Five Signs You're Not Ready for the Application Economy

Business as usual is not enough in the application economy. When software is at the center of everything, companies must offer different and better customer experiences, collaborate in real time across functional lines, and rethink their interactions with business partners to stay competitive. Transformation is unavoidable-but not always easy.

Is your company doing a good job at navigating this dynamic environment? Here, we offer five signs your organization still has more work to do before seeing success in the application economy, based on analysis of survey results from 200 business and IT executives and real-world examples from successful leading companies.

You're still playing by the rules

In the application economy, if you're resistant to change, your company will suffer. When undergoing such a large organizational change, it's likely rules will be bent, and change will happen fast. When change is executed the right way, nearly half of respondents believe that becoming a more software-driven business has had an impact on time-to-decision.

How to break the mold

At Lockheed Martin, software that speeds up the new-business process works so well that senior leadership wants to make this same functionality available across the company. But not everyone is waiting for a directive from the top: several business units adopted it on their own. “It’s happening organically,” says Liz Michaud, Lockheed Martin’s director of business applications. “It’s a sign about how important it is to keep up with the pace of business needs and the changes in the marketplace.”

You're missing the details that matter

While your company might be comfortable with some aspects of marketing, 58% say they are very or highly effective at marketing directly to consumers-- having all of the details is essential to success. Luckily, software-driven enterprises know that data, such as tracking customer preferences can lead to improved customer experiences.

Knowing what your customer needs before they need it

Sportswear manufacturer Under Armour is cracking the code. For example, it uses data to let customers know when they need a new pair of running shoes. "Studies show that to avoid injury, if you run 400 to 500 miles in a pair of running shoes, it's time to buy a new pair of sneakers," says chief digital officer Robin Thurston. "We're doing our customers a service by letting them know when that time comes. We're using data in a way that's contextually relevant, to improve the customer experience."

Your customers are on their own when it comes to protecting data

In today's hackable world, it's no longer enough to implement basic security measures and hope for the best. While over half of our respondents say they are spending more to protect customer data, making a big investment in your customers' protection is well worth the cost. Luckily, even more are also investing to safeguard internal information to protect employees too

Going a step beyond confidentiality requirements

Under Armour has made big investments to protect customer data, including health-related data from fitness apps. Right now, none of that information is covered under the confidentiality requirements of the US Health Insurance Portability and Accountability Act (HIPAA). But Mr. Thurston is preparing for that possibility. "Trust is earned in drops and lost in buckets," he says. "We take it all extremely seriously."

Your security team is operating separately from your heads of business

With security top of mind for businesses, it's no longer enough for IT to be in the basement while the C-Suite enjoys the penthouse view. For organizations to be successful, security executives need to be front and center. In fact, nearly half of respondents say that bringing together security executives with the heads of business units is enabling new business opportunities.

Breaking down silos

At DHL Supply Chain, software developers no longer use a linear process to create applications for its customers. Clearly each project is different, but DHL tends to use an overlapping and agile approach, supported by senior board members. Says Damian Pike, vice president of innovation, on getting senior team members on board: “We will sit with them. We will do mockups. We will do prototypes. We will do proof of concepts very quickly to get the right direction. Then we go into a number of sprint cycles where we do the development. At the end of each of those cycles we make sure that we have alignment with the operational business owners.”

Your customers' expectations are falling on deaf ears

Today's customer expectations and demands for flawless, uninterrupted service are higher than ever. With the ability to deliver quick feedback, customers expect the same in return, all with a seamless and intuitive interaction. While yesterday you might have been able to skirt by with ignoring these demanding voices, today, a growing number of revenue is now being driven by customer interactions with apps, making listening to customers, and making sure their service is up 24/7 more critical than ever.

Switching direction in a snap

To deliver on customer expectations, Banque de France runs two data centers and uses duplicate sites for backup. "We switch from one site to the other on a regular basis," says Benoit Clouet, Banque de France's head of project integration. "When an application is not running, it is not providing its business value. And customers get quite sensitive when the applications are not running properly."

More than 40% of our respondents say using social media to interact with customers and partners is a must-have in the new environment. These tools are not just new ways to push information out--they are also great ways to capture intelligence.

When one large European bank was developing a mobile app, it listened in on social chats to learn that customers wanted to see their last 100 transactions - not just the last six as it believed. "The best changes to our mobile banking app have come straight out of the mouths of our customers commenting on social sites," says one of the bank's senior technology executives.

In the application economy, undergoing a digital transformation in your organization is difficult. While overcoming existing company culture and processes will not be easy, a true software-driven enterprise will make substantive and far-reaching changes, and recognize that the rules will continue to evolve. Playing by these new rules pays off in greater agility, speed-to-decision and market, and improved financial performance. The cost of inaction could be irrelevance.

About the research:

This think piece is part of a research program by CA Technologies and Oxford Economics, based on a survey of 200 business and technology executives. To see our briefing paper and infographic, please visit Rewrite.