‘Application Economy’ Now Impacting All Sectors

By October 02, 2014

Larger firms need to implement strategies to keep abreast of changes taking place in their value chain and respond to the need for closer consumer engagement, which are being fuelled by the explosion in software development – what is being called the ‘application economy’.

“Every business is now a software business.” This stark claim is a central theme of a report – ‘How to Survive and Thrive in the Application Economy’ – commissioned by independent software corporation CA Technologies. Applications, whether web or mobile, are transforming the way companies relate to their customers and engage their audience. In order to investigate the extent to which this phenomenon is disrupting traditional businesses and industries, CA Technologies commissioned opinion research specialist Vanson Bourne to conduct a global survey among 1,425 senior business executives. Half of all respondents reported that their industry is being ‘very’ or ‘highly’ disrupted by the burgeoning ‘application economy’, and 44% are already experiencing this impact in their own organisation. Software engineers are playing a major role in this new-style economy where huge investment is being poured into all kinds of innovation. On average the managers polled expected investment in this area at their company to increase by 25% over the next five years, with one firm in three planning to invest 30% or more. “While budget constraints continue to be a challenge, enterprises are recognising that they are going to have to invest in new talent and tools to succeed,” says the report.

“Software is eating the world”  

The number of software engineer jobs exploded between 2007 and 2012, rising by 72% in financial services and a massive 98% in the retail (distribution) sector. To take one telling example, US-based multinational banking and financial services firm JPMorgan Chase “now has more software developers than Google and more technologists than Microsoft,” points out the CA Technologies-Vanson Bourne report. The authors stress that high quality software development helps firms to differentiate themselves from the competition. The claim that “every business is now a software business” and the famous assertion by tech guru and leading investor Marc Andreessen that “software is eating the world” are strongly supported by the fact that 52% of respondents said they have either already made a software acquisition or plan to do so in the next 12 months. In fact, firms whose business is not directly software-related may lag behind if they fail to recognise that they need to hire or acquire software skills, warn the authors. At the very least, security – ways of protecting user data – is a big issue for any customer-facing organisation. However, security should not be thought of negatively, as an unwelcome necessity that tends to put the brakes on development, but should be used as an opportunity to improve products and services for the customer, stresses the report.

Line-of-business executives under pressure from the software revolution

The survey was conducted online by Vanson Bourne in July - August this year among 1,425 senior IT and line-of-business executives at enterprise organisations in 13 countries with revenues of at least $500 million. The report highlights the fact that although major firms have already understood the importance of launching new applications or services faster than before, it is the ‘line-of-business’ executives who are feeling the impact of the software encroachment first. These people are under particular pressure to deliver in response to customer demand, competitors’ actions and revenue shortfalls, and only 6% of those polled felt no pressure to do so, the survey reveals. There are in fact few surprises among the best practices listed in the paper. A noteworthy piece of advice is however that in order to respond to the challenges of the ‘application economy’, companies need to approach the Mobile phenomenon not as a series of piecemeal projects, but in a comprehensive manner with an eye to implementing a long-term enterprise-wide strategy.


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