Accepting that future success depends on how good your organisations becomes with software does not come easy for leaders who have succeeded in a traditional industry sector; it be oil, health care, engineering or manufacturing.The hardest part is to understand the practical implications with respect to what decisions and actions that must be made and carried out to succeed.
Before we try to answer what actions that must be taken, lets take a look at what software is and what its used for. Software is a representation of systemised knowledge that can be repeatably executed by a computer.
Knowledge mean anything from what is needed to control the temperature in a living room to pursuing strategies in war-games or even war it self and everything in between. One off the most common applications is to use software to strengthen human capabilities and senses, as is the case in medical ultrasound imaging. It is software that make it possible for doctors to look into the internals of a beating heart and to see if the heart chambers are performing as intended.
The same is true for seismic imaging where software algorithms are used to create images of 200 million old sediments, tousands of meters below todays surface.
Its by understanding that software is knowledge we understand why software is perishable and need to be continuously updated. The need for continuously updates includes also the software tools used to create software. This make change the name of the software business. For sectors who strives to avoid change this feels scary.
At this point one might argue that we have created software programs for more than 50 years, what have changed? The answer to this is the cost of computers. Back in the days a computer was so expensive that only the most valuable problems where tried addressed, and programming was for the first of the few. Today computer hardware is pervasive and almost for free, making the start-up cost with global reach affordable for anybody. Think of the app-stores and the fact that smart teenagers with some luck become millionaires.
The effect of this is that software is leveraged at the edge of any business, forcing firms to systemise their intelectual property and knowledge and package it into software for sharing, sale or just internal use.
On the strategic level the implication is that vendors become competitors, customers might become suppliers and nobody knows how the market and the competition will look like down the road.
For senior management the solution is simple, they have to make software a first order thing to manage and create an organisational entity that is made for taking care of software at the edge of their business. Further they must create a culture for learing and continious change.
By not doing so they will loose opportunities they never new they had, and in the worst case their organisation will face extinction.
How such entity could be created will be addressed next.