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The Software Business Model Framework (SBMF)

The “Software Business Model Framework” (SBMF), developed by Markus Schief in his PhD thesis, is a business modeling tool specifically designed for the software industry. It aims to assist businesses in understanding and structuring their business model by focusing on key aspects of their operation and strategy.

The SBMF is structured into five main groups:

  1. Strategy: This group deals with the fundamental strategic elements of the business, including value proposition, offer orientation, competitive position, growth, market evolution, and offer structure.

  2. Revenue: This group examines aspects related to revenue generation, including sales volume, revenue source, pricing assessment base, payment flow structure, and revenue distribution model.

  3. Upstream: This group focuses on aspects related to the production and distribution of the software, such as the software stack layer, platform, license model, degree of standardization, and key cost driver.

  4. Downstream: This group delves into aspects related to the delivery of the software to the customer, including localization, target customer, target industry, target user, and sales channel.

  5. Usage: This group concentrates on aspects related to the software’s use by the customer, such as implementation effort, operating model, maintenance model, support model, and replacement strategy.

By combining these five groups, the SBMF offers a comprehensive and holistic view of a software company’s business model. It serves to identify, analyze, and optimize the different components of the business model to enhance the company’s performance.

Application to open source vendors

Applying the SBMF to an open-source software publisher can help outline and optimize the business model for such an organization. Here is how the five groups can apply:

  1. Strategy: The value proposition of an open-source software publisher could be the transparency, flexibility, and adaptability of their software. Their competitive positioning could be based on the rapid pace of innovation and the extensive development community contributing to the software.

  2. Revenue: Open-source software publishers can generate revenue in various ways. For example, they might offer services such as technical support, training, consulting, and software customization. Another model is based on dual-licensing, where the basic version is free but a premium or enterprise version is paid.

  3. Upstream: The open-source publisher may use a Copyleft or Permissive license for their software. Depending on the software, it could be standardized or tailored to specific customer needs. The primary cost could come from developing and maintaining the software.

  4. Downstream: An open-source publisher might target customers across various industries and regions. The software could be designed for business users, developers, or even consumers. Sales channels could be online, through partners, or through events and conferences.

  5. Usage: The implementation effort could vary depending on the complexity of the software. The operating model could be on-premise or cloud-based. The publisher may provide regular updates and technical support to its users. The replacement strategy could involve multiple versions of the software being available at the same time.

Obviously, the exact business model will depend on the specifics of the open-source publisher and its products. The SBMF provides a structure for analyzing and optimizing these various aspects.

OSS vendors / OSS communities

The relationship between an open-source software publisher and its open-source community is a crucial component in the “Upstream” group of the SBMF. An open-source community can play a significant role in determining the direction and development of the software, which impacts the software stack layer, the platform, the license model, the degree of standardization, and the key cost drivers. Let’s take a closer look at how this relationship could manifest in these components:

  1. Software Stack Layer: The open-source community can contribute to various layers of the software stack, from application software to systems software, and even hardware control and embedded software. The community’s contributions and feedback can help in the development and improvement of the software across these layers.

  2. Platform: The choice of platform for the software can be heavily influenced by the open-source community. The community could help adapt the software to different platforms such as desktop computers, servers, mobile devices, cloud computing, and more.

  3. License Model: The relationship with the open-source community can impact the license model chosen. For instance, if the community values freedom and flexibility, a Copyleft or Permissive license might be adopted.

  4. Degree of Standardization: The level of standardization can be influenced by the open-source community’s needs and contributions. The community can help in creating highly customizable software (individual production), or in refining a product for broad use (bulk production).

  5. Key Cost Driver: The open-source community can also affect the key cost drivers. If the community is actively contributing to the development of the software, this can reduce the costs associated with Research & Development.

Overall, the relationship with the open-source community is often central to the business model of an open-source software publisher. It influences the development, adaptation, and continuous improvement of the software. Moreover, the community can also serve as advocates for the software, helping to increase its adoption and usage.


  • Schief, Markus. (2014). Business Models in the Software Industry: The Impact on Firm and M&A Performance. 10.1007/978-3-658-04352-0. link

See also

Page last modified: 2023-05-13 17:58:01