Put software at center of strategy, firms urged

“There’s an app for that.”

This line is no longer just a catchphrase. In the world of business, it is becoming increasingly true.

And if the experts at Accenture were correct, the future of business will become almost completely “app-centric,” requiring companies with outdated systems and outdated management frameworks to either adapt or die.

This means that in the near future, companies will have to rely more and more on software and applications— much more than they do now—to conduct their day-to-day operations and thrive.

According to Ambe Tierro, Accenture senior managing director for technology in the Philippines, Indonesia and South Korea, the business world is increasingly becoming a high-velocity, software-driven environment.

“New technologies are accelerating the pace of business, yet existing businesses and information technology (IT) approaches are seen lagging behind,” she said in a recently penned article titled “The Future of Applications: Liquid, Intelligent and Connected.”

She points out that to prosper in that business environment going forward, being a “fast follower” may not be fast enough as the velocity and volume of technology change today rock companies, industries and even entire societies to their core.

More importantly, increasing competition and increasing commoditization of products and services being offered by various companies in the market means that software applications are now considered key drivers of differentiation and innovation.

“From a supporting role in the past, software applications are now becoming a gateway to new services and revenue streams, seamless customer experiences, expansion into new markets, and a driver of business strategy,” she said. “All these are changing how companies operate and grow.”

Accenture’s latest study on the issue points out that, for many companies, information technology is still treated as an “in-a-box” concept, meaning that managers still consider it as a contained specialty function rather than a competency that every business leader must embrace.

Ambe Tierro

This traditional mindset is what Accenture wants today’s business leaders to abandon.

According to Accenture, recent research and anecdotal evidence suggest that on the average, 60 to 80 percent of IT budgets are devoted primarily to running existing systems and day-to-day operations, leaving precious little time and budget for new projects and innovation.

“Another obstacle to adapting to a software-driven business is siloed business management and IT functions which hinder organizational agility,” Tierro said. “It is said that having a silo mentality, wherein certain departments or sectors are hesitant to share information with fellow departments or sectors, reduces efficiency in the company’s overall operation.”

At the same time, current IT models used by the business community are starting to show their age.

“The fact is, many companies are trying to compete in the world of social, mobile, analytics, and cloud with applications that were designed for another era,” the Accenture executive said. “Monolithic applications are often built from the ground up—slow to implement and slow to change. The pace of change and rising complexity are also daunting to many IT organizations, which have to track more technologies and types of solutions than ever before.”

“To succeed amid disruption, companies must respond by changing the way they design, build, and use software applications,” she emphasized.

So what should companies do to face this rapidly evolving landscape, and survive and thrive?

First of all, Accenture stresses that the changes must start with the mindsets of the corporate leadership.

From there will follow IT strategies that will make future software applications more nimble.

“Companies that begin their reinvention will now benefit from relevant applications that can adapt to the pace of business, manage rising complexity, and open doors to more interconnected business environments,” Tierro said.

Accenture’s study stresses the importance of the three strategies of having business applications that are liquid, intelligent and connected—all three of these can help companies address changes in technology to become successful through software-driven strategies.

A “liquid” strategy (just like the way the term is used in financial markets) means companies will have to find a new way to build software—faster, flexible, and more liquid—with reusable components that allow for rapid assembly of applications in support of dynamic business needs.

An “intelligent” strategy means companies need to embed software intelligence everywhere in their applications and processes to manage growing volume, velocity and complexity, as well as to minimize the business value of internal and external data including that from the physical world.

Finally, a “connected” strategy means companies will need to create new competitive frontiers using software and this will require opening multiple dimensions of application connectivity—with business partner and customer ecosystems, as well as with the rapidly growing Internet of Things.

“Today, applications are changing how companies operate and grow,” Tierro said. “No longer a supporting capability, software applications are a driver of strategy and competitive differentiation. They can enable entirely new services for new and existing markets. The future of applications is an exciting one for companies that are willing to develop a new operating model for software development.”

Indeed, as Accenture points out, the velocity of change in technology, in the marketplace and in entire industries is unprecedented.

Success requires responding proactively to those changes and to the disruptive effects of software on your industry.

“In the end, both IT and business leaders must understand what it means to be a truly software-driven business,” Tierro said. “They need to understand how software can spur growth, shape new markets, and reach new customers. And, they must work together closely to orchestrate new business solutions.”