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Becoming a post-software business

Read time 6min 50sec
Heidi Custers, Deloitte
Heidi Custers, Deloitte

The late Watts S Humphrey, one of the great pioneers of the IT industry, is credited with coining the phrase 'every business is a software business'. It’s the title of the first chapter of his 2001 book, Winning with Software: An Executive Strategy, and as a snappy way of describing the underlying philosophy for digital transformation of the enterprise, it’s stuck. It’s also a favourite phrase of Microsoft CEO Satya Nadella, to name just one example, and has been cribbed as the title of countless blogs, speeches and reports over the years.

There's good reason for its popularity. It succinctly captures the nature of business in the digital era: since every process can and is represented digitally, optimising and improving it follows the principles of software engineering. It's a sign of these times that techniques for managing teams of developers, with exciting names such as 'lean' and 'agile' and 'rapid iteration', are spilling over from the IT teams into HR and accounting.

As common as the phrase is, however, is it still a suitable shorthand for the aim of organisation-wide digital transformation, and what does it mean when put into practice?

'Purple people'

Some argue that the phrase has outlived its usefulness.

“The concept that ‘every business needs to be a software business’ worked nine years ago,” says Heidi Custers, digital transformation strategy manager at Deloitte. “Back then, it was thought that you needed to build massive platforms internally, that you needed to be hiring lots of developers and that everyone should be able to code.”

“It comes down to data – if you haven’t got the data, digital means nothing.”

Willie Ackerman, 4Sight

While the philosophy still stands, hanging on to the phrase can be confusing. Being a software business doesn’t mean you have to make software, says Custers, which is often best outsourced. It’s more productive to say that in today’s world, every business should be a data business, she says, and the skills that that implies are very different.

“If you want to be agile, it’s counter-intuitive to have too many specialists in any one domain, such as software development,” Custers says. “A lot of technology people don’t understand business and a lot of business people are still scared of technology. There’s a school of thought that says outsource the tech as much as possible, but hire the people who can bridge the gap to technology, the so-called ‘purple people’.”

Without a clear idea of how to interpret and act on data, many businesses in South Africa embark on digital transformation projects, which are less transformative and more ‘random acts of digital’, says Custers. In other words, they’re changing some of their processes, but not really addressing the need for change at the core of the business.

“People tend to slap the digital transformation label onto any project. They have big strategies to converge industries or build big software products for customers, but they’re only committing a small proportion of their overall investment – both in terms of money and human capital – into them and expecting exponential returns. When they don’t see them, the board and the shareholders get impatient.”

There’s no single solution to transformation that will work for all enterprises, says Custers, but there are proven roadmaps that can be followed. While many organisations might baulk at the idea of embracing a broad transformation project in a highly risky economy, now is exactly the right time to be making wise investments.

“Businesses are asking, ‘how do we transform end-to-end when we’re struggling to survive?’,” she says. “But for the first time, digital transformation really does reduce costs, increase customer experience and enable growth – all at the same time. Before, you typically had to compromise on one aspect.”

At the coalface

Willie Ackerman is the chief sales and marketing officer at 4Sight, a consultancy that is heavily involved in digital transformation within South Africa’s industrial and mining sectors.

He agrees that while things are improving, the skills and processes are often misunderstood.

“Normally what happens when I walk into an initial session is that the first thing executives say is that they want to be a ‘digital leader’ and they want it now,” Ackerman says. “But, many in this sector have a long way to go before they can be ‘a software company’. It comes down to data – if you haven’t got the data, digital means nothing.”

While industrial and mining organisations are increasingly digital-savvy, Ackerman continues, many digital projects fail because t hey’re designed by people from outside the industry.

“All the technology is available,” he says, “I worked with a mining company in Botswana that had bought everything you can think of, so many applications, but you need the domain knowledge of the engineers to make the data fly.”

Millions of rands have been spent digitising and building dashboards, but without delivering real impact on the business.

“I don’t believe in doing proof of concept work anymore,” Ackerman says. “All the technology is proven. I need to prove that I can add value, not technology.”

Critically, successful transformation and use of data and software requires patience. It’s a slow journey from hindsight – only having historical data at your command – to insight to foresight through real-time and predictive analytics.

“We try to empower clients through software, but you have to walk with them,” he says. “Running workshops doesn’t work. People get very excited, but then can’t apply what they’ve learned. You have to have your engineers sitting there, working with them, getting them to adopt new ways of working until empowerment happens.”

Most importantly, the process doesn’t happen by accident.

“We forced one client to create a ‘digital committee’,” Ackerman recalls. “What often starts happening is the CEO and executives say, ‘digitise’, but then different parts of the organisation start duplicating each other, doing unnecessary work. A digital oversight committee can govern the frameworks, and understand how things fit into the digital strategy.”

Or, to put it another way, be a digital business, be a software business, be a data business – the names don’t matter as much as the processes and purpose involved.

THE ESSENTIAL SKILLS

Want to be a data business? Deloitte’s Heidi Custers says there are three essential skills hiring managers should look for and HR should be training.

“Everyone should be able to do these at a light level. They don’t need to be experts, but they do need to be fluid.”

Scaled agile project management This is not the software development framework of scrums and sprints, but the ability to organise in cross-functional teams and understand how validated learning and iteration are an essential part of work.

Human-scale design and design thinking People working on back-end systems wonder why design thinking is important, but even dry topics such as risk and compliance can be important exercises in design thinking. Good, human-centred design for any business process or application helps to build trust, preventing the traditional management silos that stop businesses from innovating.

Insight and analysis of data Understanding how to select and interpret metrics that have meaningful impact on the business is vital. As machine learning and AI become more common, the value of human insights for training models becomes even more important.

This article was originally published in the March 2020 issue of ITWeb Brainstorm magazine.

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