The Software Value Chain: Methods for Construction and Their Application

The value chain is a widely used framework for industry and firm analysis. To our knowledge, the conceptualisation of value chains is so far guided by “soft” criteria like intuition of experts rather than clearly stated methods with regard to the value chain boundaries and the granularity as well as the separation of activities. Therefore, we propose a combination of well-known methods – such as the Delphi study approach and clustering algorithms – to (1) ensure a holistic view of the industry at hand by covering all underlying economic concepts, (2) ensure the uniqueness of activities, and (3) provide a hierarchy of activities that allows deriving value chains at different levels of granularity. Since software is a good with specific economic properties, practitioners and researchers require a value chain framework reflecting the industry specifics. This paper contributes by proposing methods for value chain construction and applying these methods to the software industry. The resulting universal and hierarchical software value chain can serve as a sound foundation for further studies of the software industry. Furthermore, practitioners can tailor the proposed methods to their needs and apply the software value chain to their firms.