ase with competitive pricing. The effort needed to implement a software product stemming from the evolution of a vertical market depends heavily on the degree of standardization of hardware and software interfaces (Garud and Kumaraswamy 1993), as well as on the standardization of the business processes the software systems support. This sets the minimum to the organization size sufficient for productizing the offering, and leaves the majority of the small software vendors out of the new market niche, due to major shortcomings in their competence portfolios. In this phase, one or some of the spin-off ventures or occasionally an existing primary software venture focusing on the emerging market are often able to create the first software products matching with the unifying functional requirements of the core processes and standardizing interfaces. In the Adoption and transition phase, the micro ecologies formed around the standards grow fast and gain a higher user base, a higher vendor base and a higher market share. The vertical industry enterprises with internal software solutions start increasingly outsource their in-house software development (IT departments/busi- ness units), and adopt one of the competing standard software packages, which provide the whole product they need. If the number of the outsourced employees is in the range of 50 or more professionals, the enterprise may form a joint venture with a primary industry's software service provider. Typically this involves a few years' agreement on maintaining the existing core operational systems of the Model for Evolution of a Vertical Software Industry enterprise, or an assignment to help taking in use the emerging common software solutions. In the Service and variation phase, one or two of the micro ecologies established in the former phases will have gained the position of a dominant design. As a result, the majority of new software development initiatives assume these products to be the ones to interface with. The software spending of the vertical indu