Quantifying the economic value of hydrologic software: A Grounded Theory approach

Eglė Aleknavičiūtė

Student thesis: Master thesis


The topic of the thesis is an economic value of hydrologic (numerical water simulation) software. Dutch research institute and specialized consultancy Deltares is facing a challenge – shifting business models, from the conventional license fees and support income to the open source environment. Open source software implies no more lump sum purchase revenues for the institute, while complex scientific software requires extensive investments to keep up the state of the art technology development. To adjust the business models, but also to justify the rationale for the governmental subsidies, the proof of the economic value created by the use of hydrologic software raises a question. After investigating the existing economic literature, however, it proved obvious that no economic valuation framework exists for quantifying the economic value created by the use of scientific software. The research is hence focused on two goals. Firstly, on the development of the valuation framework, and secondly, on the quantification and assessment of business/economic value of Deltares hydrologic software packages. The method employed in the research was chosen according to the circumstances. Qualitative exploratory research, and more specifically – Grounded Theory approach is suggested to be used in the fields that have not been studied extensively before. It entailed interviewing, transcribing, coding and comparing the interview material to conclude with the emerging framework. The sample included seven Dutch engineering consulting bureaus, two of them – smaller but highly specialized companies, and the rest – large international companies, falling into top 10 engineering bureaus in the Netherlands. As suggested by Grounded Theory, additional interviews were sought as more questions were arising. Proposed method of valuation is based on layering economic value in different levels – project level, organizational level and unanticipated value. As a case valuation, an attempt to quantify the value of Delft3D and SOBEK software packages is illustrated. The closest estimate for the project level value is based on the number of modelers working with the hydrologic software within the companies, and the multiplier of the direct value is offered as a possible spread of direct value on the organizational level. Unanticipated value is impossible to estimate at this state of research.

EducationsMSc in International Business, (Graduate Programme) Final Thesis
Publication date2011
Number of pages66