| Contracting in software business: Analysis of evolving contract processes and relationships | ||
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The managers of the twelve software companies analysed only reported a few cases of relationship dissolving instances. The reasons may be several raging from the young life of the companies with the CEOs were reluctant to disclose negative activities. Though it may also be possible that bad experiences have been short in duration without leaving any lasting effect on the company’s operations.
Some concrete facts came out of the empirical data concerning the software companies which may be the first signs of relationship termination. Among these factors could be the partner’s changing interest in the cooperation. This can again depend on the fact that in the customer company there was only one person who was interested in and willing to get the contract signed, but the company as whole was not committed to the cooperation.
The most usual way in which the relationship ends is just by fading out without any extra notice and the partners just keeping a low profile, no contacts, and promised things do not happen. This means that the partners have not followed the relationship development constantly in order to find out the possible problems in the cooperation. One clear sign of problems in the relationship is just that the partners do not or have ceased to communicate, as they do not find any business interest in the other party.
But a more plausible reason for dissolution especially in the COTS-business, is the nature of the business that is characterized by Williamson type of transactions that do not even foster a longer relationship between the customer and supplier. So the software company does not see any special dissolution process as the customers just drift away without any notice. This silently drifting apart was also indicated by some of the interviewed CEOs as how the cooperating partners just grew apart. This happened normally by not accomplishing agreed projects or e.g. in a case of a channel operations the channel did not do its part and without any further notice did not contact the software company anymore.
Relationship dissolving is promoted by the fact that the partnering company has ended its existence or its product line is finished where the software company’s product was embedded. Other reported instances, were the cases where the customer’s procurement budget is for some reason torn up, their champion of the project or of the whole relationship is changed, the customer company is bought by acquisition, the customer’s own development unit wants to produce the solution, or lastly the manager’s friends in an other software company is interested in carrying out the project. To further the termination process there is the situation where the companies have made a bad contract which should be corrected. However, for some reasons the partners are not able to negotiate the contract anew.
During the interviews the basic elements that explicate a positively developing business relationship constantly emerged. These were common business benefit and the working personal chemistry between the partners. If these facts were in place then the relationship could stand harder times, too. Of course, either company could try to lock the other partner in a relationship by proprietary technology or a special resource base. But still these could only be temporary attenuating factors in the long run of cooperation.
Also long-standing cooperation with an established confidence base would hinder the relationship termination. The companies described that they must have working and open communications channels on different levels, i.e. manager and developers level. These reduce possibilities of misunderstanding or at least help to correct these. In order for the relationship to flourish the managers had the opinion that it is most important to get in contact with some management level person who takes the cooperation as his responsibility, finds it important and is interested in making a contract and is also willing to do more than just the contract, in other words put the case forward. In tailored and MOTS business the characteristics of the relationship itself attenuates the termination of the relationship as the companies from the beginning aim for a longer standing cooperation.