In my first Avanade blog post, I quoted a Forbes article that predicted software was moving us into a “post-hardware” world. Well, apparently software wasn’t content to just take over hardware… now it’s taking over all business itself! In a later Forbes piece headlined “Now Every Company Is A Software Company”, the thesis is made that companies no longer are able to compete based upon traditional competencies like efficiency of their supply-chain or unique manufacturing process. Instead, the author contends that any separation between traditional and high technology industries has passed, and those companies who innovate in software are able to reap much higher agility and deliver higher levels of differentiated customer experience.
Hmm…. Perhaps next they will write about how Software will save the planet from impending alien attack! (Coming soon to a theater near you just in time for Academy Award consideration…) Okay, so I admit to at first being a bit underwhelmed by the Forbes article. This is a headline that’s been discussed ad nauseam since we first saw the “dot-com” craze begin transforming modern businesses nearly 20 years ago. Also, working at a company like Avanade, we are already fully in the software business ourselves – both because of the software we write for customers as well as the unique software that we deliver directly to the market as Software-as-a-Service.
But… in fairness, in re-reading through the article there are a couple of things that did resonate with me. It wasn’t so much the uniqueness of the thesis (it’s not) but rather the recognition that there are a few new driving forces that are increasing the impact of software more than ever before:
- Consumerization – Many of my colleagues at Avanade have been discussing consumerization of IT trends, so I won’t rehash them here. However, I will just observe that expectations about user experiences have been permanently raised as a result of social technologies and mobile apps. Customers now expect more from all businesses when they purchase – it’s table stakes to be able to access information about their account or order status at any time from anywhere. So, this increasingly ups the ante on businesses to invest in software to find new ways of differentiation, by building fresh and compelling user experiences across all experience channels (via web, social media, smartphone, in-store kiosk, etc.)
- Massive amounts of data – The rapid explosion of “big data” is exponentially increasing, due to large streams of events being thrown off from mobile devices and pervasive telematics (from your phone, car, clothing, home appliances, the smart-grid, etc). In order to gain any insight from this data, powerful software is required to turn this data into something meaningful and actionable. The businesses who fail to exploit the data that exists will be competitively disadvantaged, and lose the opportunity to react quickly to changing customer and market dynamics.
Both of these driving forces accentuate the need for software, and are requiring businesses to develop new competencies and skills around software development. Those who invest in building this capability will be better poised to capture new business opportunities and to respond with greater business agility to the increasingly fast clock-speed of business. Those businesses who fail to see this as a core competency will find themselves increasingly vulnerable to their competitors in the marketplace.
Want more proof? Over the past weekend, Amazon ran a campaign that offered a 5% discount to consumers who did a price check from the Amazon mobile phone app while shopping at a physical retailer. This created a furor in the news and raised much discussion around whether this practice is anti-competitive, an abuse of U.S. sales tax loopholes and hurting the economy.
But I predict that pretty quickly no one will write about this topic at all – because this practice will simply have become the new normal. To survive and compete, all retailers (whether traditional or e-tailers) will need to embrace the consumerization, mobility and big data trends and harness their own unique software IP in order to compete for customer hearts and minds. Once something becomes a common practice, it’s no longer newsworthy – meaning that press will have to move on to other more exciting topics.