With half of all companies admitting they are not that effective at responding to the application economy, it is worth looking at the major obstacles to success in this new environment.
It is apparent the obstacles are many and varied, with seven different issues garnering at least one in five votes.
Budget constraints top the list, with lack of resources not far behind - both indicators of the age-old challenge of investing for innovation while still "keeping the lights on". Lack of knowledge and/or skills are also related to these issues - recognising how difficult it is for non-technology companies to re-tool their skills to become a more software-enabled business. There are also organisational issues including: culture, changing corporate strategy and lack of executive management support.
The second biggest obstacle surrounds security concerns, and bears closer examination.
The subject of security
Why should security be such a big issue?
Firstly, providing a secure environment that protects identities and critical data with multiple, expanding mobile touch points is not simple. In fact, survey respondents list "improving the experience" as their number two security priority, second only to protecting against data breaches. Another challenge is securing the application program interface (APIs) so they can be made available to customers and partners, as access to applications is expanded.
It is apparent this becoming increasingly important. According to the survey, 79% of respondents provide access to their APIs to customers, suppliers or partners. In the application economy, security must be an enabler of the business, not a restrictor of it. In the next Industry Insight, I will examine what enterprises are doing about these obstacles in order to succeed in the application economy.
The research asked companies which reported they were not effective at responding to the challenges of the application economy, whether they were increasing investment, and if so, by how much.
Overall, the average increase in investment proved to be 25%, with one in three planning to invest 30% or more. While budget constraints continue to be a challenge, enterprises are recognising they are going to have to invest in new talent and tools to succeed.
The survey data also indicates enterprises are reversing a long-standing trend towards outsourcing key areas of IT and bringing more software development back in-house. IT decision-makers were asked to estimate the percentage of their company's application development done in-house: today, in the past, and in the future. Over a four-year period, the percentage of software development being performed in-house will have increased by 11 percentage points, from 33% to 44%.
Why in-house software development?
Bringing more software development back in-house is a recognition that these skills need to be a core part of an enterprise's DNA, but sometimes the pressure to expand the application footprint means skills can't organically grow fast enough. When this becomes an issue, enterprises are turning to software acquisitions as a way to get the talent and the technology they need. Respondents were asked if their company had made (or intends to make) any acquisitions to add application development capabilities.
So, is the application economy driving software acquisitions?
The simple answer to this question is "yes"!
A surprising 52% reported they have either made a software acquisition or plan to do so in the next 12 months.
In the application economy, security must be an enabler of the business, not a restrictor of it.
Only 19% say they have no plans to do so. This is a very startling result - probably no better data point exists in support of the proposition that every business is a software business than this one.
Some of the actions that leading enterprises are taking to ensure success in the application economy can provide insight into what others may need to do. I would like to address this under the specific header of the "Leaders and laggards" - what they are doing and how that is affecting their businesses. I will address this in my third and final Industry Insight in this series.
The survey: This global study was conducted online by UK-based Vanson Bourne in July-August 2014, with 1 425 senior IT and line-of-business executives at enterprise organisations with revenue of at least $500 million. The survey was conducted across five industry verticals of financial services, healthcare, retail, telecommunications and media/entertainment in the following 13 countries: US, Canada, Brazil, UK, France, Germany, Italy, Switzerland, Spain, Australia, China, India and Japan. For further information, log on to: www.ca.com/za.
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