Inter-organizational collaboration in software product development

Abstract

Digitalization changes many industries since manufacturers are increasing the automation level in their products. Novel business needs require developed softwares, and that often leads companies to use external skills in software development either by hiring more software engineers or by purchasing tailored softwares from software companies. However, prices in the software industry can be high, and hiring new software engineers or purchasing tailored softwares may not be the most cost-effective method to get softwares into products. Co-developing softwares with other companies could be a potential method for sharing the costs and benefits of the product development processes. The objective of this thesis was to investigate different companies’ interests towards deep collaboration models, such as contractual alliances and joint ventures, in software development. Other objective was to examine what benefits and risks these collaboration models include, as well as which are the enablers and barriers for such collaboration. Research data was gathered by interviews with product development managers and directors as well as with technology managers and directors of different companies. Results showed that software co-development in a contractual alliance aroused moderate interest, whereas forming a joint venture for software co-development aroused less interest among the interviewees. Main benefits that interviewees saw in a deep collaboration in product development were the possibility to increase the speed and creativity in the processes while sharing the costs and risks of the development work. The main risks in deep collaboration were the uncertainty in collaboration costs, risk of getting too dependent of the partner and risk of getting unfair share of the jointly created value. Trust, open knowledge sharing and sufficient contracting skills were seen as the main enablers for deep collaboration, whereas limited time and complex contracting were the main barriers for deep inter-organizational collaboration.