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"Software is eating the world"
Marc Andreeson, Co-founder of Netscape
In those competitive business scenarios where most of the value is delivered by software, the value chains of established players are disrupted. The impact of this force will grow, with a voracious appetite for competition.
The software driven dynamic has been referred to as “unscaled” by Harvard Business Review and it makes incumbent industry players look listless. Immediate instances are Uber who have left the taxi industry stalled in their wake and agile AirBnB who have stolen a march on the sleeping accommodation sector.
Unscaling is neither upscaling or downscaling, it is small becoming the new big and it occurs when the global audience of the inexpensive Internet becomes exploited and a wide choice of modular services is accessed. It is nimble and quick and it is an innovator nirvana.
The newspaper and magazine industries have recently seen significant disruption as print circulation continues a global freefall, while the number of readers getting their news via smart phone or tablet rises rapidly. According to a report “US Smartphone Use in 2015”, published by the Pew Research Center, 64% of American adults now own a smartphone of some kind, up from 35% in the spring of 2011. A majority of these use their phone to follow along with breaking news, and to share and be informed about happenings in their local community.
This disruption is patently evident in many different industries over recent years. The disruption is not simply the move away from traditional media, but reflects a change in reader empowerment. Ordinary people now have the capability to be journalists and contribute to online conversations. All of this is facilitated by software that simplifies publishing, video production and live updates as global events happen.
Take one of the more recent developments in the manufacturing industry, that of 3D printers which are software controlled. This technology enables the rapid development and revision of products while bypassing costly traditional manufacturing processes.
However as the 3D printing revolution is gathers pace the technology is finding deployments in core manufacturing.
In 2013 a South African aircraft manufacturer Aerosud, an established supplier to major aircraft manufacturers Airbus and Boeing, started building a 3D printer capable of manufacturing aircraft components an order of magnitude faster and close to fifty times larger than any previous printer capable of making metal parts.
The average high end modern car has 100 million lines of code, creating a lower-cost entry point for non-automotive companies with fresh approaches. The trend toward hybrid and electric vehicles such as the Tesla, which is completely computer controlled will only accelerate the software shift. Software runs engines, controls safety features, entertains passengers, guides drivers to destinations and connects each car to mobile, satellite and GPS networks. The automobile is shifting from mechanical to electrical and software controls.
The degree of software control and complexity in cars and is growing and according to the Economist in January 2016, technology firms may be better placed than car makers to develop and profit from the software that will underpin both automated driving and vehicle-sharing.
Some of these firms may even manufacture cars of their own. Local Motors has produced the first of a range of road-ready, 3D printed vehicles. The Low Speed Electric Vehicles (LSEV) will debut in Q1 2016. A highway-ready version will be released in late 2016.
Uber is innovating at the intersection of lifestyle and logistics, connecting riders with safe, reliable, convenient transportation providers at a variety of price-points in cities around the world. The company owns no cars and is disrupting the global taxi industry while focusing on new logistics sectors. Just before the recent consumer electronics show in Las Vegas, GM announced a $500m investment in Lyft, US based nationwide ride-sharing service. Lyft started in 2012 and is currently valued at US$2.5B
According to research from the Global Center for Digital Business Transformation (DBT Center), 47 percent of retail executives believe that disruption could put them out of business. The combination of on-line, in-store, call center and mobile is creating a new retail customer experience called omnichannel that is managed to ensure that it is seamless, integrated and consistent across all channels. The decision as to how service will be delivered is becoming the prerogative of the digitally empowered customer rather than that of the retailer.
Managing the Crisis
While digital disruption of traditional business value chains is a fact, the disruption itself can be seen as a positive, not only because competition sparks innovation, but because it delivers greater value, particularly for the customer and those other actors who drive the success of the business, by consistently realising the resulting digital value.
In a McKinsey article, on the perils of ignoring software development, the article includes a statement that “Despite the mission-critical nature of software, it gets surprisingly little attention in the C-suite.” Further to this they add that as digital technologies continue reshaping markets, the keys to success for a growing number of companies are, embracing the rising strategic importance of software, and viewing software development as a crucial competitive battlefield.
In many instances it is not a single technology, but different technologies that merge which cause digital disruption in the value chain. Once again, change agility needs technology support. These new process demands are growing in many business sectors and because successful transition to the maximum utilisation of strategic information technology is a priority for many organisations, enterprise-class BPM principles are being hard wired into operations. Tools such as Sparx Systems Enterprise Architect and standards including Business Process Modeling are essential.
Approximately 2.3 million lines of code run the International Space Station and it is imperative that it continues to function as expected. The development of software that is mission critical or essential to the survival of business today, necessitates the use of fit for purpose, industrial strength technology.
Sparx Systems Enterprise Architect delivers revolutionary architecture to meet the challenges of the digital revolution, separating exploratory areas of the business, from those that are well established, while supporting collaborative agile development, based on the business direction, strategy and vision. It allows the organisation to revise existing enterprise architecture to support the ongoing process of business transformation.
To accept risk and get comfortable with a pace of change that is very different from the current IT operational models, it is essential to leverage technologies that have been designed to mitigate risk and that are built to support industry best practice and standards for industry.
This agile enterprise architecture platform fosters innovation, by enabling continuous building and refactoring, to facilitate the emerging and vanguard technologies. Simultaneously in a disruptive business environment where continuity is the highest priority, Enterprise Architect supports the consolidation of legacy capabilities.
Sparx Systems Enterprise Architect is the popular, powerful and affordable visual modeling platform, capable of meeting the exacting demands of enterprise IT and Business.
To manage change in a hyper changing world, organisational leaders are now selecting reliable, scalable solutions that have been extensively road tested, by many hundred of thousands of users.
In a period of global industry disruption such as is currently being experienced, it is essential to choose the right, standards based platform with the lowest maintenance overhead, to meet the challenges of predictive change management, collaboration and interoperability.