Software-Defined Business – Implications for IT Management

In August 2011 the Wall Street Journal published an essay by Netscape co-founder Marc Andreessen titled “Why software is eating the world”. He argues that “more and more major businesses and industries are being run on software and delivered as online services—from movies to agriculture to national defense. Many of the winners are Silicon Valley-style entrepreneurial technology companies that are invading and overturning established industry structures. … Companies in every industry need to assume that a software revolution is coming.” (Andreessen 2011). By pointing at examples in various industries from automotive and banking to defense, healthcare, music, retailing, and telecommunications, he illustrates the transformational power of information technology (IT) and software in particular. The discussion is not new and dates back to the early 2000s. For example, Power and Jerjian (2001, p. 99) mention for Heathrow airport that “software is the thing that runs the airport” and in a biological analogy they consider software to be the nervous system. Meanwhile, the large “big tech” software companies (e.g., GAFAM, BATX) have impressively confirmed this development: their digital platforms have spread over many industries with an impact on processes (e.g., interaction and transaction), on products (e.g., app stores and services) as well as on business models (e.g., streaming and as-a-service models). The recent tech-portmanteaus (e.g., Fintech, Insurtech, Regtech) also reflect the attitude of these startup businesses, which perceive themselves rather as IT (tech) companies than as representatives of the industry they are aiming to transform (Meijer and Kapoor 2014). In the same vein, the high valuation of Tesla Motors since early 2020 spurred an intense debate of whether the company is in the automotive or the tech business (e.g., Klebnikov 2020). Obviously, these developments have numerous implications for the field of IT management, which were discussed during a panel at the 82nd Annual German Business Researcher Conference on March 18, 2020. The panel builds on prior discussions regarding the impact of digitalization on IT management. For example, a BISE discussion section in 2017 addressed the implications of the broad trend of digitalization for the field of Business Information Systems Engineering and pointed out new topics, such as digital innovation and transformation, which complement existing competencies (e.g., in modeling and managing enterprise IT). The discussion revealed strong arguments for the strategic role of IT and that business and IT departments as well as academia and practice need to collaborate more closely (Legner et al. 2017). While these statements adopted a rather broad perspective, another discussion section focused on “the impact of digitalization on the IT department” (Urbach et al. 2019). It mentioned important and intricate challenges: On the one hand, IT departments need to move closer to the business units and, on the other hand, they need to constantly update their technological skills in an environment with a high pace of technological innovation. In a world “eaten by software” these developments are equally prevalent and lead to the question how businesses address these challenges, in particular, how they assess the dominant role of software, how activities in managing the software lifecycle should be organized, and what the implications are for the BISE community.