Why Every Business Is a Software Business
A senior vice president of Citibank once told me that "we are a software business masquerading as a bank." He explained that they could not run the bank without software. I see this situation in business after business: software is now a critical part of running many businesses. Some executives recognize it, but many others do not.
One example of the growth of software is in weapon systems. Figure 1.1 shows the growth of software in military aircraft from 1960 to 2000. With the F-4 in 1960, software supported only 8% of the functions the pilot performed. With the F-16 in 1982, this proportion had reached 45% and, with the newest F-22 in 2000, software controls 80% of everything the pilot does1. As one general said, "The only thing you can do with an F-22 that does not require software is take a picture of it." That, of course, assumes that you are not using a digital camera.
Figure 1.1 Software functionality in military aircraft
The speed with which your people develop software can put you ahead of or behind your competitors. Software problems may have been frustrating in the past, but mismanaged software can now be fatal to a business. If your people do not produce quality software, testing times will be excessive, schedules will slip, and revenue will drop. You could soon be in serious trouble. The consequences of these problems are predictable.
If you extend schedules to make realistic customer commitments, you lose business.
If you make competitive commitments, your software is late and your customers are unhappy.
If you do this too often, you will be known as an unreliable supplier and have unhappy and disloyal customers.
If this condition continues for long, you will lose so many customers that you could well go out of business.
Even Fortune 500 businesses can fail, and often very quickly. In this fast-paced world, you rarely get a second chanceyou must do the job right the first time. There is no second prize and no time to learn from mistakes. In fact, you rarely have time to catch up. Then, if you are not competitive, the business consequences will likely be severe.