Hello everyone and welcome back to our course on commercial open source software startups

and how to spin them out of university.

My name is Dirk Riele and I'm teaching this course with Dr. Thomas Otto.

So today we will be talking about software vendors.

We previously talked about products but we need to talk about vendors now as those who

actually bring a product to market.

We will have to contrast software product firms, said vendors, with product, at this

project firms, consulting firms.

To understand the differences we need to take a look at the financials of it and how they

play out for these very different types of companies.

Then for software vendors we will also look at the key business functions, the roles or

positions that people play and the positions they hold.

And then the core business processes that constitute the business of a software vendor.

So in the previous sessions we already talked about the main players of the software industry

as well as what products are.

We will focus here on that particularly interesting type of industry player called a software

vendor because that's where startups, or product startups are made from that have that Silicon

Valley cache of possibly being large and successful companies based on software products.

The key is software vendors provide you with so called standardized software commercial

of the shelf software meaning one product for a market as opposed to custom made products

for individual customers.

There are two variants, the classic software vendor is the producer of the software and

in addition we have seen these days that there is also the provision of that product not

as a traditional license sale any longer but as a service meaning software as a service

meaning the cloud service providers or internet companies.

These are standard product providers and we will look at software vendors also at cloud

computing firms.

In both cases it's always a product for a market not a custom made product for a single

customer.

And when we look at what is a product we previously discussed how we can structure a product into

these different components, how these different extension stages of a product correspond with

customer groups so we know that there needs to be some sort of core product.

Later we will see how that is also called in the startup context a minimum viable product

and how a growing company extends that or builds that out into a basic product with

more functionality that a broader array of customer needs all the way to a whole product

with all the bells and whistles needed by large enterprises who are often reluctant

to buy unless every item on some checklist is met.

So then first products versus projects and product firms versus project firms.

So we already saw that in the previous lecture how say SAP needs consulting firms to put

their product into action because the product as a standardized product as a commercial

off the shelf software is just too generic to satisfy the needs of a particular customer.

And this complementarity will be with us today for the whole lecture because for enterprise

software this is almost always the case.

There is just no enterprise software that is so good that you don't need to customize

it and adjust it and that usually leads to a separation of work between a software vendor

who provides a standardized product and a consulting firm which in the course of a project

paid for by a customer project turns that standardized software to specific software

for that one customer.

The main difference or the main thing to realize is that this is how it is in the enterprise

software market but that in the consumer space or retail space the customers consumers are