[David Strom's Web Informant] Everyone is now a software company (again)

David Strom david at strom.com
Sat Dec 3 16:33:50 EST 2016


Web Informant, December 3, 2016: Everyone is now a software company (again)

Several years ago I wrote <http://blog.strom.com/wp/?p=4423>, “everyone is
in the software business. All of the interesting business operations are
happening inside your company’s software.” Since then, this trend has
intensified. Today I want to share with you three companies that should
come under the  software label.  And while you may not think of these three
as software vendors, all three run themselves like a typical software
company.



The three are Tesla, Express Scripts, and the Washington Post. It is just
mere happenstance that they also make cars, manage prescription benefits
and publish a newspaper. Software lies at the heart of each company, as
much as a Google or a Microsoft.



In my blog post from 2014, I talked about how the cloud, big data, creating
online storefronts and improving the online customer experience is driving
more companies to act like software vendors. That is still true today. But
now there are several other things to look for that make Tesla et al. into
software vendors:

--  *Continuous updates.* One of the distinguishing features of the Tesla
car line is that they update themselves while they are parked in your garage
<http://www.businessinsider.com/tesla-software-update-8-features-2016-9/#autopilot-which-is-teslas-semi-autonomous-driving-system-got-some-big-improvements-with-the-80-update-6>.
Most car companies can’t update their fleet as easily, or even ever. You
have to bring them in for servicing, to make any changes to how they
operate. Tesla’s dashboard is mostly contained inside a beautiful and huge
touch LED screen: the days of dedicated dials are so over. These continuous
updates are also the case for The Washington Post website, so they can stay
competitive and current. The Post posts more total articles than the
*NYTimes* with double the reporting staff of the DC-based paper. That shows
how seriously they take their digital mission too.

--  *These companies are driven by web analytics and traffic and engagement
metrics.* Just like Google or some other SaaS-based vendor, The Washington
Post post-Bezos is obsessed with stats
<http://www.cjr.org/q_and_a/washington_post_bezos_amazon_revolution.php>.
Which articles are being read more? Can they get quicker load times,
especially on mobile devices? Will readers pay more for this better
performance? The Post will try out different news pegs for each piece to
see how it performs, just like a SaaS vendor does A/B testing of its pages.

--  *Digital products are the drivers of innovation. *“There are no sacred
cows [here, we] push experimentation,” said one of the Post digital
editors. “It is basically, how fast do you move? Innovation thrives in
companies where design is respected.” The same is true for Express Scripts.
“We have over 10 petabytes of useful data from which we can gain insights
and for which we can develop solutions,” said their former CIO in an
article from several years ago
<http://www.forbes.com/sites/peterhigh/2013/07/29/94-billion-express-scripts-leverages-technology-and-analytics-to-improve-patient-outcomes/#77b0791c8065>.


--  *Scaling up the operations is key.* Tesla is making a very small number
of cars at present. They are designing their factories to scale up
<https://electrek.co/2016/02/15/tesla-3dx-model-3/>, to where they can move
into a bigger market. Like a typical SaaS vendor, they want to build in
scale from the beginning. They built their own ERP system that shortens the
feedback loop from customers to engineers and manages their entire
operations, so they can make quick changes when something isn’t working.
You don’t think of car companies being so nimble. The same is true for
Express Scripts. They are in the business of managing your prescriptions,
and understanding how people get their meds has become more of a big data
problem
<http://blogs.wsj.com/cio/2012/04/04/express-scripts-cio-expects-big-boost-from-big-data/>.
They can quickly figure out if a patient is following their prescription
and predict the potential pill waste if they aren’t. The company has
developed a collection of products that tie in an online customer portal to
their call center and mobile apps.

I am sure you can come up with other companies that make normal stuff like
cars and newspapers that you can apply some of these metrics to. The
lessons learned from the software industry are slowly seeping into other
businesses, particularly those businesses that want to fail fast and more
quickly as their markets and customers change.


​Comments welcome here. <http://blog.strom.com/wp/?p=5693>​
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