Businesses will need to recognize that their next competitor might have a radically different profile from their current competitors.

451 Research: 3 key trends that will drive software disruption in 2016

Software will be more disruptive than ever for businesses in 2016. An inescapable truth is that every business is becoming a digital business, controlled by software, 451 Research noted in a recent report on software trends for 2016. Companies that don't understand this face the prospect of dislocation, as have been seen with businesses such as taxis, banking, and hotels.

Legacy market participants may feel they have the digital assets and people they need, the report explained, but many lack the imagination to spot where the next disruption is coming from. Businesses will need to recognize that their next competitor might have a radically different profile from their current competitors. "Technology is becoming a horizontal market across everything," said Nick Patience, author of the report and vice president for software at 451 Research.

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In the past, there were businesses that didn't have a lot to do with technology. "It does have something to do with them now, and it has something to do with every single business down to the tractors on a farm, someone doing laundry, or lawyers doing legal work," Patience observed.

"That's why older companies, like GE, are scrambling to make the adjustment and hiring developers," he added. Just how serious is GE taking this digital thing? Its recent ad campaign centered on a developer named Owen and his vain attempts to explain to family and friends what he does at GE has the tagline, "The digital company. That's also an industrial company."

Know the digital terrain

Businesses that don't understand the changing digital landscape risk being dislocated from their markets. "They won't understand what their customers are doing, and if they're sharing the market with competitors who do understand what those customers are doing, then those competitors will be better able to serve them, to sell them stuff, to market to them, to advertise at themall the things you can do with digital data," Patience said. The classic example of software driving industry dislocation is the taxi business, which was blindsided by Uber.

"You used to get all this customer-centric stuff 10, 15 years ago," Patience explained. "It sounded nice, but it didn't really mean much because the company still controlled when the product was released, what it was called, how much it cost—and most of the reviews and feedback came through its call center so a lid could be kept on bad news.

"These days, your relationship with your customers starts before they purchase anything from you because they're talking about you on some social media," he said. "They're also talking about what they want and don't want, and what they like or don't like, and they're less likely to call your 1-800 number as they are to rant about you on Twitter. That kind of information can give you a competitive advantage if you know it and put you at a competitive disadvantage if you don't."

Trendspotting disruption

The 451 Research report identified three broad trends that will drive the disruptive forces of software in the enterprise market in 2016 and beyond: analytics, acceleration, and agility.

1. Analytics

The report noted that analytics will become more prevalent throughout the layers of technology that businesses use. It will appear everywhere, from development, IT management, and databases to customer experience management. "Technology is infusing businesses that weren't previously infused with it," Patience said. "That's throwing off a lot of data, and that causes organizations to invest in analytics because now they can analyze things they couldn't analyze before."

Not only that, but today's analytics can look beyond the transactional data being collected. It does that through contextual analytics, which the report predicted will attract a surge of interest from businesses in the coming year. Contextual analytics combine text and advanced analytics with machine learning to uncover insights from a mix of structured and unstructured data.

For example, he said, if you're selling cars in Brazil and Peru, transactional analytics can predict your profit margins in those countries. While that's interesting, it would be more interesting to know the demand for your cars in countries where you don't sell them. Contextual analytics can do that.

Also, more businesses will be using analytics because it has become easier to do so. "One of the trends we're seeing is that analytics is becoming easier to use while at the same time becoming more powerful," Patience said. "When those two things happen at the same time, usually very interesting things happen."

Ease of use is being aided by the increase of natural-language interfaces. It's no longer necessary to understand a query language to get the answers you want from your data.

2. Speed

Driven by software, speed will also be a disrupting influence on business in 2016, the report noted. Transactions need to be processed automatically and rapidly through customer-facing applications. If they're not, customers will take their business elsewhere.

That acceleration in how business is conducted is having a profound effect on software, the report added. Business processes are being broken down into micro-processes that can be assembled on the fly to accommodate the assortment of connected devices customers use to engage in commerce. As a result, the traditional dividing line between front-end and back-end apps is decaying and the idea of end-to-end dynamic supply chain apps delivered as software as a service is gaining prominence.

3. Agility

To cope with the acceleration of business, software development has had to become more agile, the report noted. "Web applications used to be monolithic," Patience explained. "Now they're made up of tiny components linked by APIs."

He added, "Developers are doing sprints in two- or three-week cycles rather than an 18- to 24-month waterfall project where they have to wait for everything to be finished before a new website is launched. That's a big change in software development. It's also increased the power of software developers in an organization."

With the DevOps movement, now more than ever software developers are more involved with business decisions. "They're not leading the company, but they're not grunts who have to do what they're told and produce an application in six months. It's a much more collaborative and agile process between the developers and operations people," Patience explained.

"The shift to agile from waterfall is a critical one, and companies that stick with waterfall are going to fall behind," he added. "Their customers aren't going to wait two years for an upgrade."

The business of technology

However, as digital technology spreads through every kind of business, finding developers to meet the needs of organizations will become increasingly difficult. "Since technology infuses every type of business, the battle to attract and retain developer talent goes way beyond the Silicon Valley bubble," the report said. "It affects every organization, whether you're in the business of software, shipping, beverages, or banking; the more digital a business becomes, the more good developers are likely to be needed."

And if a business thinks it can avoid the headache of finding good developers by farming out its technology needs, the report cautioned, "If you choose to rely on outsourcing companies or systems integrators for your digital transformation, be aware that they, too, are competing hard for the same developer talent."

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Topics: App Dev