Four myths about building a software business
It may seem essential for software to become the core of a business model for a broad cross-section of companies. For example, among industrial companies, 38% say they aspire to generate over 50% of revenues within the next three years from digital technologies.
However, it doesn't mean it will be easy. There are a handful of successful cases of non-software companies building software businesses. Many companies head in the wrong direction because of common misconceptions.
People may think companies become successful because of software engineering transformation.
However, product management and product organisation play a bigger role, where product managers are more like mini-CEOs for a product. The digital transition is a business-model transformation across all parts of the business.
It is a misconception that a company should hire a few senior executives from tech companies and repurpose their own IT talent in software-business building.
Non-tech companies need a lot of digital talent to shift successfully to a software model. But when it comes to top performers, your company competes with leading tech firms, meaning you are more likely to lose. You risk overpaying for lower-performing talent. To get the talent you need, second- or third-tier regions may be better.
Many businesses improve company performance by the consistent acquisition of small players. But in the case of a nonsoftware company buying software assets, it is not effective.
Smaller digital acquisitions often create difficulties integrating the new companies because the companies differ dramatically from one another. It is better to focus on anchor digital acquisition. When the bigger purchase has been integrated, your own organisational culture is digitally adjusted, putting you in a better position to start acquiring additional assets.
You may be confident in your sales force and its good relationship with customers, but selling software is different from other products as it requires technical chops and deeper vertical expertise. Your existing sales force may lack some understanding of the software they're trying to sell and the expertise to win customer confidence.
An alternative is to pull in a set of specialists that your existing sales force can contact in the sales process.
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