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One of the
distinguishing characteristics of any software firm is
the choice of business models. In the following description
of the three types of business models available for software
firms, you should be able to spot the business model or
models used by software firms that you might have been
associated with as an employee, investor or customer.
Can
you describe the three principal business models used by
software firms? Before you invest in a software firm, buy
products from one, or decide to work for one, look at their
business model.
In this
industry overview, we adopt a case study approach to incorporate
data from NetSol
Technologies. They were founded in 1996 and are
listed on NASDAQ as NTWK.
NetSol is
an enterprise software products firm that develops and
sells financial services software to banks, lease finance
firms, leasing agencies and consumer financing firms. Information
for this case study was gathered over the last 10 days
at their new 270-seat development facility in Lahore, Pakistan.
NetSol initially
targeted the front end of automobile leasing software,
where lease applications are completed and sent for approval
by a finance company. Then it moved up that vertical until
it had built up a complete suite of complementary products.
Mastery of one market vertical served as a jumping off
point for NetSol to enter the banking industry using the
same verticalization strategy.
In future
columns, the NetSol case study will be used to explore
market strategies for software product firms, issues of
capitalization and the challenge of gaining domain expertise
in targeted verticals.
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