Software co-development between supplier and buyer - benefits, risk and enablers

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 seek external skills for 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 become expensive. Co-developing software with other companies could be a convenient method for sharing the costs and risk in software development. As a result of this literature review study, different co-development models - such as contractual alliances and joint ventures - are proposed as potential governance models for software co-development. In addition, an interview template for evaluating other companies’ willingness for inter-organizational software development was developed.