6.7. Summary

This ends the analysis of the empirical data concerning the contracting processes. The model formulated in Chapter 4 was used in the analysis. The software contracting process has been analysed in three ways, through: software development, relationship development and process typologies. However the common denominator has always been the process. The contracting maps described in Fig. 29, Fig. 30 and Fig. 33 for COTS, tailored and MOTS business modes respectively are important outcomes of this chapter’s analysis.

Framework contracts and versatile forms of licensing agreements attached to it emphasize the COTS business mode. These combinations of contracts are used extensively in conjunction with different kinds of OEM, distributor and end-user relationships, whereas only licensing agreements are used in pure business transactions between companies. With framework contracts the software companies in all business modes try hard to establish longstanding cooperative relationships. These agreements facilitate a more accurate estimation of future resource needs and fixing of a stable and known turnover. The COTS business is also characterized by the fact that in many cases the software company does not know or meet the customer who actually uses the sold application. There is no circumstance to negotiate for the contract, thus typically the license agreement is presented to the customer on “as is” bases. There is no possibility of changing the items in the contract, this brings along requirements for the license agreement’s form and content. Therefore these agreements are typically long and include numerous clauses that are written down to protect the software company from insurmountable liabilities.

Tailored business mode is again characterized by time consuming negotiations of framework contracts later complemented with extensive utilization of bid, offer, work order and assignment agreements. In this business mode the relationship development plays a central role. Therefore the framework contract negotiations can be seen as a period of becoming acquainted with the prospective partner, i.e. partner’s resources, working methods and the level and scope of expertise. Tailored business mode is characterized by continuous specification and iteration rounds during the software development process. This requires a good and trustworthy relationship between the partners that enables contracts to be discussed and modified effectively also after they have been signed.

The MOTS business mode includes the contracting and relationship aspects of both COTS and tailored modes. This was found to be a real challenge for the managers and people responsible for working with contracts and contracting. This follows from the fact that MOTS software includes both pre-made software components (or platform) and tailored software parts that are combined together. Both parts require different negotiation issues and contractual forms, even though they are typically negotiated together and drafted into the same contract. The software company has to consider closely the IPR –issues connected with this contract form.

The data interpretation was done by analysing the available empirical material by reading through and contemplating each text passage several times in order to have the same evaluation criteria over all the cases. At the outset of Section 6.4, the coding method for process activities that form the base the above analysis was discussed. This classification is a source of error as it is done by hand, reading the documents. The researcher may make wrong judgements or be biased in cases during the analysis process. The researcher had not only to find the activities but he had also to define the attributes (phase, interaction process, Ford’s stage, motor, inputs, outputs, owner and events) that were included in each individual process activity. Also the number of identified activities do not allow making too far reaching interpretations, especially when dividing them further into the smaller COTS, tailored or MOTS business modes. Many of the software companies operated in several business modes and they employed the same contracting process for each mode and, as these activities may be found from one company in several contracting maps, this is a further possible source of errors. However, the researcher tries with prior knowledge and analysis competence to keep these errors to a minimum.

The reliability of the analysis presented in this chapter can be discussed from several viewpoints. The central issue of reliability is how well the researcher has found and interpreted the process activities. As expressed above the data was analysed several times in order to avoid misinterpretations. Also the number of identified activities (93 altogether) helped the analysis work. However, dividing these numbers again over different business modes makes the number of activities smaller for each mode. Then again the researcher must be cautious when making conclusions based on this figures. But as the above analysis of the process activities is supported with other relevant parts of the empirical material, thus improving the overall reliability.