Cloud, Data, and AI enable even more software-driven value chains
The digital transformation is far from complete. Even though it has been underway for a while, companies are still asking themselves how they can put Cloud, Data & AI to work for them to improve, i.e.:
- Defend current core businesses
Save costs & improve quality - Nurture emerging businesses
Speed up time-to-market and get to scale - Explore future business options
Incubate data-driven business and service models
As Innovation Manager of a large IT company, I am at the heart of such discussions and have the privilege to contribute to various industries.
Typically, those companies' business departments and C-level managers are bombarded with value propositions, use cases, details, and expert presentations on various tech topics, but the big picture is never explained. The forest is not seen for the trees.
The reason is that the people with those presentations try to sell you costly digitization band-aids. Do the following examples sound familiar?
- You need to think of your architecture in containers and host it on Kubernetes!
- We have an astonishing prediction AI; you can use that to predict your revenue (or whatever)!
- With OpenAI GPT-3, you can generate creatively written texts! And by the way, this now also works with pictures!
- You should redesign your applications in cloud native!
- Introduce RPA (Robotics Process Automation) to save costs in Process XY!
- And so on.
Sure, you immediately understand the single benefits of those new tech capabilities: saving a few costs in a process here or getting a little faster there. But where does that lead in total? How do you prevent this from becoming just another zoo of digitization projects that aren't connected to something bigger?
The bigger picture is that Cloud, Data, AI (and other tech innovations) expand the range of value chains you can execute with software.
I mean that the ultimate goal in digitization is to recreate an incumbent value chain in software to provide a better value at a competitive price for the customers of that value chain. That's what Marc Andreessen meant with his iconic quote, "Software is eating the world, in all sectors".
The suffix "In all sectors" is often forgotten when reciting. Suppose you talk to creative people in the media industry, for instance. In that case, they quickly understand how insurance brokers get disrupted by comparison platforms or incumbent banks by online banks. Still, in the same breath, they don't see how their job and company are at risk of technological disruption.
And for the current moment, they are right to do so. A programmer can't just write software that licenses content or creates original content, then puts together attractive entertainment packages with excellent branding and publish them on the web or in a paper magazine. Yet!
The thing is that with every new technology release and every step that cloud, data analytics, and AI get better, it becomes more likely that this will become feasible and the next value chain (and thus an entire industry) will be disrupted by software - even the ones based on creativity!