Mikko Rönkkö's blog http://www.softwareindustrysurvey.org/blog/4 en Insights about your firm http://www.softwareindustrysurvey.org/node/75 <div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p>All firms that participated in the survey will receive a complimentary report, where we compare the firm with all other firms that responded to the study. These reports are now set up and we will begin sending them out soon. <strong>We are leaving the survey form open for June, so even if your firm did not "officially" participate in the study, you may still fill in the questionnaire and obtain a report about your firm.</strong></p> <p>This blog post descries the content of the firm reports. An example report is available <a href="http://softwareindustrysurvey.fi/companyreport.pdf">here</a>. The reports are mass customized from a template where each table and figure is generated specifically for the responding firm. We have three different types of figures that are showcased next. </p> <p>The first figure is what we call a percentile plot. We provide an example comparing the firm size and age below. The red dot marks the response for this year and smaller dots with years show what the firm responded during earlier years. This particular figure type is probably familiar for anyone that knows how the growth of children is tracked by the Finnish health care system. The height of a child is measured periodically as the child matures and the measurements are are recorded in a chart where the horizontal axis is the age of the child. The chart also contains lines that present how typical child, or a child that is taller than, say, 75% of other children grow. These charts are very useful in detecting any problems related to growth that the child may have and can also be entertaining for the parents, who can use them to guess how tall their small baby will eventually be.</p> <p>The example figure below presents this same growth curve figure with the exception that instead of children and height, we are looking at firms and revenues. The curves in the background show that firms typically grow up to about 7 years of age after which growth seems to continue for the larger firms, but smaller firms tend to stagnate. Here we have data for the last 5 years for our example firm. These data show a small decline during the recession, but steady growth after that. Comparing with the performance of other firms, the example company is clearly in the third quarter of firms. More than half of the respondents are larger in the comparable age, but also more than a quarter are smaller. This is not terribly bad, and depending on the characteristics of the business could be considered also a good achievement.</p> <p><img src="http://www.softwareindustrysurvey.org/sites/default/files/liikevaihto.png" width="100%" /></p> <p>The second example figure shows pie charts that describe the sources of revenue and compares these to other firms in the same age class, revenue class, and firm type. Firm type is based on the first question in the survey, where we asked the informants to choose which of the six listed business models or firm types best described their firm. Among all responding firms, the provision of software development services is clearly the most significant source of revenue, amounting to approximately a third of all revenue. Clearly smaller shares of revenue are gen- erated by license sales, followed by maintenance services and ASP/SaaS sales . Together these intellectual property related sources of revenue account for more than a third of revenue. The rest is generated by various kinds of software related services, hardware sales, and sources that are not related to software.</p> <p><img src="http://www.softwareindustrysurvey.org/sites/default/files/lvpiirakat.png" width="100%" /></p> <p>The final figure type is what we call a comparison or thermometer chart. The example figure compares the firm against all other firms on three different dimensions of willingness to grow. The black dots show the position (rank) of the firm compared to all other firms, firms in the same age class, and firms in the same revenue class. Black dot on the left side of the scale would mean that the firm is less growth willing than other respondents and a black dot on the right side would indicate higher growth willingness. We typically use this chart type for questions that were asked on a 1 to 5 scale, so these charts may not be as reliable as the other figures that are based on questions where we asked exact numbers.</p> <p><img src="http://www.softwareindustrysurvey.org/sites/default/files/kasvuasenne.png" width="100%" /></p> <p>We would like to thank all the participating firms. As always, if you have any questions about these reports, you may contact. The up to data contact information can be found <a href="http://www.softwareindustrysurvey.org/node/5" here="">.</a></p> </div></div></div> Mon, 10 Jun 2013 12:50:08 +0000 Mikko Rönkkö 75 at http://www.softwareindustrysurvey.org/admin http://www.softwareindustrysurvey.org/node/75#comments Presenting and being featured by the press http://www.softwareindustrysurvey.org/node/72 <div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p>It has been now little over two week since we presented our main results at the Federation of Finnish Technology Industries office in Helsinki. Actually, we had quite a presentation tour because after the main presentation. First, in the beginning of the following week Juhana flew to Oulu to give a presentation to a full audience. Meanwhile, I was in Texas presenting some more academic analysis of last year’s data in the form of two research papers. After returning from there, I went to Tampere to talk about our results. The presentations from Oulu session can be downloaded <a href="/SlidesOulu2012.pdf">here</a>, and the slides used in Tampere are available <a href="/SlidesTampere2012.pdf">here</a>.</p> <p><img src="http://www.softwareindustrysurvey.org/sites/default/files/presenting.jpg" width="100%" /></p> <p>In general, this year’s study was quite a success. Although we had less resources than in the previous years and this was reflected in a slightly smaller number of of responding firms. Also, we had just four days time to between closing the survey and presenting the results. And this time frame included a weekend, so some weekend overtime was necessary. Nevertheless, the results that we obtained were interesting and timely. This was naturally rewarded by lots of coverage from the press. </p> <p>Perhaps most importantly, we were featured in the national TV news, and YLE also broadcasted a summary of the results in the national radio news, and later also in the regional YLE Oulu.</p> <p><a href="http://areena.yle.fi/tv/1541923?start=12m13s">http://areena.yle.fi/tv/1541923?start=12m13s</a> (YLE TV1)</p> <p>Our study was also mentioned by MTV3 after the new downsizing announcement by Nokia, but it was not a feature like in the YLE news show.</p> <p>The study was noted by almost all business and IT related newspapers and magazines that we are aware of. I have listed some examples below.</p> <p><a href="http://www.kauppalehti.fi/5/i/yritykset/yritysuutiset/uutinen.jsp?oid=201206192515&amp;ext=rss&amp;request_ahaa_info=true">http://www.kauppalehti.fi/5/i/yritykset/yritysuutiset/uutinen.jsp?oid=201206192515&amp;ext=rss&amp;request_ahaa_info=true</a> (Kauppalehti)<br /><a href="http://www.taloussanomat.fi/ihmiset/2012/06/16/nokialainen-paa-pystyyn-ja-tyonhakuun/201231643/137">http://www.taloussanomat.fi/ihmiset/2012/06/16/nokialainen-paa-pystyyn-ja-tyonhakuun/201231643/137</a> (Taloussanomat)<br /><a href="http://www.tietoviikko.fi/kaikki_uutiset/nokian+muutos+ei+juuri+kurittanut+ohjelmistoyrityksia++kaikille+irtisanotuille+ei+ole+toita/a814347">http://www.tietoviikko.fi/kaikki_uutiset/nokian+muutos+ei+juuri+kurittanut+ohjelmistoyrityksia++kaikille+irtisanotuille+ei+ole+toita/a814347</a> (Tietoviikko)<br /><a href="http://www.itviikko.fi/ihmiset-ja-ura/2012/06/05/ex-nokialaiset-loytavat-toita-pk-yrityksista/201230832/7">http://www.itviikko.fi/ihmiset-ja-ura/2012/06/05/ex-nokialaiset-loytavat-toita-pk-yrityksista/201230832/7</a> (IT-viikko)<br /><a href="http://www.kaleva.fi/mielipide/paakirjoitukset/nokialta-lahteneiden-tilanne-ei-ole-toivoton/596217/">http://www.kaleva.fi/mielipide/paakirjoitukset/nokialta-lahteneiden-tilanne-ei-ole-toivoton/596217/</a> (Kaleva)<br /><a href="http://www.insinoori-lehti.fi/suomen-ohjelmistoala-kasvussa">http://www.insinoori-lehti.fi/suomen-ohjelmistoala-kasvussa</a> (Uusi insinööri)<br /><a href="http://www.mikropc.net/kaikki_uutiset/nokialta+irtisanotut+tyollistyneet+yllattavan+hyvin/a817045">http://www.mikropc.net/kaikki_uutiset/nokialta+irtisanotut+tyollistyneet+yllattavan+hyvin/a817045</a> (MicroPC)</p> <p>Finally, many of our partners that maintain active web presence naturally covered our study. </p> <p><a href="http://www.teknologiateollisuus.fi/fi/uutishuone/tiedotteet/2012-6/ohjelmistoyrityskartoitus-2012-pk-yritykset-vetivat-ohjelmistoalan-kasvua-vuonna-2011">http://www.teknologiateollisuus.fi/fi/uutishuone/tiedotteet/2012-6/ohjelmistoyrityskartoitus-2012-pk-yritykset-vetivat-ohjelmistoalan-kasvua-vuonna-2011</a> (Teknologiateollisuus ry)<br /><a href="://www.ohjelmistoyrittajat.fi/ajankohtaista/artikkelit/ohjelmistoyrityskartoitus-2012">://www.ohjelmistoyrittajat.fi/ajankohtaista/artikkelit/ohjelmistoyrityskartoitus-2012</a> (Ohjelmistoyrittäjät ry)<br /><a href="http://www.tekes.fi/ohjelmat/Skene/Ajankohtaista/Suomen+ohjelmistoala+kasvussa?type=news">http://www.tekes.fi/ohjelmat/Skene/Ajankohtaista/Suomen+ohjelmistoala+kasvussa?type=news</a> (Tekes)</p> <p>After this positive press about the study, we the question is: what next? During these presentations we had several questions that we could not answer immediately, but that would require more analysis. These will be addressed in the research blog. Also, our sister project in Germany just closed their survey and we have now good opportunity to combine their data from our Finnish data as well as data from Austria and Norway collected through earlier partnerships. These are of course contingent on us getting funding for these analyses. </p> <p>We have also several other ongoing initiatives. First, our results that the software SMEs have recruited about 650-850 people from Nokia and its subcontractors has sparked interest in the public sector and we have been requested a small follow-up analysis of the capital region. Second, we are planning a three year project that would expand the coverage of the software industry survey to from software to also other technology industries focusing on high-tech entrepreneurship in Finland. Currently our most important task is to secure funding for this project. Considering that the role of technology entrepreneurship as a source of employment just got greatly increased by the latest Nokia's downsizing announcement, this project will probably be met with great interest. </p> </div></div></div> Wed, 20 Jun 2012 12:17:39 +0000 Mikko Rönkkö 72 at http://www.softwareindustrysurvey.org/admin http://www.softwareindustrysurvey.org/node/72#comments The official truth about the software industry http://www.softwareindustrysurvey.org/node/69 <div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p>In my previous <a href="http://www.softwareindustrysurvey.org/node/67">post</a>, I looked at what the firm level growth figures look like for the last year. It is now time to adopt a higher level perspective and look at how the Finnish software industry is faring on the industry level. Toward this end, I retrieved a few data sets from the databases of Statistics Finland.</p> <p>In the official statistics, most of the business that we include in the survey fall under the NACE industry code 62 “Computer programming, consultancy and related activities”. Although some companies, particularly some game producers, are registered as software publishers under the publishing industries (NACE 58), these are a minority both in the software industry and in that industry code. Because of this, a majority of publications that discuss the software industry focus on the information processing industries (62) only. The official statistics become available with some delay, and the latest numbers available now are for the year 2010. The figures go back to year 2007, when the industry classification system was changed.</p> <h2>The IT services industry and its subindustries</h2> <p>The first table that is presented below shows the aggregate statistics on the industry code level. The higher level code, 62, is broken into four subcodes. The 6201 is the closest match to software industry, but many software companies are also registered under other codes and not all companies under this code do software as their primary business. Nevertheless, the 6201 industry code is the best proxy that the official statistics provide. </p> <p>On a higher level, the overall IT services sector (62) clearly experienced a boom in 2008, a bust in 2009 and stagnation or slight recovery in 2010. What is noteworthy that these figures are not directly affected by Nokia, because it is classified under the electronics industry. However, the challenges faced by the company are inevitably reflected in the revenue of its subcontractors.</p> <p>Looking at the computer programming activities (6201), we can see that not only both the revenue and personnel employed decreased in 2009, but they have continued to decrease in 2010. There is a stark contrast with the consulting services (6202) that have steadily increased their revenue through 2007-2010. Also, pure consulting companies tend to be more productive, i.e. one person working in this industry generates about 15-20% more revenue than a person working in the software industry. This difference is puzzling considering that software product business is often characterized as high margins activity. Clearly, this is one issue that might be worth further analysis in our final report.</p> <table><tr><th></th> <th>Companies</th> <th>Personnel</th> <th>Revenue (Me)</th> <th>Average salary (ke)</th> <th>Average revenue (Me)</th> <th>Revenue (ke)/personnel</th> </tr><tr><td>62 Computer programming, consultancy and related activities</td> <td></td> <td></td> <td></td> <td></td> <td></td> <td></td> </tr><tr><td>2007</td> <td>4 534</td> <td>39 142</td> <td>5 659</td> <td>47,8</td> <td>1,25</td> <td>145</td> </tr><tr><td>2008</td> <td>4 783</td> <td>40 928</td> <td>6 094</td> <td>50,6</td> <td>1,27</td> <td>149</td> </tr><tr><td>2009</td> <td>4 857</td> <td>39 797</td> <td>5 682</td> <td>50,9</td> <td>1,17</td> <td>143</td> </tr><tr><td>2010</td> <td>4 981</td> <td>39 955</td> <td>5 697</td> <td>52,0</td> <td>1,14</td> <td>144</td> </tr><tr><td>6201 Computer programming activities</td> <td></td> <td></td> <td></td> <td></td> <td></td> <td></td> </tr><tr><td>2007</td> <td>2 807</td> <td>24 113</td> <td>3 220</td> <td>47,4</td> <td>1,15</td> <td>134</td> </tr><tr><td>2008</td> <td>3 008</td> <td>27 122</td> <td>3 927</td> <td>50,5</td> <td>1,31</td> <td>145</td> </tr><tr><td>2009</td> <td>3 071</td> <td>25 211</td> <td>3 280</td> <td>49,8</td> <td>1,07</td> <td>130</td> </tr><tr><td>2010</td> <td>3 110</td> <td>24 862</td> <td>3 258</td> <td>51,4</td> <td>1,05</td> <td>131</td> </tr><tr><td>6202 Computer consultancy activities</td> <td></td> <td></td> <td></td> <td></td> <td></td> <td></td> </tr><tr><td>2007</td> <td>1 454</td> <td>5 304</td> <td>788</td> <td>45,4</td> <td>0,54</td> <td>149</td> </tr><tr><td>2008</td> <td>1 489</td> <td>5 614</td> <td>875</td> <td>48,7</td> <td>0,59</td> <td>156</td> </tr><tr><td>2009</td> <td>1 480</td> <td>6 262</td> <td>967</td> <td>51,2</td> <td>0,65</td> <td>155</td> </tr><tr><td>2010</td> <td>1 534</td> <td>6 584</td> <td>997</td> <td>51,8</td> <td>0,65</td> <td>151</td> </tr><tr><td>6203 Computer facilities management activities</td> <td></td> <td></td> <td></td> <td></td> <td></td> <td></td> </tr><tr><td>2007</td> <td>227</td> <td>9 448</td> <td>1 625</td> <td>50,4</td> <td>7,16</td> <td>172</td> </tr><tr><td>2008</td> <td>229</td> <td>7 889</td> <td>1 261</td> <td>52,4</td> <td>5,51</td> <td>160</td> </tr><tr><td>2009</td> <td>237</td> <td>8 093</td> <td>1 412</td> <td>54,6</td> <td>5,96</td> <td>174</td> </tr><tr><td>2010</td> <td>243</td> <td>8 287</td> <td>1 414</td> <td>54,1</td> <td>5,82</td> <td>170</td> </tr><tr><td>6209 Other information technology and computer service activities</td> <td></td> <td></td> <td></td> <td></td> <td></td> <td></td> </tr><tr><td>2007</td> <td>46</td> <td>277</td> <td>26</td> <td>35,4</td> <td>0,56</td> <td>94</td> </tr><tr><td>2008</td> <td>57</td> <td>302</td> <td>30</td> <td>39,3</td> <td>0,53</td> <td>100</td> </tr><tr><td>2009</td> <td>69</td> <td>232</td> <td>21</td> <td>33,6</td> <td>0,31</td> <td>92</td> </tr><tr><td>2010</td> <td>94</td> <td>222</td> <td>27</td> <td>40,3</td> <td>0,28</td> <td>122</td> </tr></table><h2>Startup activity - company founding rates</h2> <p>Many people close to the Finnish startup scene like to argue that we are now experiencing a startup boom in Finland. This is a view that is portrayed by some <a href="http://www.investinfinland.fi/news/2012/en_GB/IT_start-up_and_sales_boom/">government agencies</a> as well. The second dataset that I retrieved from the Statistics Finland addresses this trend: To which extend is there a boom in founding new companies in the IT sector (62). The number of companies between this table and the previous is probably because this list includes all registered companies, but the previous only those that have actually had revenue. It is common that a discontinued company, or a company that actually never was started, is left in the desk drawer to wait for better days. </p> <p>Without further introduction, the figures tell a clear story: If there is an entrepreneurship boom in the Finnish IT sector, it is not visible in the official statistics. In fact, the entry rate (number of new firms founded as percentage of total population) decreased between 2008 and 2009 and continued a slight decrease in 2010. This begs the question: are the people who argue that there is a startup boom wrong? We doubt that this was the case: First, the startup boom was not on the radar in 2010, but – if it exists – is a more recent phenomenon. Second, these figures include all registration events. Considering that many new companies are just subsidiaries of existing organizations, one-man operations, or e.g. ways to officially recognize revenue from projects done as side jobs, real startups are in any case a minority in the population. Because they are a minority, fluctuations in registrations for other types of businesses would mask any trends in the startups. </p> <table><tr><th>Year</th> <th>Firms started</th> <th>Starting rate</th> <th>Closed down</th> <th>Exit rate</th> <th>Number of companies</th> <th>Change</th> </tr><tr><td>2007</td> <td>929</td> <td>13.4%</td> <td>592</td> <td>8.6%</td> <td>6909</td> <td></td> </tr><tr><td>2008</td> <td>1050</td> <td>14.3%</td> <td>753</td> <td>10.3%</td> <td>7345</td> <td>6.3%</td> </tr><tr><td>2009</td> <td>969</td> <td>12.8%</td> <td>664</td> <td>8.8%</td> <td>7559</td> <td>2.9%</td> </tr><tr><td>2010</td> <td>1009</td> <td>12.8%</td> <td>515</td> <td>6.5%</td> <td>7903</td> <td>4.6%</td> </tr><tr><td>2011</td> <td>993</td> <td></td> <td>.</td> <td></td> <td>.</td> <td></td> </tr></table><h2>Dominated by large service companies</h2> <p>The final table illustrates the importance of large firms for the IT industry. The table below shows the aggregate figures of the three largest firms, ten largest firms, firms outside the top ten, and all firms. The table shows that the largest IT services companies (Tieto, Logica, Fujitsu) account for roughly a fourth of the revenue for the entire sector, and including the rests of the largest 10 companies raises this to one third. The table tells also several interesting details. First, larger firms seem to be more productive than smaller firms. While this is seemingly the case, it can be a premature conclusion: The category other includes also all part-time companies, which naturally generate less revenue per employed person. Although we believe that there is a trend in that larger firms are more productive, it is not nearly as strong as portrayed by the table below. Second, interestingly, the larger companies seem to have faced decreasing revenue, but increasing number of personnel between 2009 and 2010. The figures do not reveal if this is a universal effect, or just caused by one of the three largest. The revenue trend in the other firms seems to be the opposite and firms have slightly increased their business in 2010. </p> <table><tr><th></th> <th>Companies</th> <th>Personnel</th> <th>Revenue (Me)</th> <th>Personnel/firms</th> <th>Revenue (Me)/firms</th> <th>Revenue (ke)/personnel</th> </tr><tr><td>3 largest</td> <td></td> <td></td> <td></td> <td></td> <td></td> <td></td> </tr><tr><td>2009</td> <td>3</td> <td>8 003</td> <td>1 446</td> <td>2 668</td> <td>482</td> <td>181</td> </tr><tr><td>2010</td> <td>3</td> <td>9 173</td> <td>1 395</td> <td>3 058</td> <td>465</td> <td>152</td> </tr><tr><td>10 largest</td> <td></td> <td></td> <td></td> <td></td> <td></td> <td></td> </tr><tr><td>2009</td> <td>10</td> <td>12 886</td> <td>2 210</td> <td>1 289</td> <td>221</td> <td>172</td> </tr><tr><td>2010</td> <td>10</td> <td>13 230</td> <td>2 126</td> <td>1 323</td> <td>213</td> <td>161</td> </tr><tr><td>Other</td> <td></td> <td></td> <td></td> <td></td> <td></td> <td></td> </tr><tr><td>2009</td> <td>4 795</td> <td>24 778</td> <td>3 171</td> <td>5.2</td> <td>0.661</td> <td>128</td> </tr><tr><td>2010</td> <td>4 915</td> <td>24 932</td> <td>3 256</td> <td>5.1</td> <td>0.662</td> <td>131</td> </tr><tr><td>Total</td> <td></td> <td></td> <td></td> <td></td> <td></td> <td></td> </tr><tr><td>2009</td> <td>4 805</td> <td>37 664</td> <td>5 382</td> <td>-</td> <td>-</td> <td>-</td> </tr><tr><td>2010</td> <td>4 925</td> <td>38 161</td> <td>5 382</td> <td>-</td> <td>-</td> <td>-</td> </tr></table><h2>Conclusions</h2> <p>So if one was to conclude this blog post with a grand conclusion, what might be said about these three tables? The best characterization might be “Business as usual”: After the recession years, there are no clear trends toward better or worse. However, this is with the caveat that the figures are now a year and a half old, and much has happened since that. For example, Nokia’s problems started to manifest in layoffs only after 2010. Clearly, there are much that can still be said about our more timely survey data</p> </div></div></div> Tue, 15 May 2012 08:30:17 +0000 Mikko Rönkkö 69 at http://www.softwareindustrysurvey.org/admin http://www.softwareindustrysurvey.org/node/69#comments What happened to the Finnish software industry in 2011 - some early results http://www.softwareindustrysurvey.org/node/67 <div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p>We have now around 200 responses to the survey, although a third of these are still in paper form and need to be entered into our database. Nevertheless, this is plenty of data to restart our research blog.</p> <p>In this first post of this year, I will be looking at what happened in the Finnish software industry in 2011. Looking back, the single most important event in 2011 was Nokia’s decision to discontinue Symbian and adopt Windows phone as the primary smartphone operating system. As covered in our <a href="http://www.softwareindustrysurvey.org/ReportFinland2011.pdf">last year’s report</a>, this lead to layoffs by the subcontractors and by Nokia. But the cloud had a silver lining in two different forms: First, many Finnish software companies were having difficulties in recruiting new people and saw this as an opportunity. Second, many companies saw Windows Phone a new big opportunity. In fact, last year equally many companies predicted that they would develop for Windows Phone as for Android. The data this far shows that the number of firms targeting Windows Phone this year is almost double that from the last year, but it is still clearly the third platform. We will be covering mobile platform soon in more detail in another post.</p> <p>Another important issue about 2011 is that where as 2010 was clearly the first year of recovery after the difficult year 2009, last year was the first normal year for the software industry, at least if we look at the data presented in the figure below. The figure is a percentile plot, which is our favorite for visualizing data over time. Each line represents a percentile of the firms. The 50% line is the median, or the most typical company. And the 95% line shows where the top 5% of companies are. Comparing the years 2010 and 2011, we see that most of the lines point upward, signifying that on average companies grew more (or lost less) in 2011 than 2011. Nevertheless, the challenging economic situation of particularly late 2011 shows still in the graph and the growth rates remain slightly below the pre-recession levels. We will update these figures in another post when we have more data available.</p> <p><img src="http://www.softwareindustrysurvey.org/sites/default/files/growth.png" width="100%" /></p> </div></div></div> Sun, 13 May 2012 19:42:51 +0000 Mikko Rönkkö 67 at http://www.softwareindustrysurvey.org/admin http://www.softwareindustrysurvey.org/node/67#comments Publishing the final report is just around the corner http://www.softwareindustrysurvey.org/node/63 <div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p>I wanted to write a small blog post to celebrate two key milestones in the project: Today the length of our report draft exceeded 100 pages and we also finally agreed on the cover background for the report.</p> <p>The main results of the Finnish survey were published on June 16th at Aalto Venture Garage. Although we were sending out the invitations on a short notice, the event attracted a nice audience. The presentation slides and the press release are available on our <a href="http://www.softwareindustrysurvey.org/node/13">publications page</a>.</p> <p>The main results that we presented were that the industry is again on a growth path, but the estimated 5% growth in 2010 is still a bit behind the pre-recession levels. Moreover, we addressed Nokia's strategy change and companies willigness to sell their business. Both topcis have been covered in previous blog posts.</p> <p>We are currenctly finalizing the report and will publish it in a few days. The work that remains is adding the final figures and texts as well as proof reading and polishing the report.</p> <p><img src="http://www.softwareindustrysurvey.org/sites/default/files/Cover2011.png" class="mceItem" /></p> </div></div></div><div class="field field-name-upload field-type-file field-label-hidden"><div class="field-items"><div class="field-item even"><table class="sticky-enabled"> <thead><tr><th>Attachment</th><th>Size</th> </tr></thead> <tbody> <tr class="odd"><td><span class="file"><img class="file-icon" alt="" title="image/png" src="/modules/file/icons/image-x-generic.png" /> <a href="http://www.softwareindustrysurvey.org/sites/default/files/Cover2011.png" type="image/png; length=132933" title="Cover2011.png">Cover2011.png</a></span></td><td>129.82 KB</td> </tr> </tbody> </table> </div></div></div> Wed, 22 Jun 2011 10:38:16 +0000 Mikko Rönkkö 63 at http://www.softwareindustrysurvey.org/admin http://www.softwareindustrysurvey.org/node/63#comments First results from the 2011 survey: Nokia and mobile platforms http://www.softwareindustrysurvey.org/node/55 <div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p>The 2011 survey has been going on for approximately a week now. The first invitation letters arrived at the companies in last Thursday, the day before easter vacations. We sent out the email invitations on this week's Tuesday and Wednesday. The total number of firms that were sent the postal mail was 5 490 and we have a working email address for estimated 3 169 firms. Compared to last year, these numbers are slightly smaller because we eliminated all sole proprietors from the mailing list and generally have improved the screening process for firms when creating the address list.</p> <p>Now at Friday noon we have 144 completed responses in our online survey system and 47 returned paper questionnaires. In all, this compares favorably to last year and we expect a slightly better response rate than last year.</p> <h2>First look at the results</h2> <p>Before going into the results, there are two caveats that need to be pointed out. First, the early respondents are generally not representative of the entire population. This means that when we get more data, the results will likely change. Second, the survey covers the entire software industry. Although the high-growth firms and large firms receive most visibility, a typical software firm is relatively small and does not necessarily grow that fast. The data for these analyses are the online responses that we had at the end of office hours on Thursday. These consist of 127 firms that had a median revenue of less than 300 000 euros. </p> <p>People have been particularly interested in results relating to Nokia's decision to adopt Microsoft's Windows Phone as their primary smart phone operating system, as I explained in <a href="http://www.softwareindustrysurvey.org/node/51">my previous blog post</a>. Hence I decided to start analysing the two question set that were newly included in this year's survey and address Nokia and mobile platforms.</p> <p>The figure below shows the responses to a question where we presented eight statements about the Nokia's strategy change. The respondents rated these statements on a five-point scale from "Completely disagree" to "Completely agree". The bars show the shares of the five possible responses blue being the "Completely disagree" option, yellow the "Completely agree" option, and the other colors the options between these two extremes. The N below the figure shows how many companies provided data for all these questions.</p> <p><img src="http://www.softwareindustrysurvey.org/sites/default/files/Nokia.png" width="652" height="475" class="mceItem" /></p> <p>Since these are just early results, I will not analyze this figure indepth at this point. However, there are a few points that I would like to make:</p> <ul><li>The firms are evenly divided on whether the Nokia's strategy change has a positive impact on the software industry. The firms considering this as a negative event probably think more about the layoffs while the firms that consider this as a positive event probably think more on the lines that this increases the number of talented people available for the independent software vendors in Finland.</li> <li>More than half of the companies chose "Completely disagree" to the staments about negative effects on their business. What this means is that although a large share of the largest software companies in Finland (e.g. Tieto, Ixonos, Digia) do depend on Nokia, this does not seem to be the case for smaller companies.</li> <li>Firms are divided on their stance on hiring ex-Nokia employees. This is probably more related to the overall hiring situation of the firms rather than layoffs by Nokia.</li> </ul><p>In all, it seems that the software companies in Finland are not terribly worried about the changes that Nokia is currently undergoing. On the other hand, these companies do not seem to see the availability of Nokia employees in the job market as a great opportunity either. Howerever, these are just early results from the first responses. Once we have more data, we will publish more indepth analysis of these questions if not as a blog post, then at least in our final report that will be published in June.</p> <p>The second issue that has received attention is on which platforms companies develop on. In the figure below, I have included descriptive statistics on the responses to a question where we asked the firms to indicate for which platforms they have developed software for in 2010 and are planning to develop software for in 2012. These dates were chosen since Nokia did their announcement after 2010 and we expect most companies that react to the announcement to do this by the end of 2012. The bars indicate the share of firms that chose a particular option in the multiple choice question. </p> <p><img src="http://www.softwareindustrysurvey.org/sites/default/files/Platforms.png" width="652" height="475" class="mceItem" /></p> <p>The results in this figure are interesting. Although I do not personally believe that in 2012 a fourth of the Finnish software companies would develop software for Android and a third for Windows Mobile, it is clear that these platforms will increase their popularity. At least two reasons come to mind to explain the high frequencies that these platforms were chosen. First, it is very likely that the early respondents to the survey are younger and more dynamic and when the more stable firms respond later, the figures will go down. Second, firms in the software industry tend to be overly optimistic in their predictions. Again, there are a few observations that I can make relatively confidently:</p> <ul><li>Symbian and iOS are currently the two most popular mobile platforms in Finland.</li> <li>Software firms see Android and Windows Mobile as the platforms with the most potential and I expect these to be the most popular development platforms in 2012.</li> <li>A large share of firms that currently develop for Symbian will discontinue this in the near future.</li> </ul><p>We will be posting more results in this blog as they are available. Now that we have a good number of early responses in our use, we will probably publish blog post more frequently than what we did prior to launching the survey.</p> <p> </p> </div></div></div><div class="field field-name-upload field-type-file field-label-hidden"><div class="field-items"><div class="field-item even"><table class="sticky-enabled"> <thead><tr><th>Attachment</th><th>Size</th> </tr></thead> <tbody> <tr class="odd"><td><span class="file"><img class="file-icon" alt="" title="image/png" src="/modules/file/icons/image-x-generic.png" /> <a href="http://www.softwareindustrysurvey.org/sites/default/files/Platforms.png" type="image/png; length=42812" title="Platforms.png">Platforms.png</a></span></td><td>41.81 KB</td> </tr> <tr class="even"><td><span class="file"><img class="file-icon" alt="" title="image/png" src="/modules/file/icons/image-x-generic.png" /> <a href="http://www.softwareindustrysurvey.org/sites/default/files/Nokia.png" type="image/png; length=42518" title="Nokia.png">Nokia.png</a></span></td><td>41.52 KB</td> </tr> </tbody> </table> </div></div></div> Fri, 29 Apr 2011 07:51:47 +0000 Mikko Rönkkö 55 at http://www.softwareindustrysurvey.org/admin http://www.softwareindustrysurvey.org/node/55#comments How Important is Nokia for the Finnish Software Industry? http://www.softwareindustrysurvey.org/node/51 <div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p>Since Nokia announced the change in their software strategy and decided to partner with Microsoft instead of continuing to rely on Symbian, we have been approached several times by media with the question:</p> <p><em>"How important is software development that is done for cell phones for the Finnish Software Industry?"</em></p> <p>Unfortunately, we currently have no definite answer to this question. However, the question is indeed on our radar for the soon-to-be-launched 2011 Software Industry Survey. Before the new data is in, we can still search our old data for some clues on the subject. In 2010 we focused more on the question of "who is your customer", which e.g. revealed the large portion of B2B and the dismal portion of consumer software. However, we did not go as far as to look into specific technological platforms in connection with the customers' industries.</p> <p>Looking back a bit futhrer, the survey did include a question about customer industry in 2006 and  2007. At that time so-called "vertical software" was a hot topic in Finland. The idea was that instead of focusing on general application software, firms should specialize in serving a particular industry. The question was later dropped because the classification contained overlapping categories, some of the categories were of different size than others, and the question generally was not very reliable. Nevertheless, this is the best data that we have at the moment about the industry focus of Finnish software companies.</p> <p>The figure below show the frequencies how four different mobile phone related industries were chosen from the list that totaled 29 named industries. Based on this figure, a fourth of the software companies in 2006 and 2007 that responded to the software industry survey developed their software for the telecom sector. Although the reliability of this figure has room for improvement, it still shows that the Finnish software industry at the time was very telecom focused.</p> <p><img src="http://www.softwareindustrysurvey.org/sites/default/files/Graph_0.png" class="mceItem" height="474" width="652" /></p> <p> </p> <p>The next question is how these companies have developed over time. I used a three-year compound average growth rate as a measure for success and have listed the mean for this statistic grouped by customer industry in the table below.</p> <table border="0"><tbody><tr><td><strong>Customer industry</strong></td> <td style="text-align: right;"><strong>3 year revenue growth (CAGR)</strong></td> <td style="text-align: right;"><strong>Number of firms</strong></td> </tr><tr><td>Electronics and high tech.</td> <td style="text-align: right;">14.1%</td> <td style="text-align: right;">10</td> </tr><tr><td>Information and com. tech.</td> <td style="text-align: right;">8.3%</td> <td style="text-align: right;">47</td> </tr><tr><td>Telecom industry</td> <td style="text-align: right;">10.6%</td> <td style="text-align: right;">11</td> </tr><tr><td>Mobile industry</td> <td style="text-align: right;">2.6%</td> <td style="text-align: right;">12</td> </tr><tr><td>Other industries</td> <td style="text-align: right;">3.2%</td> <td style="text-align: right;">146</td> </tr><tr><td>No particular industry</td> <td style="text-align: right;">11.0%</td> <td style="text-align: right;">82</td> </tr></tbody></table><p>These figures show that generally the companies focusing on telecom related industries have grown faster than companies focusing on other verticals. What is more interesting is that the firms that were not focusing on any particular industry seem to have grown faster than other companies. Among several possible explanations, being too focused on a vertical might not have been the best strategy for those companies.</p> <p>For the 2011 survey, we will focus on mobile software development from two different perspectives. First, we will ask the companies to indicate on which platforms they develop software for. Second, we will ask the companies to rate how well several statements related to Nokia match the situation that the company is facing currently. I have included the current working version of these two questions below for commenting. Changes can still be incorporated during the next two weeks, so comments on making the survey better would be welcome.</p> <p> </p> <p><img src="http://www.softwareindustrysurvey.org/sites/default/files/questions.png" class="mceItem" /></p> </div></div></div><div class="field field-name-upload field-type-file field-label-hidden"><div class="field-items"><div class="field-item even"><table class="sticky-enabled"> <thead><tr><th>Attachment</th><th>Size</th> </tr></thead> <tbody> <tr class="odd"><td><span class="file"><img class="file-icon" alt="" title="image/png" src="/modules/file/icons/image-x-generic.png" /> <a href="http://www.softwareindustrysurvey.org/sites/default/files/Graph_0.png" type="image/png; length=49806" title="Graph.png">Graph.png</a></span></td><td>48.64 KB</td> </tr> <tr class="even"><td><span class="file"><img class="file-icon" alt="" title="image/png" src="/modules/file/icons/image-x-generic.png" /> <a href="http://www.softwareindustrysurvey.org/sites/default/files/questions.png" type="image/png; length=155240" title="questions.png">questions.png</a></span></td><td>151.6 KB</td> </tr> </tbody> </table> </div></div></div> Mon, 28 Mar 2011 14:19:53 +0000 Mikko Rönkkö 51 at http://www.softwareindustrysurvey.org/admin http://www.softwareindustrysurvey.org/node/51#comments