Commercial Off-The-Shelf Software: Using Purchasing Portfolio Management to Gain Competitive Advantage

Abstract

This study examines how purchasing portfolio management can be used to gain competitive advantage when using Commercial-off-the-Shelf (COTS) software products in software development. A case study research method was chosen, using a qualitative data gathering approach. The study is based in a large telecommunications company that uses an extensive number of COTS software products in the software development of a telecommunications software system. Although there are many advantages to using COTS software products, there are also many disadvantages. There is a high degree of buyer lock-in, and the many challenges are attributed to vendor-controlled change and market conditions. The case study findings indicate that purchasing portfolio management is a valuable technique to classify COTS products, analyse buyer-suppler relationships and to determine what strategic actions are needed to gain competitive advantage. The approach offers a structured and comprehensive classification approach that can be customised to each company¿s context and considers supply market complexities as well as the importance of the product to business strategy.