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Choosing a Software Business Model: The NetSol Case Study

March
2, 2005. E-Commerce Times

By Anthony Mitchell
 

http://www.ecommercetimes.com/story/40952.html

 

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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