" A Software Factory is a software product line that configures extensible development tools like Visual Studio Team System with packaged content like DSLs, patterns, frameworks and guidance, based on recipes for building specific kinds of applications. For example, we might set up a Software Factory for thin client Customer Relationship Management (CRM) applications using the .NET framework, C#, the Microsoft Business Framework, Microsoft SQL Server and the Microsoft Host Integration Server. Equipped with this factory, we could rapidly punch out an endless variety of CRM applications, each containing unique features based on the unique requirements of specific customers. Better yet, we could use this factory to create an ecosystem, by making it available to third parties, who could extend it to rapidly build CRM applications incorporating their value added extensions. "
From : "Software Factories: Assembling Applications with Patterns, Frameworks, Models & Tools" by Jack Greenfield and Keith Short, with contributions by Steve Cook and Stuart Kent