Surviving in a Data Driven World
How Software is Changing Everything
“Sofware is eating the world.” This famous quote made by Marc Andreessen in 2011 applies more than ever to today’s business world. The most valuable companies are in the tech and software industry, and the top 10 tech firms have a cumulated market capitalization of more than 5.2 tn USD in June 2019. As a comparison: Germany’s GDP was about 3.8 tn USD in 2019. Since then we had to cope with the global corona lockdown followed by the largest economic downturn in more than 70 years. However, especially the software industry was not impacted negatively. If you look to Amazon (E-Commerce), Netflix (video streaming), Microsoft (Enterprise Collaboration) they even increased their revenues and profit drastically. If you also consider the average profit of those companies in the last years, it’s not unusual to see a profit margin between 18–30%.
I would even say, those tech firms are the oil companies of the 21st century and due to their sheer market presence, they will remain on the top of the business world for a long time. Given the fact, that those companies were (and still are) key drivers for digitalization, the rest of us becomes more advanced in this topic as well — slowly but steadily. This leads to a more and more data driven economy where huge amounts of data are being generated and processed.
What does that mean for our society? Software will become more and more a commodity. With the rise of cloud computing and the “Everything-as-a-Service” economy, software will become interchangeably and hence decreasing profit margins will drop in this industry. Just having your business processes digitalized will not give you a competitive advantage any longer. Instead, the utilization of the data generated will become more important, if not business critical. This is no news since Brynjolfsson, Hitt & Kim already figured it out in 2011: there is a strong correlation of business success and the utilization of data for decision-making.
So the challenge for company leaders and managers will not only be dealing with software and services in future, but also the right handling of data generated by software. Typically, this discipline is even more challenging (merging software engineering principles and mathematics/statistics) than “just” dealing with software and digitalization. Being proficient (or at least advanced) in statistics, wrangling information out of data and how to apply it in a software context will become a key competency for emerging leaders in the next decade(s). At the same time, the application of data-engineering and -science methods to solve real world problems is another key capability, which will distinguish the average leaders from the successful ones.
So my dear reader, my only recommendation to you is the following: If you want to pursue a successful and sustainable career in a management position in future, go educate yourself to become advanced in data-engineering and data-science. Simply dealing with “digitalization” will not be sufficient any longer.
tl;dr
Software & services was a major growth driver in the past years. If you look to the next decade(s) it will become more and more a commodity though and the importance of data utilization will become the new business growth driver. As a manager and leader in a company it is crucial to become advanced in handling data efficiently and deriving valuable information out of it. Successful leaders will be determined by their capability to adopt data-engineering and -science skills. And those skills require way more competency than “just” dealing with digitalization.
About Tobias Faiss
Tobias is a Senior Engineering Manager, focusing on applied Leadership, Analytics and Cyber Resilience. He has a track record of 18+ year in managing software-projects, -services and -teams in the United States, EMEA and Asia-Pacific. He currently leads several multinational teams in Germany, India, Singapore and Vietnam. Also, he is the founder of the delta2 edventures project where its mission is to educate students, IT professionals and executives to build a digital connected, secure and reliable world and provides training for individuals.
Tobias’ latest book is ‘The Art of IT-Management: How to Successfully Lead Your Company Into the Digital Future’. You can also contact him on his personal website tobiasfaiss.com
