38 2014 Issue 02 | Dell.com/powersolutions
Perspective
Reprinted from Dell Power Solutions, 2014 Issue 2. Copyright © 2014 Dell Inc. All rights reserved. Reprinted from Dell Power Solutions, 2014 Issue 2. Copyright © 2014 Dell Inc. All rights reserved.
We’ve long claimed that software will change
the world. But for the most part, so far we’ve
just automated the human bookkeepers
and assistants. Now, however, software is
on the cusp of truly transforming the world as we know it,
particularly as the Internet of Things (IoT) emerges. A system
wherein even everyday objects are identifiable and readable
by the Internet, IoT plays a key role in influencing trends and
ideas that will dominate this transformation.
The IoT extends its presence.
In the next few years, the huge expansion of the IoT can
only significantly alter the size and scope of the software
market, as companies scramble to support all those “things”
as they did for all those smartphones. Naturally, the IoT
demands an enormous and revolutionary effort in terms of
software development. People will buy products not only
for the products themselves, but also for the advantages
provided by services embedded in those products. Running
shoes, for example, already feature the added value of
sensors that enable performance tracking, competition
with friends and even virtual worldwide marathons. The
value of a product rests not so much in the product itself
but in its capacity to be networked.
The nature of software value keeps shifting.
Even today, most software is transactionally oriented, an
outgrowth of business needs to reduce transaction costs
through scale and to drive efficiency focused on a single
unit of work. But now studies indicate that we’ve pulled
As the Internet of Things expands, the next generation
of software is poised to transform how businesses and
consumers create value.
By Jim Stikeleather
Shape-shifting software innovations and the new value proposition
Dell.com/powersolutions | 2014 Issue 02 39
Perspective
Reprinted from Dell Power Solutions, 2014 Issue 2. Copyright © 2014 Dell Inc. All rights reserved. Reprinted from Dell Power Solutions, 2014 Issue 2. Copyright © 2014 Dell Inc. All rights reserved.
existing productivity levers as far as we can; the next step is
to focus on productivity and efficiency at the group level.
The CEB study, “The Future of Corporate IT, 2013–2017,”
covers the productivity issue extensively.1 We will see a
continuing explosion in software that enables people and
machines to collaborate, orchestrate and choreograph their
work nondirectionally. This is a whole new value proposition
beyond reducing costs and increasing efficiency: These new
ways of using software promise to change the nature of work
to directly create value for enterprise customers, suppliers
and partners, but primarily drive innovation.
The paradigm shift from ownership to rental continues.
The new generation of consumers would rather rent
a product than own it. We’re already seeing this in
transportation — for instance, Zipcar, Uber and public
bike sharing — and we’re going to see it soon in software.
Software as a service (SaaS) will increasingly become
the norm. For example, consumers will hire a company
to manage their calendars and contacts rather than buy
software for the same purpose.
Context plays an expanding role in determining value.
Case in point: The transition from basic mobile phones
to smartphones has dramatically increased the value of a
device that can make calls. One small device doesn’t just
allow you to call your family from the road; it tells you that
there’s an Indonesian-Texan barbecue fusion restaurant
four blocks from your hotel room. And soon it will be able
to tell you which colleagues are free for dinner — and then
make a reservation for five at 7 p.m. The phone’s value in
that hotel room, at that moment, is very particular. Value is
created by context and the actions taken in that context.
In the near future, no software will stand alone; how it is
choreographed to function in context will increase its value
dramatically. As a result, products and services will move
increasingly away from being products and services to
becoming platforms upon which customers and partners
can add value.
Innovation will be crucial for profit
in an equilibrium economy.
Some economists note that we’re approaching what’s called
an equilibrium or perfect economy — one in which just about
All that data, handled with the
idea that value is highest at the
moment of need, will require
increased adaptation, agility
and decision making on the part
of software itself.
1 To read the CEB report, “The Future of Corporate IT, 2013–2017,” visit qrs.ly/z43cf47.Sam
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40 2014 Issue 02 | Dell.com/powersolutions
Perspective
Reprinted from Dell Power Solutions, 2014 Issue 2. Copyright © 2014 Dell Inc. All rights reserved. Reprinted from Dell Power Solutions, 2014 Issue 2. Copyright © 2014 Dell Inc. All rights reserved.
anyone can start producing and selling
anything in short order thanks to SaaS
computer-aided design (CAD) software,
3D printers, Kickstarter, outsourcing
production, Amazon storefronts and
UPS. This dynamic means that supply
rises to meet demand almost instantly,
bringing the economy to equilibrium.
When the economy reaches that
point, the only form of profit left is
monopoly: the profits that come from
a short period of time when you have
a value proposition that no one else
does — in other words, innovation.
More than ever, software developers
must continually innovate, and agile
development models that allow quick
manipulation of value, such as DevOps,
will become prevalent.
Advanced mathematics
becomes more important.
Basic tools of software development —
architecture, languages, environments —
follow the progressions of thought
in philosophy — logic, semantics,
taxonomy, epistemology. But
increasingly, as we move toward
the IoT, ideas drawn from advanced
mathematics will become more and
more relevant. Here’s an extreme
example: Imagine having sensors
in your undergarments that monitor
your health and that coordinate
with environmental detectors in
your outerwear, which in turn are
organized by systems in your car
or home or even synced with your
calendar, phone, and perhaps your
glasses and watch. Sensors attached
to your skin could create gigabytes
of data per second that track your
glucose levels. These sensors could
send an alert to your phone when
your glucose levels spike after eating
a sugary food or send a warning
when your electrolytes are dipping
too low. And when abnormalities in
your bloodstream are detected, the
sensors could even automatically alert
your doctor.
Today, software making the first
iterations of such connectivity possible
is rooted in code that is very close to
the silicon. But given the sheer volume
and complexity of programming
that the IoT demands, we will see
new forms of programming emerge.
These forms will leverage ideas
from the prototype-instance model
of object-oriented programming,
as well as from complex adaptive
systems rules that are derived from
advanced mathematics. I’m not sure
exactly which elements of advanced
mathematics will be used — maybe
genetic algorithms, neural nets,
predicate calculus — or how they’ll be
applied and configured. But no doubt
they’ll be key to building an IoT. All that
data, handled with the idea that value
is highest at the moment of need, will
require increased adaptation, agility
and decision making on the part of
software itself.
It’s important to note that hardware
for an IoT is ready, for the most part:
64-bit ARM or x86 system-on-chip are
adequate, and the technology will only
get better. Moreover, the IoT could
even reduce bandwidth needs if we
get the architecture right, which will
be necessary as wireless becomes the
default interface mode.
Outsourcing relationships
are characterized by trust
instead of legalities.
Economics always drives problem-
solving. In software development, just as
in any other business, we’re constantly
weighing speed to benefit against cost
When the economy
reaches equilibrium,
the only form of
profit left is
monopoly: the profits
that come from a
short period
of time when you
have a value
proposition that no
one else does —
in other words,
innovation.
Dell.com/powersolutions | 2014 Issue 02 41
Perspective
Reprinted from Dell Power Solutions, 2014 Issue 2. Copyright © 2014 Dell Inc. All rights reserved. Reprinted from Dell Power Solutions, 2014 Issue 2. Copyright © 2014 Dell Inc. All rights reserved.
of failure. These days, the bottlenecks
that slow software development are
legal and administrative issues: the
defensive strategies used to reduce
or eliminate the cost of failure. But
as speedy experimentation becomes
the common practice— try it out, see
whether it works, quickly regroup and
try again — there just isn’t time for
traditional procurement methods.
In the coming years, we will see
outsourcing relationships become less
like traditional contractual relationships
and more like highly trusting
ecosystems in which gain and risk
are shared. You will share all needed
information with your outsourcers
and trust that they will not only build
the right thing, but perhaps even
build something better than what you
envisioned. Naturally, this idea makes
legal departments shudder, but we’re
already seeing it in play with certain
small specialty manufacturers that
produce anything you want without
requiring any contractual relationships.
Reputation and verbal commitments
are the name of the game. The maker
culture operates in a similar fashion and
still produces sophisticated products.
All this leads to
transformative change.
Flexibility happens, adaptability happens,
agility happens. The Darwinian crucible
of competition heats up and change
happens. Transformative change happens
when industries democratize — when
they’re ripped from the sole domain
of companies, governments and other
institutions and handed over to regular
people to operate collaboratively and
cooperatively. We have seen this in the
intangible world of content and the
associated disruption of media. And
we’ve seen it in the open-source software
movement and resulting software, such as
the Linux® OS, the Apache™ HTTP Server
and others that basically run the internet.
Now we are beginning to see it in the
tangible world as the IoT matures.
Basically, a value supplier or business
must maintain — appropriately and
with permission — the total context of
the customer’s environment so that
when opportunities appear to provide
value, they can be exploited as quickly
as possible if not instantaneously. And
the value of a product or service greatly
varies in the moment: One minute
it may be highly valuable, and a few
seconds, minutes, hours or days later
effectively useless. Value creation for
both business and consumer becomes a
joint activity between the customer and
the supplier or the supplier’s ecosystem.
At a particular moment, a supplier is
increasingly less likely to have all the
capabilities necessary for generating
needed value, so its ecosystem also
must be contextually aware and able to
operate instantaneously.
The role of an enterprise morphs
from providing products and services
to providing a platform upon which
customers and partners can build
value. And the strategic questions shift:
Who can add value to my platform?
Whose value can I enhance?
This transformation is driven by the
next generation of software.
Transformative
change happens
when industries
democratize — when
they’re handed
over to regular
people to operate
collaboratively
and cooperatively.
Author
Jim Stikeleather is chief innovation officer
for Dell Services, where his team enables,
facilitates and accelerates advanced
technologies, business models and processes
to address evolving business, economic and
social forces for Dell and its customers.
Dell is a trademark of Dell Inc.
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