Vertical software. Channels of distribution, VARs.

Value added resellers (VARs) - are companies that represent the manufacturer and have personnel trained by the manufacturer and authorized to customize the software. Eg, Information Technology Inc., headquartered in Lincoln, Nebraska, is a VAR for NCR Corporation’s payment and check-processing systems.

Vertical Software - costs more than mass-marketed software because vertical software developers need to recover their instrument over very few sales and because the vendors have higher selling costs.

38. Vertical software. Main features. While evaluating vertical software what should a manager focus on?

In evaluating vertical software, managers should focus on whether the software supports the way their company conducts its business. Companies that lack resources to purchase or develop customized software sometimes change their business practices to fit with available software. Others. particularly those who have the resources and whose business practices blaze new trails to create a competitive advantage, need to obtain or create software that supports the way they do business.

Managers who buy vertical software must also consider consider the quality and availability of support and customization. They must believe that the software vendor can respond to their unique needs and that the vendor has enough installations to guarantee its existence for many years.

Because businesses rely on vertical software in their daily operations, vendors must respond rapidly to emergencies and to requests for changes in the software’s design. Failure of the software or of its vendors can have disastrous consequences for businesses.

39. Vertical software. Ways to acquire vertical software. Pluses and minuses of each.

The Make versus Buy decision

A company can acquire vertical software in three ways:

- Purchase packaged software from a software manufacturer and use it without modification;

- Purchase software that can be customized;

- Develop the software from scratch, creating custom software.

Managers and other users can purchase a large variety of uncustomized vertical software products for all types of computers through retail outlets or directly from software developers. Known as packaged or commercial off-the-shelf (COTS) software, these uncustomized software packages exist for a wide range of applications and industries.

ChemSW Inc. of Fairfield, California develops and sells COTS software called CISPro Desktop that tracks and manages a company’s inventory and use of chemicals.

Campaign Associates of Manchester, New Hampshire develops and sells GiftMaker Pro, a donor management system for organizations that do fundraising.

40. Advantages and disadvantages of vertical packaged software.

+ low price, extensive features, high reliability.

These advantages arise from the software’s use by multiple companies. In general, the more popular the software is, the greater these advantages become. Packaged software often benefits from the large number of users who have tested the software in a variety of environments. This widespread use decreases the likelihood that the software will have major defects and will omit desired features.

Disadvantages - It can create a dependency on the software manufacturer. Once a company installs one vendor’s vertical software, it will incur heavy costs in licensing, training, and work redesign if it changes to another vendor, as a result, the vendor can charge high prices for upgrades and support.

In addition, whenever business managers want a new feature, they can only ask and wait for a future software release. Finally, a company that purchases packaged software does not own it. It just has a license to use it.

In most cases, the original developers of the software do not want to divert their product focus by performing individual customizations. Frequently, they partner with a VAR who not only represents their software but has also been authorized to customize it.

Developers who want to provide users with an option to customize their software typically provide a rich set of APIs to allow their software to be customized easily and flexibly.