How software drives innovation and enables digital business

Twenty years ago, businesses and consumers were focused on the computer or gadget. Today, everyone recognizes that it’s the software – the platform if you will – where the greatest amount of innovation is occurring. Three keystone trends are making software the primary driver of business innovation and agility – hardware commoditization, cloud computing and open source.

Since the invention of the modern computer, the hardware side of the technology drove most of the innovation. However, in the last 10 years, the computing and communications hardware advances in ICs, wireless or wireline networking, storage and output have begun to reach their limits in terms of tangible ROI. While advances have enabled new types of products, it is the software platform that ties the technology together to make one system more valuable than another. Hardware, in large part, is now a commodity.

Previously, we discussed how a digital business is a fundamentally different mindset, manner and way of approaching how your organization delivers products or services to a marketplace. A successful digital business is supported by three primary pillars — market insight, a collaborative leadership team and one or more platforms.

The raw computing power available to rent from cloud vendors like Amazon, Google and Rackspace, among many others, is staggering. In as little as 10 minutes, a business can be born online – with the ability to scale to meet unprecedented levels of worldwide demand. This has made businesses of all sizes either utilize cloud or build organizations that deliver services via the cloud. What is differentiating these businesses or their new-found capabilities? Software.

Open source software can significantly shorten build times while increasing the pace of innovation

In particular, open source software, once viewed as an engineer’s hobby is now a mainstream trend. Developers no longer need to design foundational, off-the-shelf or customized software products. They can build on the ever-growing foundation of software libraries that have been developed and shared within the community – then innovate and differentiate higher in the software stack. Open source software can significantly shorten build times while increasing the pace of innovation.

With software development and platform computing costs getting less expensive everyday, digital businesses have unprecedented opportunities to drive disruption in their industries. Uber, for example, emerged in just a few years time to generate a tectonic shift in the car-for-hire industry. What’s impressive is how the momentum of their initial digital business is quickly expanding their market reach to include food deliveries and on-demand helicopters.

Ignoring the business potential provided by software — be it increased efficiency and automation, competitive advantage or outright subsuming innovation — puts organizations at risk. Rather, organizations that embrace what’s possible through software are transforming themselves into digital businesses with limitless potential.

According to research from Gartner, software innovation is a top-5 priority

Software is the real champion, driving value in enterprise systems, transforming businesses into digital players and differentiating one gadget from another. According to Gartner, the U.S. enterprise software business, by itself, was expected to generate approximately $335 Billion in revenue. That is a staggering figure. When you also consider the value of consumer and government software sales, the “software industry” is a substantial cornerstone of our economy. And as IT services overall move towards a nearly trillion-dollar business segment in the U.S. it’s clear that the potential of software is a driving force within the economy and our lives.

In another recent Gartner survey, 45 percent of respondents, with knowledge of their organization’s software strategy, indicated that one of the current top five IT project priorities is “application modernization of installed on-premises core enterprise applications.” Which is a fancy way of pointing out that innovating software is crucial to their business. In addition, the same survey stated that 41 percent of respondents agree “extending capabilities of core enterprise applications” is also a top five priority.

In short, smart businesses understand that it’s a digital or die world we live in. These leaders are rightfully investing a great deal of money in customized software and these projects aren’t cheap either. Software engineers are typically the most expensive resources in an organization, outside of the C-Suite, and play a pivotal role in the potential of your digital business. So, you would think that this expensive resource would be carefully nurtured and properly supported.

An upcoming article will delve into the misallocation of software development team members and the detriment these issues can have on your company’s future.