10+ years after ‘Why Software is Eating the World’, Marc Andreesen’s sublimely prescient essay, it’s easy to note that his observations are still relevant today. When Marc’s essay was published, SaaS spending was projected to reach $9 billion. Gartner noted last year that SaaS spending is likely to reach $140B by 2022.
The essay listed companies whose dominance was fueled by software, but it’s telling that Marc didn’t title the essay “applications are eating the world.” It would be a mistake to interpret Marc’s point to mean companies would win by simply using off-the-shelf applications.
Thanks to SaaS, the consumption of software applications has skyrocketed in the last 10 years. The average company uses hundreds of apps. Yet, industries continue to be disrupted by software at a startling rate. Household names like Neiman Marcus, Hertz, and J.C. Penney continue to struggle. What gives?
I’ll share a hint: Rather than off-the-shelf software, most of the successful companies listed in Marc’s essay used proprietary, bespoke software to create market differentiation and disruption.
That key distinction—that custom software is how companies actually win—explains why Gartner predicts that by 2023, 60% of organizations will list composable business as a strategic objective. As software continues to eat the world, composable software will eat the enterprise, empowering more companies to win an unfair share of their market.
Related: A guide to no-code automation
Off-the-shelf software is not differentiation
Off-the-shelf software, sometimes also referred to as commodity software, is any solution offered by a vendor that’s readily available for purchase. For example, if Company A buys software that allows them to automate customer emails, are we as customers more likely to prefer them over Competitor B, who likely has the same software? No. The purchase of this software offers no value to differentiation between the two.
The insatiable demand for off-the-shelf software applications shows no sign of slowing. At first glance, this is an amazing feat of automation. However, it results in processes becoming more homogeneous across organizations.
Buying off-the-shelf software is also buying a process philosophy. Vendors will call these philosophies best practices: Recruiting software decides how candidates are handled. Sales engagement software dictates acceptable channels for sales communication. Ticket management software influences support team attitudes toward customers.
There will always be a need for best practices and off-the-shelf software. But following best practices means copying what other companies do. It certainly helps with efficiency, but it’s not the kind of disruptive impact that Marc refers to in his essay.
Consider if Company A from the prior illustration had taken their new email software purchase, folded it into an automated workflow with their product, finance apps, and revenue apps, making their orders 90% touchless and buttery-smooth for customers? That would be a source of differentiation from Competitor B, who still just uses their email software to automate emails—and it’s a true story. Company A is one of the world’s most successful collaboration software companies, and not only do their customers receive fast service, they also free up team members in finance, customer success, sales, and more to focus on more valuable work that propels the business forward without being bogged down in the minutia of order processing.
The way companies work with customers, interact with employees, and collaborate with partners sets them apart. Companies that find ways to cultivate bespoke best practices—and reflect those best practices in their software—usually win.
Build is a bad word
“Build” has become something of a dirty word after years of debate about whether teams are better off coding their own apps or buying off-the-shelf software. As a result, we have been trained that “buy” is the default choice, and build is only appropriate for the most critical of business needs, or when there is nothing available to buy.
The assumption has been that we can’t all be Amazon or Uber: We can’t afford the luxury of custom software, to attract the best engineers, or invest the time required.
These assumptions are rapidly becoming obsolete. Serious low-code/no-code (LCNC) tools empower users with little or no coding expertise to securely and safely build enterprise-grade solutions. The trend has already reached a point where it’s a legitimate third option in the build vs. buy debate. Build no longer has to be synonymous with code when anyone can build equivalent features with a drag-and-drop UI.
In the next 10 years, LCNC will enable nearly every company to innovate and create differentiation with custom proprietary software. In Gartner’s words, “applications of the future will be assembled and composed by the people that actually use them.”
Accenture predicts a Cambrian Explosion of user generated innovation. From tools that screen job candidates, to customized CRMs, to holistic health information repositories, or even entire company websites, a large percentage of the solutions we use every day can and will be built by people with no coding experience using LCNC tools. Today, you’ll already find LCNC approaches in nearly every category of enterprise software, including app development, integration, automation, and data science.
The ability to build is what helped the market winners of the last decade differentiate themselves. Building is still the path to differentiation for the next 10 years, and it is more accessible than ever.
Related: Navigating build vs buy when it comes to integrations
Build, buy, or compose
LCNC as a third option in the build or buy decision has big implications. Gartner notes that by 2025, 70% of new applications will be built with low-code/no-code tools. Thousands of companies will abandon process philosophies baked into off-the-shelf software, and preserve their differentiation by building software to match their processes. The new key metrics will focus on iteration—how quickly companies can evolve and improve their software over time to adapt.
Some call this prediction the “composable enterprise.” In this vision, companies will buy a select few composable tools, hire a small army of ops professionals, and ask them to build software. These companies will assemble groups of technical and non-technical employees called “fusion teams” that will all work together in their low-code composition tools to build solutions that fit the company, iterating over time to outwit their competitors.
Few realize just how much company behavior is dictated by software today. But as awareness spreads of the capabilities of LCNC platform stacks, we could see an explosion of creativity and innovation in how companies work. That’s an exciting possibility.
Related: A guide to data orchestration
Composable enterprise = differentiated enterprise
Some software categories will see their market change as companies build more custom tools. Contributors from every corner of the organization will become composers. Here are a few ways it might play out:
- Instead of buying recruiting software, HR ops could use existing low-code software to compose a custom recruiting tool. Then, they improve it over time with feedback from recruiters and hiring managers. The end result is a candidate experience that stands out to potential new hires in a tight labor market.
- Instead of buying lead routing software, Revops can quickly compose routing rules that sales leaders request, and modify them as the team measures their effectiveness. The end result is improved matching of leads to the appropriate seller, leading to increased revenue and buying cycle satisfaction.
- Instead of buying project management software, IT might interview teams around the company and compose custom yet interconnected project management tools that match the team’s working styles, and modify them as those styles evolve. The end result would be increased team efficiency and output as the software matches their unique working style.
Every organization will tackle different projects, but the consistent outcome of any composition project is more uniqueness in the market. Uniqueness and improved customer experience have always been noble goals, but fast iteration aided by LCNC composition tools will turn goals into reality for more companies.
It goes without saying that Marc Andreesen was right—and he still is. While software continues to eat the world, this new kind of enterprise will emerge. As a result, more companies will be able to dominate their industries than even Marc could have foreseen at the time. It’s an exciting time to be in software, and it will be even more exciting to watch what companies create in the next 10 years as composable software eats the enterprise.
