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—> To swing for the fence, entrepreneurs must avoid the shark-infested red water and sail into the deep blue sea.

If you’re even thinking of creating a software startup, I highly recommend you read The Business of Software as soon as possible. Doing so will save you much pain and suffering from senseless mistakes. When there is such a large body of existing knowledge, there is no cause for trial and error mentality. There’s plenty of other opportunities for trailblazing. Read this book as a bare minimum before starting your venture.

Cusumano, offers an in depth study of what it takes to succeed in software. Of particular value are critical questions to contemplate:

1) Do you want to be mainly a Products company, or a Services company?

2) Do you want to sell to Individuals, or Enterprises | Mass market, or Niche market?

3) How horizontal (broad) or vertical (specialized)is your product or service?

4) Can you generate a recurring revenue stream that will endure both good and bad times?

5) Will you target mainstream customers, or do you have a plan to avoid the chasm?

6) Do you plan on being a Leader, Follower, or Complementor?

7) What kind of character do you want your company to have?

Cusumano also offers eight Critical Success Factors that are necessary for Software Start-ups to succeed as a business and raise investor money:

1) Strong Management Team

2) An Attractive Market

3) A Compelling New Product, Service, or Hybrid Solution

4) Strong evidence of Customer Interest

5) A Plan to Overcome the “Credibility Gap”

6) A Business Model Showing Early Growth and Profit Potential

7) Flexibility in Strategy and Product Offerings

The Potential for Large Payoff to Investors

Don’t reinvent the wheel. Read this book as soon as possible, preferably “before” you create that software venture you so boldly dreamed.

Michael Davis, Byvation

Cusumano presents a solid overview of selected topics relevant to the software business. He focuses on the following topics: strategy for software companies, best practices in software development, and software entrepreneurship. He makes use of case studies and provides insight on the inner workings of Microsoft, IBM, Netscape, Business Objects, and i2. In the chapters discussing strategy, he analyzes product versus service focused organizations. He also discusses market segmentation and whole product solutions as described in Geoffrey Moore’s "Crossing the Chasm." With regards to best practices in software development, much of the material is from "Microsoft’s Secrets." Cusumano describes the pitfalls of waterfall development and describes the key concepts of Microsoft’s synch and stabilize technique. A few pages are devoted to outsourcing and specifically the rise of the Indian software business. I would have expected more analysis on some of the newer agile development methods — such as XP. Lastly , Cusumano covers software entrepreneurship. He provides an eight point framework to evaluate a software start up. Does it have the following characterisitcs ?
1. Strong management team
2. Compelling new product, service, or hybrid solution.
3. Strong evidence of customer interest
4. An attractive market
5. A plan to overcome the credibility gap.
6. Business model showing early growth and profit potential
7. Flexibility in strategy and product offerings
8. Potential for large payoff to investors.
The text also has a useful appendix with income statement analysis of Business Objects and i2 , and growth comparisons between various organizations. There is nothing in the text I would consider groundbreaking, but it is a solid overview of the software business appropriate for software managers and entrepreneurs.