectives. Moreover, the business ecosystem concept is especially focused on the fact that a company’s success is dependent on other organizations that influence the creation and delivery of their products (Iansiti & Levien, 2004a). Especially success dependence on other organizations is of importance for this thesis. Therefore a business ecosystem perspective is justified.
2.2.3 How can Solutions be defined?
It is important to address the subject of solutions because accompanied with this knowledge it is easier to place all actors in a clearer perspective to one another.
According to COMPANY X’s own terminology a Solution can be defined as:
“A solution is an offering – from one or more companies – that solves a client’s business problem through a value-enabling combination of technology and high-value services”
As can be deducted from the definition an offering is made out of two components; value-enabling technology and high-value services. Value-value-enabling technology can be divided into software and hardware which makes a total of three components. The function of hardware within the Solution is that it provides the physical basis on which the software can run.
Software consists of the programs, procedures, rules, and associated documentation pertaining to the operation of a system. It is also the interface of the Solution with which the customer works. Services enable the offering to provide the solution for the customer’s problem. Services, for example, are concerned with the implementation and maintenance of the solution.
The identification of these three elements is useful in the sense of making a distinction based on competencies between the different kinds of actors present in the competitive field. The different actors will be addressed in the next paragraph. There is no need to elaborate on and deepen the definition of a Solution and its components any further because its elements are only used for actor segregation. Schematically, the rough elements of a solution can be seen below. The hardware element is highlighted because this part of the Solution is produced by the STG. Since the formation of the business ecosystem is done from a hardware perspective it is clear that cooperation with companies oriented on other parts of the offering, in order to deliver the solution, is necessary.
Customer Problem Offering Services Software Hardware Solution
2.2.4 Which actors are present on the SMB market?
Now that it is clear out of which elements a solution is comprised, the different actors present on the SMB market can be identified. This is necessary because the different natures of the various actors provide certain parts of the solution.
On the SMB market a huge number of actors are present. These actors cannot easily be put down as producers of software, hardware or services respectively. For example, some of them will be more focused on the development of software but will also deliver some
services. Whilst others will be more focused on delivering services but will also deliver some hardware products. This makes it difficult to place the actors in a specific actor role. One can however, place the different actors on a spectrum as can be seen in the figure below. In this Figure all the actors within the SMB market landscape can be mapped based on the proportion of revenue they get from software, hardware or services. Each segment in the triangle thus represents a different mix of orientation towards the three solution elements.
Software Services Hardware ISVs Software-oriented partners 60% software ISVs Software-oriented partners 60% software Logistic-oriented partners 60% resale <20% services (Distributors, Resellers) Resellers Logistic-oriented partners 60% resale <20% services (Distributors, Resellers) Resellers VARs Value-added resellers 20% resale of hardware 20% services VARs Value-added resellers 20% resale of hardware 20% services SIs Services-oriented partners 60% services <20% resale SIs Services-oriented partners 60% services <20% resale
Map Partner’s business model based on proportion of revenue from:
Software: Internally created software Services: Internally created &
delivered professional IT services
Hardware: The resale of other firms’
products & services
The next three actors can be put under the denominator of channel partners. Channel Partners are commercial organizations that predominantly provide hardware resources to buyers for specific steps in the sales cycle process. The Division X’s (STG) channel was specifically designed to penetrate the SMB market. However, these channels have proven not to be sufficient because of their focus on hardware sales. With other words; it is focused on product selling and not on solution selling. The channel and its interrelationships will also be covered in the next sub paragraph. The channel partners encompass Distributors, First Tier- and Second Tier- Resellers. All three types of actors are already in STG’s ecosystem.
Distributor
A distributor is defined as an indirect seller of hardware products. A distributor does not sell directly to end-users of the product, but only to First Tier- and Second Tier- Resellers. A distributor may provide its own value-add services or modifications to the product, and may also choose to group products for sale into kits or bundles differently from its suppliers. These actors can be put in the Hardware corner.
First Tier Reseller (1T)
This kind of reseller is a business that sells hardware products to businesses (such as end-users or other resellers), after having obtained the goods from manufacturers or distributors. A reseller can provide its own value-added services or modifications to the product, and can also choose to package and bundle products differently from it suppliers. A 1T reseller has qualified itself as such that is sells a specific volume of products. Besides that it must have a certain level of technical expertise in-house. On these two criteria resellers can be distinguished. These actors are commonly named Value Added Resellers (VAR’s) and can be put more in the middle of Figure 4 but with an orientation to the Hardware corner.
Second Tier Reseller (2T)
2T resellers are more abundant within the channel of COMPANY X, but they are less technically certified when compared with the 1T resellers and sell less in volume. Their number runs into the hundreds. Furthermore, the roles that these 2T resellers play are the same as the 1T resellers. Also these actors can be put under the denominator of Value Added Resellers (VAR’s) and can be put right of the middle in Figure 4 but with an orientation to the Hardware corner.
Next I will address the other two extremes of the spectrum.
Independent Software Vendor (ISV)
This is a Non-COMPANY Xsoftware vendor. These companies develop and deliver specialized software which is made out of applications suited for a specific business process or industry. An application can be defined as one or more computer programs or software components that provide functionality in direct support of a specific business process or processes.
The ISV’s can be differentiated by geographical focus and industry segment. Because the customers of the SMB market are more locally oriented, looking for solutions and specified to an industry, they are served primarily by ISV’s. This is because of their ability to bring in specialized skills centred on a company's specific industry, their local presence, and overall competitive cost structure.
Within the SMB competitive landscape the ISV’s are tremendously important players. This is because most of the time customers are looking for solutions for their problems in the sense of software. For this software they turn to the ISV’s which therefore also have a consultative function. Besides that, hardware plays a role of minor importance in a customers’ choice for a total solution. Thus for STG it is very important that the software sold by the ISV’s is compatible with COMPANY Xhardware. This is, however not the case in many instances. These actors can be put in the upper software corner.
Consultant System Integrator (CSI)
Consultant System Integrator is a classification that includes multiple types of providers with different combinations of professional services, integration capabilities and support offerings in their portfolios. This kind of company is familiar with each customer’s specific industry and the forces affecting it. Often they can act as business, as well as technology advisers. As such they can play hands-on roles in spearheading near-term tactical projects as well as in laying the architectural foundations for IT environments that will allow their clients to address long-term business requirements. CSI’s often operate or concentrate their activities in a specific country or geography or in multiple countries or geographies. Despite their well-established presence they are still more focused on the higher segments within the SMB market. This means that for STG’s latest initiative, which is specifically targeted on the smaller customers, they are less useful in reaching the smaller SMB customers. These actors can be put in the services corner of Figure 4.
The different actors described above and their orientations to one part of an offering explicitly show the necessity of cooperation with regard to the shift of product selling to solution selling. Cooperation as a driver of solution selling also shows the connection with the business ecosystem concept.
2.2.5 How does STG currently reach the SMB market?
The actors discussed in the previous sub paragraph interact with STG in some way or another. At this moment however most contact with customers on the SMB market goes through STG’s channel partners or directly. Direct contact is maintained by client managers or specialists and indirect contact is maintained by business partner managers. The current
indirect and direct approaches are unfavourable situations when keeping the shift from product selling to solution selling in mind. Customers nowadays want integrated solutions for their problems and don’t look for separate parts anymore (Summit Strategies, 2005). Before delving too deep in the matter and keep the pilot study compact the routes to the SMB market can be seen graphically in Figure 6.
Figure left out for reasons of confidentiality
Some elucidation is needed concerning the lines in Figure 6:
1. These dotted lines mean the infrequent use of this relationship. Since STG’s channel
partners are focused on hardware selling (thus product selling) it is quite strange that this relationship is not well developed when keeping solution selling in mind. With STG’s new initiative they hope to obviate this problem.
2.2.6 How does the STG segment the SMB market?
The STG segments the SMB market based on revenue per customer. The resulting areas are differentiated by client/prospect and approach. Prospects resemble the customers which have never done business with the STG before. Clients have done or still do business with the STG. Differences in approach are face to face (FTF) contact by the STG or business partner representatives versus telephone contact by Dot Com or Dublin telesales representatives. Where the “higher” focus and E&C (Emerging and Competitive) segments are served by FTF contact the “lower” segments are served by Dot Com telecoverage and telesales Dublin. The segmentation of the SMB market is schematically shown below.
Figure left out for reasons of confidentiality
The latest initiative deployed by the STG specifically targets the smaller customers on the SMB segment i.e. the Activation and Acquisition (A&A) accounts. The Activation account consists of clients which have some user history with COMPANY X’s products and represent small revenue. The client set is approximately 1300. The Acquisition account on the other hand consists of a large amount of prospects with which the STG has never done any business before. The number of prospects in this segment is approximately 60000.
One can question if this segmentation should be used in this thesis. However, the segmentation that the STG uses for the SMB market is exactly the same as is used by the Dutch Chamber of Commerce and the European government (MKB Nederland, website). Therefore, the segmentation of COMPANY Xis adopted for ease of research.
Keystones of this initiative are solutions selling and volume selling. Volume selling is also important because the offered solutions on the MKB markt represent smaller revenue and thus more solutions (also read hardware) need to be sold in order to earn significant revenues. As a logical consequence the solutions offered on the MKB markt are more standardized when compared to the higher segments (Summit Strategies, 2005). Also important in volume selling is cooperation with many partners in order to get “more feet on the street” so to speak and achieve a wider reach. This is where solution selling, volume selling and business ecosystems meet.
2.2.7 Conclusions
The Pilot Study was used to elucidate various aspects of the problem situation. The following aspects were highlighted: business ecosystem definition, why use this perspective, solutions, actors on the SMB market, STG’s channels to the SMB market and the SMB segmentation. The pilot study started with the concept of business ecosystems. Throughout the following sub paragraphs the interconnectedness of the concept business ecosystems with solution selling, different actors and the MKB markt were addressed. It was stated that solution selling demands cooperation because of the focus on a specific part of the total solution by the actors present on the SMB market. Also STG’s latest initiative which specifically targets the MKB markt of the SMB market demands cooperation in favour of volume selling. Since cooperation is the pivot on which everything hinges in a business ecosystem the connection is clear. STG’s A&A business ecosystem leans on cooperation with VAR’s and ISV’s. CSI’s are left out of the initiative, and research because of their absence on the MKB markt. The competencies lost by exclusion of CSI’s could be theoretically filled up by the complementary competencies of VAR’s and ISV’s because of the higher standardization of the MKB markt solutions.
The thought behind these choices is the formation and expansion of a business ecosystem specifically targeted on the MKB markt. Support and stimulation of the business ecosystem partners aims to increase opportunity identification and cooperation among them. A crucial first step in achieving this is selecting the right companies to partner with. When right companies are chosen it may be possible to achieve growth on the MKB markt by expansion of the ecosystem. This is why business ecosystem selection criteria need to be established and be put in a decision model. The criteria must apply to ISV’s. The VAR’s are also left out of because they are already in the STG’s ecosystem. The problem definition concerning these selection criteria will be presented in the next paragraph.
2.3
Problem definition
In this paragraph the problem definition will be addressed. The problem definition consists of an objective, research questions and restrictions (Leeuw, 2000). The objective is the practical relevance of the research (Baarda, 1997). Besides that, the objective tackles the why question. The research question formulates the main question of the research that connects to the objective and is defined in accessible terms.
2.3.1 Research Objective
Based on the outcomes of the pilot study the following research objective is constructed:
Establishment of a decision model for selecting business partners, consisting of ISV’s to expand the MKB ecosystem with, for the management of the STG.
2.3.1.1 Definitions
The definitions explain the meaning of certain words in the research objective, and makes clear how they are used in the context of this study.
Decision Model: A decision model defines the set of selection criteria and decisions that
managers of the STG must resolve to select new business partners. The decision model comprises the input emanating from the three research questions. Together, they enable the STG to select business partners to expand the ecosystem with.
Ecosystem Expansion: Increasing the number of ISV’s committed to the STG hardware
2.3.2 Research Questions
In combination with the research objective three research questions are constructed. By constructing three research questions the researcher is led step by step to achieve the research objective. This leads to the following research questions:
1. Which selection criteria can be derived from a business ecosystem perspective?
2. What information about the MKB markt is important for using the selection criteria?
3. What information about Independent Software Vendors is important for using the
selection criteria?
The figure below shows which chapters relate to the three research questions.
2.3.3 Research Restrictions
Restrictions set the limitation of the research and research method. Restrictions are predetermined by the external environment and thus can not be influenced by the researcher. The following restrictions apply to this research:
• The domain of this research is COMPANY X. Chapter 3. Literature Study Chapter 5. Empirical Study Chapter 2. Research Description Chapter 7. Decision Model Chapter 4. Hypotheses Chapter 8. Conclusions & Recommendations Chapter 6. Market Segments and
Solution Areas Answer Research Question 1. Answers Research Question 2 And 3.
• This research only considers ISV’s as possible partners for the business ecosystem with regard to the MKB markt.
• Competitors, customers and other actors defined earlier active on the Dutch MKB markt are not considered.
• This research only pertains to the hardware server brands. • The timeframe of this research is six months.
• The research and research methods should be both theoretically responsible and practically useful.
2.4
Data Collection
The research question as well as the sub questions will be answered by using multiple sources and by applying several methods to collect data. Collection methods that are used are gathering information from already existing documentation such as the COMPANY X intranet and semi-structured interviews with STG stakeholders. Moreover, theoretical selection criteria will be established that will be tested empirically by consulting ISV’s through questionnaires. 2.4.1 Documentation Existing documentation: • Intranet • Internal reports • Scientific Articles • Books
2.4.2 Interviews
To obtain information about ISV’s and the MKB markt several stakeholders were interviewed. These interviews were held in a semi-structured way. Various sales people, business partner managers and other managers were interviewed.
2.4.3 Questionnaires
In order to validate the hypotheses, written structured questionnaires were sent to many ISV’s active on the MKB markt.
2.5
Conceptual Model
Selection criteria from a Business Ecosystem
point of view
Information about the A&A accounts important for using
the ecosystem selection criteria Decision Model for selecting ISV’s System Boundary
Information about ISV’s Important for using
the ecosystem selection criteria
2.6
Relevance of the Study
This study is relevant for both practical and scientific domains. With regard to the practical domain, this study increases insight into the dynamic environment of the STG and the strategic role it plays within this environment. The increasing dynamic environment is characterized by loose-coupling of inter-company relationships and collaboration that in its turn are susceptible to interaction effects, network externalities, and advances in information technology (Iansiti & Levien, 2004a). Fundamentally, this means that the STG’s fate is increasingly linked to many other firms, forcing it to collaborate effectively. This study takes these factors into account by using the business ecosystem paradigm and provides business ecosystem-based selection criteria accordingly. The established selection criteria are aimed at ecosystem expansion and ultimately reinforce the goal of the STG achieving growth on the MKB markt. The criteria and other input will be cast into a decision model for selecting business ecosystem partners and hereby provide practical relevance.
This study also has scientific value. It is partly an explorative study (Baarda & De Goede, 1999) that is aimed at establishing a decision model for the STG. In order to achieve this however, the business ecosystem paradigm needs to be extended. This concerns the explorative part. The business ecosystem literature does not provide any selection criteria that can be used as the basis for ecosystem expansion. This study however, does establish selection criteria for ecosystem expansion based on several concepts underlying the business ecosystem paradigm.
Chapter 3
- Literature Study
This chapter covers the theoretical
contributions that will be used with regard to establishing ecosystem selection criteria. The first paragraph covers the business ecosystem concept in order to provide more information about the centrally used perspective. Moreover, the role of the STG will be determined in accordance with the discussed subjects of the business ecosystem literature. The two following paragraphs will highlight underlying theories of the business ecosystem paradigm.
The second paragraph covers theories about cooperation and highlights the interdependency of decisions in the STG’s technology-intensive environment. This paragraph is very important because it provides further directions into which the selection criteria must be looked for. The third and final paragraph is concerned with theories about business relationships and elaborates the outcomes of the preceding paragraphs and points to a solution.
3.1
The Business Ecosystem
This paragraph will be used to deepen the business ecosystem concept and provide the general context in which selection criteria need to be established. The business ecosystem concept spans several subjects of which some will be addressed in the following sub paragraphs. First the different types of ecosystems will be addressed. After that, the important topic ecosystem health will be discussed. A subject which is highly intertwined with this, the three different operating strategies, will be highlighted in the third sub paragraph. After these three sub paragraphs the fourth sub paragraph will end with the
Chapter 3. Literature Study Chapter 5. Empirical Study Chapter 2. Research Description Chapter 7. Decision Model Chapter 4. Hypotheses Chapter 8. Conclusions & Recommendations C on ce pt ua l Pa rt Em pi ri ca l Pa rt Chapter 6. Market Segments and
Solution Areas Prac
tic
al
Pa
four sub paragraphs to sketch the STG’s strategic context. Finally, this chapter will end with a conclusion and will introduce the subjects of the paragraphs hereafter.
3.1.1 Types of Ecosystems
In this sub paragraph the different types of ecosystems will be addressed. It is necessary to address this topic because with this knowledge it is easier to identify the STG’s ecosystem role.
There are different types of business ecosystems. One of them is based on geographical location, for example Silicon Valley where all kind of supplementary activities are grouped together. A different kind of business ecosystem is the technology related business ecosystem, in which a core technology is providing all kind of companies the possibility to do business. Den Hartigh (2004) defines this kind of business ecosystem as ‘a network of
suppliers and customers around a `core technology’ with mutual dependence of its members as the essential characteristic’. The last business ecosystem is the dominant company related
business ecosystem. The activities of one company are the reason for many other ‘smaller’ companies to deploy activities. Microsoft is a good example of the last category.
Based on the pilot study it can already be stated that the STG’s ecosystem is of the technology related type.
3.1.2 Ecosystem Health
Ecosystem health is highly intertwined with the operating strategies and is therefore discussed in this sub paragraph.
Assessing ecosystem health is very helpful in judging whether to stay in a particular business or innovate into new business domains in order to increase the chance of prolonged competitive advantage. The information gathered from a health check also indicates whether the followed strategy should be adjusted, or not, in order to create a healthier ecosystem. To asses the health of a business ecosystem Iansiti and Levien (2004b) propose to use the same aspects as are used in assessing the health of biological ecosystems. Business
ecosystem health can be measured along three aspects namely; productivity, robustness and niche creation.
They are defined as:
• Productivity is an ecosystem’s ability to consistently transform capital or new technology into net income and new products.
• Robustness is the extent to which a business ecosystem is capable of surviving disruptions such as unforeseen technological change.
• Niche Creation is the ecosystems’ capacity to increase meaningful diversity through the creation of valuable new functions, or niches.
To achieve growth on the MKB markt the STG should strife to develop a healthy ecosystem that delivers longevity and a propensity for growth by stimulating productivity, robustness and niche creation. To achieve this goal three operating strategies are possible of which each has a different effect on ecosystem health (Iansiti & Levien, 2004a; den Hartigh & van Asseldonk, 2004). In the following sub paragraph the three operating strategies will be covered and their interrelationships with ecosystem health will be described.
3.1.3 Operating Strategies
Just like species play different roles in biological ecosystems, organizations follow different strategies within a business ecosystem. According to the theory of Iansiti and Levien (2004a) there are three different types of operating strategies which firms can employ to leverage the vast potential of a networked business environment; Keystones, Dominators and Niche strategies. It is important to address these operating strategies because the strategy of STG can probably be classified as one of these strategies. If this is the case it will have implications for ecosystem health and for the ecosystem selection criteria that are to be established. First the keystone operating strategy will be highlighted.
3.1.3.1 Keystone Strategy
Keystone firms play a crucial role in the business ecosystem by executing their strategy. They occupy hubs and provide stability and structure to the ecosystem network. A hub is a richly connected node in the network. Removing arbitrary nodes will not threaten the stability of the network, but removing a hub will cause severe damage to the entire ecosystem (Iansiti & Levien, 2004b).
Fundamentally a keystone acts to improve overall health of the business ecosystem and in doing so the keystone firm benefits its own sustained performance. Two foundational components of an effective keystone strategy have been identified by Iansiti and Levien (2004a). The first is creating value for the ecosystem in order to attract and attain ecosystem members. The second is sharing the created value with all the ecosystem participants in order to sustain the ecosystem.
The creation and sharing of value often goes hand in hand because keystones are able to set standards or create platforms on which niche firms can operate in a specialized area. This enablement of the ecosystem participants and leverage of its hub position is a typical characteristic of a keystone player that contributes to overall ecosystem health. This means that keystone players give rise to the productivity, robustness and the niche creation in an ecosystem. Keystones increase an ecosystem’s productivity by simplifying the task of connecting the ecosystem participants to each other, and by providing a platform which third parties use for creating new products. Besides improving productivity keystones increase network robustness by providing a reliable reference point and interface structure for other ecosystem participants. Furthermore keystones encourage niche creation by offering the innovative technologies to a variety of third parties and investing in new fundamental infrastructure. This continuous encouragement of niche creation makes sure that diversity within, and expansion of the business ecosystem is safeguarded (Iansiti & Levien, 2004a). It is however important to note that diversity of niches in itself is not a guarantee for success. What matters for the health of an ecosystem is the capacity to create new valuable niches which are valued as important by customers (Iansiti & Levien, 2004a).
3.1.3.2 Dominator strategy
Dominators follow quite a different strategy when compared to keystones. Although dominators also occupy hubs in the ecosystem network, creating and sharing value with the ecosystem is not central in their approach. Instead, dominators try to manage a large part of their ecosystem or ecosystem domain by integrating vertically or horizontally. This can be interpreted as progressively trying to take over the ecosystem and directing what the ecosystem does. By doing this they control the value creation and capture, and in essence are delivering complex products by themselves. Often this means that they produce closed architectures thus prohibiting ecosystem members to leverage, build on, or extending their products (Iansiti & Levien, 2004a). These actions are targeted at obtaining as much value as possible which, in the long run, severely hurts ecosystem health. Typical examples of dominator behaviour are predatory pricing, deterrence of market entry by building up barriers and exclusionary tactics. On the long-term this also severely hurts niche diversity and reduces the ecosystem’s robustness against external shocks. It is therefore quite likely that over time the ecosystem occupied by the dominator will be threatened by neighbouring ecosystems that offer substitute functionality. If these ecosystems are characterized by a healthier structure, including one or more effective keystones, the dominator ecosystem will likely be replaced (Iansiti & Levien, 2004a).
Because of the above standing reasons according to Iansiti and Levien (2004a) in domains characterized by a fast pace of innovation a keystone strategy is preferred. This is also stressed by Göthlich and Wenzek (2004) who pose that the keystone strategy improves the resilience of the ecosystem by promoting diversity. According to their definition ‘resilience describes the degree to which an ecosystem will return to its original state after an exogenous shock has occurred and the velocity of this adaptation’. They also claim that the keystone strategy is better suited for a dynamic environment with respect to resilience. In business domains which are characterized by a slow pace of innovation dominator strategies are better suited because they rely on resistance. This is the ability to fend of external disturbances and invasions into the ecosystem (Göthlich & Wenzek, 2004).
3.1.3.3 Niche strategy
The niche strategy is based on developing specialized capabilities that differentiate it from other participants within an ecosystem. Said otherwise, niche firms focus on core competencies that provide them with a competitive advantage and enable them to contribute meaningfully to the ecosystem. Niche players specialize by leveraging the services provided by the keystone in their ecosystem and by acquiring specific business and technical capabilities supporting the execution of their niche strategy (Iansiti & Levien, 2004a). The development of distinguishing capabilities that generate value within an ecosystem is a continuous process in order to stay ahead of competition and platform expansion by the keystone.
One way to identify niche players is by looking at the number of relationships with other ecosystem members (Iansiti & Levien, 2004a). By definition, niche players are the most numerous members of the ecosystem and they make up the bulk of the ecosystem’s mass (Moore, 1997). This implicitly stresses their critical function in a business ecosystem. Because niche players operate at the fringes of the ecosystem, where innovation is actively being pursued, new products and services are being developed and new markets explored, they are the critical drivers of innovation. According to Iansiti and Levien (2004a) niche players are vital to the health of the business ecosystem because they provide the meaningful diversity that is essential to the ecosystem’s robustness. Niche firms also collectively create and capture most of the value within the business ecosystem.
The three operating strategies thus play different roles with regard to ecosystem health. Also, each strategy is more or less appropriate to follow in certain environments, depending on if they are dynamic or stable (Iansiti, 2004a). Besides this, the different operating strategies probably have different implications for the kind of selection criteria that need to be established. It is therefore important to gain insight into what operating strategy the STG follows and if this is in conformity with the A&A account environment. This will be done in the fifth sub paragraph after the different stages in ecosystem development are covered.
3.1.4 Development of an Ecosystem
In this sub paragraph the various phases during business ecosystem development will be addressed. This is necessary because it can be used to show in which phase the STG is currently in and what the goal of selection therefore should be. According to Moore (1993, 1997) there are four evolutionary stages within business ecosystem development; Birth, Expansion, Leadership and Self-Renewal/Death. These four stages will be covered in the following sections.
3.1.4.1 Birth
During the first phase of business ecosystem development, companies focus on defining what customers value in a proposed new product or service and what the best form is for delivering it (Moore, 1993). Victory of an immature ecosystem over others depends on who best defines and implements this customer value proposition. Moreover, during the first phase it often pays to cooperate. From a keystone perspective, in particular, business partners help fill out the full package of value for customers. And also by attracting important “followers”, keystones may stop them from helping other emerging ecosystems (Moore, 1993). Business ecosystem partner selection in the first phase thus takes place in order to limit the number of participants during the development time for refinement of the platform (Moore, 1997). This is done for two reasons:
1. It is too complex to have more than a certain number of companies having a stake in
the development of the platform.
2. It is too risky that the more intimate knowledge during the development time creates
competition or helps an incumbent dominator in an unhealthy ecosystem to keep its position.
According to Moore (1993) however, established companies are often better off waiting and watching carefully as a market sorts itself out. This is because the iterative process of trying out innovative ideas and discovering which solutions are attractive to customers is hard to accomplish in a traditional corporate culture. For established companies it is therefore better to replicate successful ideas and broadcast them across a wider market later on. In other words, established companies can better enter at the expansion phase.
3.1.4.2 Expansion
The expansion phase builds on the fundaments laid out in the birth phase. Generally speaking two conditions are necessary for the expansion phase:
1. The platform needs to be valued by a large number of customers
2. The platform must have the potential to be scaled-up and brought to the wider market
When these conditions are met, more customers and stakeholders have to be found. At first, the most important goal is to look for the best allies; important customers, suppliers and business partners (Moore, 1997).
In the expansion phase two distinct moments and purposes of nice player attraction can be identified. In the beginning, at launch time of the platform, it is necessary to have companies participating that will spread a consistent, positive message about the new or overhauled ecosystem which have a favourable influence on the attraction of more niche players later on. Furthermore they should have a respectable position in the market and be complementary instead of having conflicting interests (Moore, 1997). This means that at launch time meticulously chosen business partners have to be present which proliferate the use of the platform. The proliferation of platform use is a fundamental goal in this phase and is called achieving critical mass (Moore, 1997). Critical mass can be best described as the number of platform users which could persuade the more conservative partners to start using the platform as well and thus increase the use even more. During this last part of the expansion phase, no selection of ecosystem partners occurs anymore.
Both parts of the expansion phase can actually be characterized by the type of relationships that occur in them. Before and during the launch of the platform tight relationships are formed and maintained. After the platform is launched more niche players are attracted and the new relationships can then be characterized as loose. This means that the niche players leverage the platform independently without interference of the keystone (Iansiti, 2004a). The characterization of the relationships has strong implications for the selection criteria that are to be established. Before and during the launch of the platform more strategic alliance like selection criteria probably must be used. Conversely, after platform launch the relationships are characterized as loose which means that no selection criteria are applied at
all. This is because you want as many companies as possible to leverage your platform, so selection is not an option.
As time goes by more new contributions are made and more advantages result in a richly connected business ecosystem consisting of customer, distributors, product and services, processes and organizations (Moore, 1997). At that point strong leadership and guidance of the ecosystem is necessary which leads us to the third phase.
3.1.4.3 Leadership
The third phase is all about achieving a healthy ecosystem or domain. Subjects as supporting the ecosystem and expanding the ecosystem while looking at the three drivers of ecosystem health are central here. Constant innovation and expansion is a necessity in order to let the ecosystem keep expanding and prevent the ecosystem members from leaving. Because in this phase no selection takes place anymore this short description of the third phase is sufficient.
3.1.4.4 Self-Renewal/Death
In the final phase competition, with other ecosystems providing similar value propositions, either leads to self-renewal or the demise of the entire ecosystem. Also in this phase selection does not take place anymore.
3.1.5 Practical Intermezzo: Ecosystem Context of the STG
In the previous sub paragraphs several elements of the business ecosystem concept were covered. These elements will now be used to assess the ecosystem context of the STG. This is very important because the STG’s ecosystem context will provide the fundament for the ecosystem selection criteria.
To assess the ecosystem context of the STG a semi-structured interview was held with Harry Degger, CEO of the STG (For questions see appendix 2.). The questions were based on the preceding ecosystem sub paragraphs. Subjects like the pace of innovation on the MKB markt, type of relationships with ISV’s, how the relationships are maintained and how value is created for and shared with the business partners were addressed.
The outcome of the interview revealed that value is created for, and shared with the business partners by the STG through several initiatives. One of these initiatives is that a hardware platform is provided which can be leveraged by the business partners. Besides this the platform is accompanied with technical and marketing support. This is a brief description of the way STG supports and sustains its network of business partners. Because it is not the goal of this thesis to analyze STG’s strategy meticulously, it is therefore stated that based on these rather crude outcomes the STG follows a keystone strategy. Furthermore, with information gathered during the pilot study it can be stated that the ecosystem concerned with the MKB markt needs to attract more ecosystem members in order to achieve critical mass. Therefore it is also stated that currently the STG finds itself in the expansion phase during platform launch. This means that business partners have to be selected that have a favourable influence on the attraction of more niche players later on.
Since keystones and niche players are inextricably connected naturally the partner selection will focus on the niche players also referred to as ISV’s. Because niche players operate at the fringes of the ecosystem a focus on growth is obtained. This is very helpful because the STG eventually wants to achieve growth on the MKB markt. So by expanding the ecosystem, growth on the MKB markt may probably be achieved
3.1.6 Conclusion
This paragraph deepened the business ecosystem concept. This was done for two reasons; first the concept needed elucidation to provide a departure point for establishing ecosystem selection criteria, second the STG’s ecosystem context needed to be addressed because this has direct implications for the ecosystem selection criteria. Several subjects were discussed; types of ecosystems, ecosystem health, operating strategies, and the development of an ecosystem. These subjects form the fundament of the literature study and were also used to asses the ecosystem context of the STG. Concluding, it can be said that the STG’s ecosystem is organized around a core technology in which it follows a keystone strategy. Also the STG is currently in the expansion phase which means that ISV’s have to be selected that have a beneficial influence on the joining of other ISV’s to the ecosystem. Moreover, they should have a respectable position in the market and be complementary instead of having conflicting interests. In connection with these issues several subjects will be covered in the following paragraphs that highlight specific contributions on cooperation and business relationships.
