That’s the lesson I took away from reading a recent study commissioned by CA Technologies (a sponsor of this site) of 1,425 executives at companies with at least $500 million in revenue, with headquarters in one of 13 countries (including the U.S., the U.K. and Japan).
The work, dubbed “How to Survive and Thrive in the Application Economy,” found that “leaders” – meaning firms that effectively execute on application-related strategies – outperform “laggards” on several financial fronts. For instance, leaders have more than double the revenue growth, 68 percent higher profit growth, and 50 percent more business coming in from new products and services. The study is the first of a series.
A key lesson: No matter whether an enterprise is in health care, retail, telecommunications, or media/entertainment (the five verticals surveyed,) the reality is it’s also in the business of producing and managing software applications.
Customers are more likely to both experience and interact with a brand, and an enterprise, through software apps than through live people, the study notes. “It’s little wonder that (banking giant) JPMorgan Chase now has more software developers than Google and more technologists than Microsoft,” the study says.
Indeed, more than half of respondents said their industry is being “very” or “extremely” disrupted by the application economy. Another 44 percent have felt that disruption in their company, the study found.
One way this issue manifests itself is in increasing pressure to release new applications faster than before. Some 60 percent reported feeling the heat on this front to satiate customer demand, with an identical amount also citing competitive actions in the marketplace.
Likely as a result of that pressure, 51 percent of respondents said they’d released four or more external customer apps in the last year, with 56 percent having issued four or more internal apps.
Ready or not?
Interestingly, the enterprise respondents to the survey were split on the question of their readiness for the challenges of the application economy. About half said they were “very” or “extremely” effective in responding to it. The other half said they were “moderately,” “slightly” or “not at all” effective.
Obstacles that respondents cited in their attempts to succeed in the application economy included budget constraints (37 percent), security concerns (35 percent), lack of resources (27 percent), lack of knowledge or skills (26 percent) and lack of executive management understanding the benefits (25 percent.)
Among the group of companies that said they weren’t effective at responding to the app economy, some 39 percent said they planned to increase their organizational investment by up to 20 percent over the next five years to improve in this regard. Another 33 percent said they would hike investments by up to 40 percent over that same time frame.
How leaders respond
Here are some lessons that CA gleaned from the study on how leading companies are using the emerging application economy to perform better,
- Embrace DevOps. About 49 percent of leading companies use this software development technique to speed up delivery of high-quality applications.
- Use security to build business. Some 47 percent of leading companies reported increased revenue from new services enabled by security – with 54 percent having seen a boost in customer usage of apps or services because of those security initiatives.
- Manage IT as a business. Leading companies are more likely to use software tools to manage their information technology operations as a business. The result: 42 percent of lines of business executives reported being “completely satisfied with their IT organization’s ability to understand business needs.
- Adopt an enterprisewide approach to mobility. This results in higher levels of consumer satisfaction, along with getting mobility applications and services to market faster.