Regardless of the industry you are in, you almost certainly use software applications to support, if not carry out, most value chain activities. Depending on the industry you’re in, software applications likely facilitate customer acquisition, sales orders, billing, recruitment and induction, payroll, performance tracking as well as strategic and management processes. If you’re in a service industry, software likely coordinates primary value chain activity workflows; and analyses, models and optimises service delivery. If you’re in manufacturing, software applications likely control procurement, production, inventory management, warehousing and distribution systems. When up to 90% or more of operations can be facilitated by online software, you are most certainly in a software business. You’re in a software business even if those activities aren’t currently being facilitated by software, when they in fact can be. This is because the competitors that will disrupt you are likely taking steps to digitise every activity that can be digitised. Or they will begin their lives as digital natives, with all of their activities being run / facilitated by software. This matters because, ultimately, software is determining how well, how quickly and to what scale all the activities that must come together to serve customers are being done.
Digital Sceptics vs. Digital Transformers vs. Digital Natives
In a lot of our platform and application integration work, we have long established businesses integrating legacy systems to newer applications and platforms (e.g integrating legacy on premise systems with cloud platforms and applications like GoogleApps for Business, Xero, Salesforce, Tableu etc). But most of our integration work actually comes from newly established businesses that have 100% cloud infrastructure facilitating all value chain activities. To be sure, these newly established businesses don’t have the market based assets, established routines for delivering customer value or the resource base of their long established competitors. But we never cease to be amazed by their leanness, agility, effectiveness and scalability. A case in point is a recent engagement we had to integrate the different applications of a 100% cloud accounting practice (i.e. they had no physical infrastructure besides laptops and a wifi connection). Their degree of digitisation and automation meant that the practice’s operating costs were less than 1/5th those of traditional practices we’ve previously worked with. By eliminating time consuming and error prone manual processes, the practice was also much more effective at serving customers. Unlike a lot of its SME competitors, the practice was able to serve a local, national and international client base (which was surprising given the complexity of differences in accounting standards across countries).
Software as an “offensive play”
That every business is a software business is not an original or new insight – nor can we take credit for it. In fact it’s old news (e.g try a simple Google search of the phrase). But we’re convinced that software should now be regarded as an “offensive play”. Taken this way, it can be a powerful weapon that offers new potential revenue sources, transforms customer experience, delivers previously unimaginable operational efficiency breakthroughs and provides new levels of agility and scalability. Taken otherwise or put off long enough, it can result in painful disruption or a long drawn out death by margin erosion or customer defection.