December 10, 2014
Companies Need New Application Strategies to Stake Out Next Competitive Frontier in a High-Velocity, Software-Driven World, According to Accenture Report
Redefining the business of applications can open doors to new revenue streams and markets
NEW YORK; Dec. 10, 2014 – Software is fast becoming a key driver of differentiation and innovation, according to a new report by Accenture (NYSE: ACN). In today’s software-driven world, every company needs to rethink its potential and reinvent itself. Companies can start this reinvention by changing the way they design, build and use applications, and also by adopting a new operating model that enables business and IT to jointly develop software to enter new markets, reach new customers and drive new growth.
The Accenture report, titled “The Future of Applications: Three Strategies for the High-velocity, Software-driven Business,” features a comprehensive analysis of the business of applications – including custom, ERP and SaaS – in light of the fact that today’s business world is increasingly high velocity and software driven.
In this environment, IT is often challenged to innovate and respond quickly to business needs because of its operational obligations. According to Gartner, IT resource allocation is currently weighted heavily toward running the business, which consumes 60 to 80 percent of IT spending1. Accenture believes that more fundamental change is needed to reinvent the business of applications for today’s marketplace challenges.
“When long-term competitive advantage depends on software, being a ‘fast follower’ may not be fast enough anymore,” said Bhaskar Ghosh, group chief executive, Accenture Technology Delivery. “Software strategies are quickly becoming business strategies. The business of applications needs a dynamic and high-impact makeover using new strategies that will help companies not just sustain a business advantage, but to gain ground on the competition.”
The Accenture report introduces three application strategies:
- Liquid applications: To compete based on agility and speed, companies can no longer afford complex, lengthy and expensive coding of applications, or massive, multi-year system implementations. What’s needed is a new way to build software—faster, flexible and more liquid—with reusable components that allow for the rapid assembly of applications in support of dynamic business needs. This approach requires modular architectures, next-generation integration techniques and a cloud-first, mobile-first mindset. Engineering innovations such as Agile and DevOps further accelerate development and deployment.
- Intelligent applications: Companies need to embed software intelligence everywhere to manage growing volume, velocity and complexity, and to maximize the business value of internal and external data—including that from the physical world. Software intelligence is made possible by an influx of data, processing power and advances in data science such as natural language processing, machine learning and cognitive computing. Thanks to these advancements, applications can automate routine tasks, improve business and IT processes through integrated analytics and ultimately govern themselves.
- Connected applications: To grow revenue and defend their market position, companies will need to create new competitive frontiers using software. Doing so requires opening multiple dimensions of application connectivity—with business partner and customer ecosystems, as well as with the rapidly growing Internet of Things that are essential to delivering new services. Connected applications will run everywhere—not just on phones, tablets and PCs, but also in manufacturing, pipelines, industrial equipment, cars, wearables and more—to convert products into product-service hybrids.
“In contrast to today’s monolithic applications, future applications need to be more nimble,” said Prasad Sankaran, senior managing director, Accenture Technology, Application Services. “Companies should begin their reinvention now in order to benefit from applications that can adapt to the pace of business, manage rising complexity and open doors to more interconnected business environments.”
The report also discusses the new operating model needed to help business and IT drive business strategy, jointly and continuously, with software.
“In the digital world, software doesn’t merely support the business, but rather is the business. Most companies’ existing operating model for software development is not fit for purpose in this business environment,” said Paul Daugherty, chief technology officer, Accenture. “Innovation must be driven jointly by business and IT, and the operating model must embrace new technology stakeholders – from R&D to marketing to operations.”
For more information on this report please visit www.accenture.com/applicationstrategies or follow the conversation on Twitter with #ApplicationStrat.
1Gartner, Presentation (slides 6, 7): Customer Centricity Demands New Approach to Sourcing Strategies —Fran Karamouzis, September 2014.
About the methodology
“The Future of Applications” is the result of a comprehensive research program at Accenture throughout 2014. It involved interviews with dozens of Accenture executives, input from clients and industry analysts, and extensive secondary research, as well as Accenture’s experience working on advanced information technology solutions with thousands of clients around the world.
Accenture is a global management consulting, technology services and outsourcing company, with more than 305,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$30.0 billion for the fiscal year ended Aug. 31, 2014. Its home page is www.accenture.com.
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