Why every company should have its own software team.

When I gave an interview to the logistics group “bayernhafen” a few months ago, the conversation turned to the topic of “in-house software teams”, among other things. I claimed that it was a company’s duty to use technology to make processes and the user experience as cost-effective and simple as possible. The freestyle, on the other hand, was to build up their own software development teams in order to try out new models and experiments.

Make and Buy

This has caused some confusion. For example, I was asked whether I now believe that all eBusiness software should be developed in-house. And whether standard software is a discontinued model. Both are sufficiently absurd.

In my opinion, the situation is actually very simple. We all assume, and have been able to observe this impressively in recent years, that all business areas are becoming more and more software-based. This does not mean that physical processes will become irrelevant, but that these physical processes will be controlled and optimized by software. This is particularly evident in logistics.

For example, micro-store concepts with hundreds of robots have taken over the small parts warehouses of pioneers. They are more reliable, super-efficient and can be integrated into the entire process chain of a parcel shipper, for example.

All companies are therefore breaking new ground conceptually and operationally. Those who can implement new ideas most quickly and efficiently with software will gain a considerable competitive advantage.

Software is not a means to an end – software is the future asset No. 1

Software is therefore not just a means to an end, but an asset in itself. It is the “toolset” that makes fundamentally new processes possible in the first place. These fundamentally new processes are in turn the breeding ground for new, and in some cases “disruptive”, business models. I deliberately write “breeding ground” because I don’t think that the combination of ideas, culture, technology, software and completely new processes will lead to new business models per se.

If you, as an entrepreneur, only rely on standard software in this situation, you are following familiar paths. Because standard software, as the name suggests, relies on standards and best practices.

I think it is now clear why I advocate a make and buy strategy. Because not all processes have to be completely reinvented. These basic processes can easily be covered with standard software.

But the real innovation in your business comes from new concepts, and there is no standard software for these because they are not standard.

In-house and external teams

In this context, being able to develop and manage your own software is of crucial importance. I am currently meeting many companies that see this need and are toying with the idea of setting up their own software teams.

For companies that have no experience with software development, this is a rather difficult undertaking.

I therefore advise almost all companies not to do this and to start with external, dedicated teams. I don’t mean offshore teams, as I haven’t had the best experience with them when it comes to developing new innovations.

Rather, the aim is to form exclusive teams with software service providers that work exclusively for the company.

Headstart

This enables a quick start to development. Such software service providers also bring a lot of basic software development expertise with them. At AOE, we support a large number of enterprise customers with such teams. Most of them were able to use the first usable software component within just a few weeks.

At the same time, and I strongly recommend this, you should set up your own teams. This is not for cost reasons, but for the simple reason that in the medium term it will be part of a company’s core competence to flexibly adapt and or create new software-based processes.

Because in a world of ever faster change, this flexibility and agility is one of the basic requirements for successful economic activity. And software is right at the top of the list of priorities.

(This article was originally published on www.aoe.com ).