|Strategy

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There is increasing urgency to include software and data competency in corporate strategy. It is no longer a nice-to-have. Software competency is rapidly becoming a matter of survival. The disparity between companies that create their own software internally and those that don't is growing.

Importance

Companies that effectively leverage software and data quickly pull ahead of those that don't. These companies are gaining both market share and greater external investment.

We see more and more that companies – across a wide range of industries - are being acquired and invested in because of their software; software that is (1) a leader in the industry or (2) is better than their competitors.

Additionally, because software is intellectual property (IP), it has the potential to increase the company's valuation.

Where is software in the organization?

Software and data must be included at the highest levels of strategy development. Strategy should consider both what software to develop, and how software development will become a competency within the organization.

Software and data need to be woven into the entire value chain. We recommend that companies understand market positioning before and after software becomes a competency - how this new competency changes company culture and how they will drive continued innovation.

Developing competency

To create software competency it is critical to identify what that means for your company. What value does the executive team and board see a software competency bringing to the company? How does software and data impact products, services, operations, customers, etc.

Some organizations are comfortable creating this new business area internally. We prefer this for several reasons. The most important reason is tight integration with core strategy and operational elements of the company.

For some companies, however, standing up internal software competency is not feasible, or is not desirable. In these cases, a close relationship with external software providers can create similar strategic alignment. These types of relationships should protect IP and create similar value without the immediate expense of creating an internal software and data team. This may be seen as a “try before you buy” approach.

We also recommend a clear roadmap to software and data competency. That roadmap should identify business priorities and include an evolution to internal software competency.

Final thought

Industry research on this subject is easy to find and clearly points to a structural change in the way businesses operate. Software is a new part of the value chain. Those companies that develop software and data competencies have a tremendous advantage over those that don't./p>

The market itself is highlighting industry leaders. Software-enabled companies are gaining more investment, experiencing more growth, and driving market consolidation.

How might software competency change your company's market position and strategy?

Jeff Newman
Founder and CEO
Mauka Technology Inc