Geography Reference
In-Depth Information
intensive expertise and comprehensive problem solutions (Strambach and Storz, 2008).
By collaboration they are able to deal with the problem of gaining access to a number
of heterogeneous knowledge bases and to be able to combine and reconi gure these into
composite knowledge products adapted to the specii c customer context.
Long-term customer and cooperative relationships also support business software
i rms in creating the network externalities that are very important for the success of
busi-
ness software
.
The accumulated experience-based application knowledge of the complex
customer contexts generates high transaction costs that are wasted by changing the pro-
vider. The large international industrial companies in the core sectors are an important
interface for the penetration of the customized business software. These relatively new,
mostly small, software development i rms are unable to do this alone. Innovative, indi-
vidual problem solutions are applied to the integrated i rm-internal production systems
by way of long-term customer and cooperative relationships with strong industrial
export-oriented customer i rms located in many parts of the world. In addition, the inter-
nationalization and outsourcing processes of the industrial producers also support the
development of innovative software solutions within the context of other i rms through
their wide networks of suppliers. Although the coupling of software and hardware that
plays an important role in the USA is not available to the German software i rms, the
function of large industrial enterprises as carriers for the product distribution is never-
theless similar. Business software i rms have been able to use the supposed competitive
disadvantages of the institutional arrangements by converting them into advantages for
innovative processes and thus to hold their own in international markets.
Demand
The quality of demand is an important precondition for the development of
customized business software in Germany. Second to the US, Germany is the country
that spends the most on ICT, ahead of the UK and Japan (OECD, 2006). The techni-
cally challenging demand for inter-operable software solutions able to communicate
with existing systems and applications by both i rms of the economically successful
manufacturing branches and the large SME sector foster the competencies for produc-
ing complex products across systems (see BITKOM, 2007). In addition, the accumulated
knowledge gained in the course of adapting existing legacy systems of clients contribute
to this competence building. Legacy systems are a special characteristic of enterprises in
the secondary software industry in Germany (GfK et al., 2000). Such systems contain
applied knowledge that has matured and accumulated over many years. They were
developed using what are now outdated methods and, despite the existence of more ei -
cient systems, they have not been replaced because of high costs of change. The adapta-
tion of such complex systems supports the building up of experience-based knowledge by
using multifaceted interfaces and technological platforms of dif erent ages that have to
be combined and integrated with new innovative systems and technologies. The mostly
international operations of the user i rms in the key industrial sectors imply a further
challenge for the primary software i rms developing high-quality innovative and com-
petitive business software.
Competencies
The presumed competitive disadvantages, namely the intensive interac-
tion processes with demanding and quality-critical manufacturing customers and the
large number of individual software solutions that are being provided play a decisive
