Mathematical model and algorithm of selecting software promotion options differentiated by functionality and business models

The paper focuses on issues and tasks IT companies face with when promoting proprietary software products on consumer markets. It provides the description of the basic software product market represented as a combination of specific prospective customer groups, to which a software product line with relevant functionality can be offered using different delivery business models. The authors suggest three groups of market segment attractiveness: market attractiveness, competition level and a company’s performance in the segment. The authors developed a multi-objective mathematical model for selecting options of software product distribution in selected market segments. The following selection criteria for software distribution options in selected market segments are advanced: maximum of total profit, minimum of promotion expenses, minimum of target segments number and maximum of an integrated measure of segments attractiveness. Limitations of the model include the volume of human resources in each single-discipline group of specialists in an IT company and application of a single option of software product delivery for each of market segments. An algorithm for solution of the problem relies on successive concession method. However, suggested criteria of optimization are applicable for other methods of the multi-objective problem solution. The authors described the results of the model application for a real problem of selecting distribution options for the ‘Electronic Timetable’ software product for specialized secondary education and higher education institutions of Siberian Federal District in Russia. Twenty-four segments were selected for distribution, where two software distribution models were possible «software as a service» (SaaS) and «application service provider» (ASP). Assessment of qualitative and quantitative parameters of the mathematical model was conducted by experts using optimistic, pessimistic and realistic scenarios. As a result of the problem solution, software product should be distributed as SaaS in 14 segments, and as ASP in 3 segments. The results of the study may be useful for directors and managers of small IT companies when formulating strategies for proprietary software product distribution in certain target segments.