The Battle for Competitive Advantage in the Digital Economy

Latest research shows a software-driven enterprise is critical for competitive differentiation.

A new kind of company, the software-driven enterprise, is redefining business strategy and performance. They are leaders in the accelerating application economy, where code is king and competitive differentiation depends on customer-pleasing apps and advanced development methods.

In several instances these software-driven enterprise have already disrupted and even decimated existing business models, the two most well known are AirBnB and Urber, where the existing Real estate based rental agencies have been almost totally driven out of the short term rental market, and taxi licence holders find their licences have become worthless over night. And while they reach for "old world" regulatory help the Generation Y factor makes this a pointless exercise, the horse has bolted.

Urber has social currency to spend, existing taxi companies have none.

In both of these cases software has simply reduced the supply chain, and provides a direct peer-to-peer (P2P)  relationship to more effectively, and efficiently deliver existing services.

We see a future were Software will be used to radically change whole professions, the most obvious one is property related functions, Urber has already proved this is possible for the short term rental market, the days of lawyers and real estate agents charging for what software can radically change, in the same way as AirBnB and Urber is obvious to market observers.

Imagine as P2P property sales replace the current 70% of sales which are done via simple web site on internet today, as well as the old world 30% processed via physical estate offices. Now add almost instant settlements, without the collection of people currently involved, all technically possible today.
Another area ripe for disruption is the $14 Billion bank fees (Australia alone) market, after all payments is just moving around bags of bits, something software can do for near zero cost.

Oxford Economics conducted a global survey of senior business and technology executives, and the results show that 78% of enterprises believe that the shift to becoming a software-driven business models will be a critical driver of competitive advantage.

While the application economy is growing rapidly and already having a significant impact on the way companies view their business, building a software-driven enterprise is no simple task, many (wrongly) are spending millions re-inventing the same software wheels, purely because they believe they need to have everything "in-house". They miss the fact that Software has also gone though a radical change, and has become a commodity, the future comparative advantage comes not from software alone, but by the way software is used within the market place. Within the current and future market, first to market is the "obsolete" competitive advantage. As an example there is simply no reason anyone should pay for Accounting Software today.

Urber owns no cars and employs no drivers, it simply connects customers to suppliers. Urber's software solution could easily be duplicated, but their "first to market" advantage is harder to replicate.

“Companies that don’t accept and meet disruption head on, simply won’t exist.”

Driven the future is Generation Y, social media and new ways of looking at old problem spaces, these must factor into your digital transformation strategy.

We believe one quarter of the Fortune 2000 will have changed within the next two years, with those unable to understand Generation Y buying behaviors losing out. It is essential for not only digital channels to be built, but also fundamentals to be revisited, such as business models and the way in which services are provided, and interaction with customers

The Million plus "APPs" available on Google Play, demonstrate what the future looks like, once the focus moves from games to business applications, the movement has already begun.

The future is much like the past, where synergistic "partnerships" between software and marketing companies will drive the next wave of client centric enterprises, where the client becomes one with the enterprise, much like existing social platforms such as face book, but with a commercial focus, these solutions are almost unlimited in scope.



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