Characterization of practices and measurements in software start-ups in an emerging ecosystem

Abstract

Software start-ups support the development of innovative products and services. They can support the transformation of industrial sectors in terms of new technologies and ways of working, and they can promote the sustainable growth of developing economies. However, 90% of start-ups have been found to fail in their first two years yet it is beneficial to have as many successful start-ups as possible in a region to achieve sustainable growth or sustainable transformation. Start-up hubs are a mechanism to promote start-ups and generate new ones. The concept of start-up hubs is internationally established and there are numerous examples of success. However, there is still not much-documented experience with emerging start-up hubs, especially in East Africa and Uganda in particular, where a start-up ecosystem has to be established first, such experiences are important. The question here is whether established practices will be successful with start-ups and hubs in these emerging start-up ecosystems. There is also the question of appropriate metrics to assess the progress and success of start-ups. The five empirical studies in this thesis go exactly in this direction using case studies and a survey in Uganda and Kenya. In the first study, we aimed to learn whether software start-up patterns in the Swiss-Finnish ecosystem apply to Ugandan start-ups and interviewed seven software start-ups. The Ugandan start-ups identify with similar aspects of the context and problem addressed and adopt similar solutions of the five patterns solutions found in the Swiss-Finnish start-ups. The result confirmed the generalizability of patterns across cultural and ecosystem differences. Since hubs are vital in nurturing start-ups, our second study investigated the operations of hubs and the metrics the hubs used to assess the progress of their software start-ups. Hubs were found to lack standard start-up selection criteria, provide networking, team-building events, value addition activities, and mainly give business growth incentives to start-ups. They also notice business and organizational effects of their software start-ups’ incentives, provide incentives to alumni start-ups, and measure business and scalability metrics. In our third study, we investigated metrics in early-stage start-ups and the perceived benefits of using them. We found that start-ups in East Africa use business and product-oriented metrics and expect to benefit from measuring. Despite the differences in the metrics, both start-ups and mature software companies cover similar metrics in decision making, e.g., business, organizational and technical metrics. However, what influences the choice and use of metrics in start-ups and mature software companies is unexplored. In the fourth study, we aimed at understanding the differences better by deriving ten characterizing dimensions for the metrics and surveyed 19 software start-ups and ten mature software companies in Uganda. The results show that metrics used in start-ups and mature companies differ regarding the frequency of assessment, automation of the measuring process, type of investment in the measuring tools, and the metric’s final form. Metric choices for start-ups in emerging ecosystems are not necessarily the same as those in developed ecosystems. Nonetheless, metrics, often visualized with dashboards, are still considered crucial in helping start-ups to focus on the right aspects. Our fifth study aimed to identify key requirements for measurement dashboards in start-ups in the emerging East Africa ecosystem and the expected benefits of using the dashboards. Results indicate that start-ups want dashboards to visualize performance and expect performance-related benefits. The empirical studies in this thesis thus contribute to 1) the knowledge of practices, patterns, and measurements in software start-ups and hubs, 2) a new perspective on the characterization of software start-up metrics, and 3) a set of requirements that start-ups can base on to build measurement dashboards. In conclusion, start-ups in the emerging ecosystems face similar challenges to those in developed ecosystems and largely address them similar to those in developed ecosystems with slight variation in solutions potentially due to contextual differences. Hubs as key ecosystem actors variably select start-ups and provide incentives while focusing on business and scalability metrics to track their start-ups. The metrics used in start-ups can potentially be chosen differently compared to those used in mature companies and software start-ups like other businesses will want to use dashboards that visualize their performance