Software-Defined Enterprise: Rebuilding Traditional Businesses into Software Powerhouses

The two top performing businesses by net margin in 2011 and 2012 were tobacco and software.  The software industry boasts high margins and other industries are studying the model to see if changing their businesses to be more software-driven can’t boast their margins and profits too.

Paul Muller, Vice President of Strategic Marketing at HP Software, said that “the nature of the enterprise is changing.  We’re increasingly moving from being focused on the things we make, whether it be the telephone calls, finance, or bricks and mortar.  And if we think about our experience and interaction with an enterprise, it’s increasingly being mediated through experience.  Things like mobile experiences, web experiences, web devices, and applications…  Almost all of the top-tier banks now have more programmers working for them and spend more money on software development than Microsoft has spent in developing Windows 8. So the question then becomes, are they traditional enterprises, or are they really software companies? And if you think about a software-defined enterprise, a whole bunch of new behaviors and capabilities are required that aren’t necessarily the same as what we’ve had in businesses for the last century.”

Muller said that “a modern motor car today has a 100 million lines of software inside of it, and the F-35 strike fighter is estimated to only have about 10 million lines. Now, if you’re a chief executive officer of a company, and if you’re making cars or for that matter, running a bank or a telco, have you been trained in what it’s like to lead a large software organization? If you’re that dependent on building, delivering, and ensuring the security of the software, are you going to trust that to your chief information officer, or are you going to have to build at least some core competency in it yourself? So, number one, it’s changing from the top, and number two, it’s thinking about the speed at which you deliver software.  We can’t afford to wait quarters or years or sometimes multiple years to get our software from idea to implementation.  We need to accelerate implementation on nearly a daily basis, and that changes a lot of processes.”

Sinclair Schuller, CEO of Apprenda, wrote for Wired Magazine that “to compete and be more relevant, companies must evaluate how they can add revenue streams through software. Companies such as Diebold, Nike, and Tesla have already begun experimenting with ways to improve operational efficiency and transform their services with software and have been met with great success. Aware that tremendous potential exists to increase net margins, improve customer acquisition, and enhance customer loyalty, companies will continue exploring new ways of generating software-based revenue.”