Thesis work paper Improving Cash Flow in Software Companies

The basic premise is to produce more versions with fewer features more quickly (Davidson, 2001), with a more targeted customer base and at a lower cost. In short using continuous incremental improvements to improve cash flow and thereby increasing profitability.
This follows exactly on from Dr W Edwards Dening’s “Process of Continuous Improvement” (Walton, 1996). The increase in the number of software releases is similar to a ‘virtual subscription’, with customers updating their software more frequently.
One example of this has been in the software gaming industry. Epic Games Unreal Franchise has moved from releasing a brand new gaming version every 5 years, to a new version minor version every year. For example the original Unreal Tournament was released in 1999, and the next version was released in 2003. Although the product met with commercial success, customers were also faced with increasing choice from new market entrants. Europe, the United Kingdom, Australia and former “Eastern Block” countries have all entered the software gaming industry and prices have begun to drop as competitors fight for customer’s share of wallet. Responding to the change in competition, Epic released the minor upgrade version of Unreal Tournament 2004, which met with huge success. Davidson (Davidson, 2001) and Shapiro (Shapiro et al., 2000) both observe that releasing software more often and at lower prices not only improves cash flow, but also generates significantly better customer feedback.