No matter what business you are in today, the reality is that your company is ever more reliant on software. Whether you buy it from others or build it yourself, software is at the heart of nearly everything you do: selling, servicing, accounting, communicating, collaborating, scheduling and even manufacturing.
In a recent letter to shareholders, General Electric CEO Jeffrey R. Immelt offered a view of where things are headed: “We believe that every industrial company will become a software company.”
You may not work for a software company, but when your entire business is mediated by software, you better take seriously the people, process and tools needed to build, buy and deploy software.
A report from the McKinsey Quarterly by Peter Andén, Chandra Gnanasambandam, and Tobias Strålin states that:
Software is a key to market differentiation and value creation for an increasing number of products and services.
Despite the mission-critical nature of software, it gets surprisingly little attention in the C-suite. Most often, it is relegated to functional managers, several levels down the organization, who manage teams of programmers.
New research suggests, however, that companies pay a price when they undervalue the strategic importance of producing excellent software. We examined three core measures of software-development performance at 1,300 companies of varying sizes and across all regions of the world. (See Exhibit)
Raising the profile of software development
CEOs need to determine whether they have the right organization and capabilities to compete in an environment where software continues to change the game. Asking three questions can help start the process:
- What are the strategic stakes?
- Where does our software power reside?
- How do we build the required software-development muscle?
For insight on these questions and more.
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