Why do manufacturing companies need a modern software strategy?

Dodging Disruption with SoftwareSoftware has become a critical factor of our economy. Manufacturing companies must start to think and act software-centric to survive. In this interview, software pioneer Matthias Kalle Dalheimer explains why conventional companies run the risk of becoming commoditized and how they can get ahead of the competition. What are the corner stones of a real modern software strategy? What can the "old economy" learn from the software industry (and vice versa)?

What are your thoughts when looking at software being a critical part of infrastructure and our daily lives?

You can liken this to an infrastructure, like railway tracks, where countries have built railway tracks in the late 1800s and the early 1900s and then neglected maintenance and now many western countries, like Germany, the UK, or Sweden find themselves in the situation where the technical infrastructure is starting to crumble. Even though software is less old than that, we have a similar situation of accumulated technical debt, meaning that software hasn't been updated at the rate that it should have been. So, we will see more and more problems with software that hasn't been maintained and companies, organizations, and whole countries will need to address that problem.

You mentioned technical debt. Can you say a bit more about that?

We've seen software development since the 1960s and, sadly, some of the software that is still in operation is about that old. So, companies have accumulated a huge amount of technical debt that they will need to pay off sooner or later. Many companies that come from a non-software technology background, such as machining companies or other hardware companies, find themselves unwittingly in a situation where the software that runs their machine deteriorates. Contrary to popular belief, software is not fire and forget, it needs to be maintained and updated just like hardware does, just like technical infrastructure does.

What does this mean for business strategies?

Any technology company needs to understand that a software strategy must be part of their business strategy. In the future, there will be no technology company that is not also a software company, because software is more and more the defining factor of what separates the different product offerings from each other. As a hardware company that realizes that it needs to become a software company as well, it is not enough to just buy a website or an app from somewhere. They will need to include the software development process into their overall product development process. As an engineering or technology company, you know how to do proper civil engineering or machine construction; this is something where the software industry can learn a lot from you. On the other hand, you also can learn a lot from the software industry. Agile development processes, thinking in platforms, and flexible development strategies are some things the software industry can contribute to your product development.

Can you give us an example for that?

If you're a company that builds washing machines, you will already be used to thinking in platforms in order to create different product lines and models of washing machines. The same thinking needs to be applied to your software creation. Just starting from scratch every time is going to be too slow and will not let you be on the market fast enough.

So what is your recommendation for traditional companies trying to establish modern software development processes?

Today, software development is done in teams with careful planning and stringent quality assurance. As companies are building up software assets, they also need to include operations and best practices into their software development process. It's not enough to just write software once, install it on a device and then forget about it. This will not be sufficient developer productivity for updates in the future.

How would you describe a modern software strategy then?

Part of a modern software strategy would be flexible work processes, work times, and work locations. This is something young software developers naturally expect. Today, software developers make themselves available on a global job market. As a technology company, this also means that even you can recruit on a global job market. However, this may require to make some of your processes, working times, or work locations more flexible.

So, where do you see this development going?

The number of screens that run software, the number of devices that run software is growing at a way faster rate than the number of software developers. So, every individual software developer needs to be able to produce more. It is very important that software developers get the most out of their time and follow best practices that have been established by the software industry in order to be able to keep up with the increasing demand of software development output. For that, software engineers will need to understand not only software development best practices but also the underlying business of the technology company.

For More Information...

If you have further interest in the topic, you can also read Kalle's whitepaper, Dodging Disruption with Software– how to prevent commoditization.

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