stry enterprises at this point drops from the 5-15% level of the Productization phase to the level of 2% or less, as software is now considered a cost rather than a competitive advan- tage. A major portion of this spending is also shifted from in-house development to the purchase of software products and associated services. In addition, business process consulting and IT integration services are needed as external services. As one vertical may rather soon be saturated, the software enterprises seek to capitalize their knowledge also across vertical industries. In the Renewal phase, some of the major vertical industry enterprises recognize a new business opportunity through software-supported business process re- organization and implement a new supporting software system with their in- house personnel, supported by external software implementation services. Once again, software is seen as a means to bring about a competitive advantage, and the evolution cycle starts another loop. The advancement from one phase to another in the process of vertical software market evolution is driven by a variety of factors, which depend on the current phase of the evolution and of the overall market situation. Some of these factors are discussed next. The evolution may also stop to a phase due to lack of sufficient customer base or commonly accepted processes and technology standards needed for proceeding to the further phases. 2 Drivers of Change Table 1 presents the drivers for change in a vertical software industry, along with the characteristic features related to the business strategies most applicable in each phase. The vertical industry enterprises driving the adoption of a new technology seek to benefit from their internal (innovative) processes, in order to maintain their competitive advantage on the basis of process differentiation or improved cost performance in the innovation phase. Eventually, however, the competitors in the industry copy the best practices adopted in the industry, and, in the Productization phase t