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The Future of Applications
Three Strategies for the High-velocity, Software-driven Business
An Accenture Technology Point of View
2
Welcome to the
high-velocity,
software-driven
world
3
Today’s business world is increasingly high
velocity and software driven. Sooner or
later, these two realities will push every
company to rethink its potential and
reinvent itself. In this point of view, we
urge companies to begin that reinvention
today, starting with a fundamentally new
approach to the business of applications.
While some aspects of technology
are moving with incredible speed—
social, mobile, analytics and cloud
as well as wearables, crowdsourcing
and the Internet of Things—business
processes and applications lag behind.
In a recent Forrester survey, just 17
percent of information technology
(IT) executives said they deliver fast
enough for the pace of business.1
IT is not alone in its struggles with
these new realities. Business is also
challenged to cope with the speed of
change. Now, more than ever, software
strategy must be part of your business
strategy. This is not just a matter of
sustaining competitive advantage; it’s a
matter of survival. It should prompt every
business leader to ask some important
questions: Is software playing a strategic
role in my company? Are we using it to
proactively drive disruption, to create new
markets, customers and opportunities?
“The Future of Applications” defines
three powerful strategies that can
help companies address the velocity
of technology change and become
successful, software-driven businesses. By
mastering these strategies, companies can
accelerate applications—including custom,
ERP and SaaS—to the pace of business.
We take it a step further by defining
a new operating model that takes
technology “out of the box.” In today’s
business environment, technology
can no longer be a specialty function.
It must be a competency that every
business leader embraces.
We hope you find the possibilities
as intriguing as we do. It’s time
to stake out a new competitive
frontier with applications.
PREFACE
Bhaskar Ghosh
Group Chief Executive
Accenture Technology Delivery
Paul Daugherty
Chief Technology Officer
4 THE FUTURE OF APPLICATIONS: EXECUTIVE SUMMARY
The velocity and volume of technology
change today are rocking companies,
industries and entire societies to their
core. One recent research report found
that two-thirds of business executives
believe their organization is currently
being disrupted by information technology
and 72 percent agree that they will be
disrupted over the next 12 months.2
At the same time, software is now a key
driver of differentiation and innovation.
It’s a gateway to new services and
revenue streams, seamless customer
experiences and expansion into new
markets. It’s redefining every industry.
Think about it: Bill Ford, executive
chairman of Ford Motor Company,
envisions radically new business models
for the auto industry in the age of
connected vehicles. Ford is working
to ensure it is not simply a hardware
manufacturer in the future, with
“all the value elsewhere,” but also a
provider of software-driven services
that improve customer safety and
increase transportation efficiency.3
To succeed amidst this
disruption, companies must
respond by changing the
way they design, build
and use software.
EXECUTIVE SUMMARY
New technologies are accelerating the pace of
business, but existing business and IT approaches
lag behind. Companies need to fundamentally
redefine the business of applications.
5
What stands in the way of such
fundamental change? First, IT is showing
its age. The fact is, many companies
are trying to compete in the world of
social, mobile, analytics and cloud with
applications that were designed for
another era. Monolithic applications
are often built from the ground up—
slow to implement and slow to change.
About 70 percent of today’s business
transactions are still processed in COBOL.4
IT organizations typically spend more
than 60 percent of their budgets just
maintaining existing systems, leaving
precious little time for innovation.
The pace of change and rising
complexity are also daunting to many
IT organizations, which have to track
more technologies and types of solutions
than ever before. Some estimates predict
that more than 50 billion “things”
will be connected to the Internet by
2020,5
and the number of partners and
providers a company must interact
with continues to expand. Microsoft
alone already has more than 640,000
partners in its business ecosystem.6
In contrast to today’s monolithic
applications, future applications
need to be more nimble.
Companies that begin their
reinvention now will benefit
from applications that can adapt
to the pace of business, manage
rising complexity and open
doors to more interconnected
business environments.
The challenge of aging IT
and accelerating business
Weight of
legacy
70%of business
transactions are
still processed
in COBOL
Microsoft has
640,000
partners
in its ecosystem
50 billion
“things”
will be connected
to the Internet
by 2020
Rising application
complexity
Expanding array
of partners
THE FUTURE OF APPLICATIONS: EXECUTIVE SUMMARY
6 THE FUTURE OF APPLICATIONS: EXECUTIVE SUMMARY
LIQUID APPLICATIONS: To compete with
agility and speed, companies can no longer
afford complex, lengthy and expensive
coding of applications, or massive,
multi-year system implementations.
What’s needed is a new way to build
software—faster, flexible and more
liquid—with reusable components that
allow for rapid assembly of applications
in support of dynamic business needs.
This approach requires modular
architectures, next-generation integration
techniques and a cloud-first, mobile-
first mindset. Application programming
interface (API) architectures underpin
liquid applications, opening them up to
flexibly and efficiently access internal
or external software components and
services. Engineering innovations such
as Agile and DevOps further accelerate
development and deployment.
INTELLIGENT APPLICATIONS: Companies
need to embed software intelligence
everywhere in their applications and
processes to manage growing volume,
velocity and complexity, and to maximize
the business value of internal and external
data—including that from the physical
world. Software intelligence is made
possible by an influx of data, processing
power and advances in data science such
as natural language processing, machine
learning and cognitive computing. Thanks
to these advancements, applications can
automate routine tasks, improve business
processes through integrated analytics
and ultimately govern themselves.
CONNECTED APPLICATIONS:
To grow revenue and defend their
market position, companies will need to
create new competitive frontiers using
software. Doing so requires opening
multiple dimensions of application
connectivity—with business partner
and customer ecosystems, as well as
with the rapidly growing Internet of
Things that is essential to delivering new
services. Connected applications will run
everywhere—not just on phones, tablets
and PCs, but also in manufacturing,
pipelines, industrial equipment, cars,
wearables and more—to convert
products into product-service hybrids.
These three new application strategies
also depend on embracing an entirely new
operating model for software development.
In too many companies, technology is “in
a box.” It is considered to be contained
within IT as a specialty function rather
than a competency that every business
leader must embrace. Siloed business and
IT functions hinder organizational agility.
A new, more cooperative approach is
essential. IT must help shape business
strategy and the business must help IT
shape how software is being used to
enter new markets, reach new customers
and drive competitive differentiation.
New application strategies
to shape your future
Three new application strategies—liquid, intelligent and connected—
can help you shape your future and lead your industry.
7THE FUTURE OF APPLICATIONS: EXECUTIVE SUMMARY
LIQUID
A fundamentally new
way to build software
INTELLIGENT
When applications
comprehend, act and learn
CONNECTED
Extending company
boundaries through software
WHY To compete with agility and
speed, companies can no longer
afford massive, multi-year system
implementations.
To manage growing volume, velocity
and complexity, and to maximize
the business value of internal and
external data, companies need to
harness software intelligence.
To grow revenue and defend their
market position, companies must
open new dimensions of application
connectivity—creating new competitive
frontiers with software.
WHAT Liquid applications are assembled
leveraging modular architectures,
next-generation integration
techniques and a cloud-first,
mobile-first mindset.
Intelligent applications offer three
critical capabilities—intelligent
automation, integrated analytics
and self-governance.
Connected applications provide
companies with the technical means
to interface with business partner and
customer ecosystems, and with the
Internet of Things.
HOW Adopt new development
approaches that incorporate
smaller, reusable components to
continuously deliver software.
Embed intelligence everywhere to
automate routine tasks, improve
business processes through
integrated analytics and teach
applications to act.
Rewire for the borderless business by
introducing new ecosystem strategies,
designing applications for resiliency,
and integrating information and
operational technologies.
8
WHY: Competing with
agility and speed
To compete with agility and speed,
companies can no longer afford
complex, lengthy and expensive coding
of applications, or massive, multi-
year system implementations.
WHAT: Architecting for change
What’s needed is a new way to build
software—one that is faster, flexible and
more liquid. No longer can applications
be “built” as one distinct activity
and “maintained” as another. Liquid
applications will be assembled leveraging
modular architectures, next-generation
integration techniques and a cloud-first,
mobile-first mindset. These elements,
combined with engineering innovations
such as Agile and DevOps, mean that
software can be continuously delivered
and evolve as business needs change.
This approach represents a shift away
from monolithic applications to a world
of smaller components and service
modules, which can either be built or
bought. In the future, liquid is the way
companies will develop every application,
including custom, ERP and SaaS.
Modular architectures
Liquid applications require enterprises to
create application architectures that are
modular, featuring reusable components
sourced internally or externally. One
of the key components is emerging
software platforms, including platforms
as a service, which provide well-defined
technical architectures along with
standards, governance and reusable
code. Platforms facilitate more rapid
creation and assembly of liquid business
solutions, as applications are increasingly
assembled from pre-built components.
Think about companies like OpenTable,
the popular online restaurant reservation
system, and Uber, the personal
transportation service. When they want to
add new application functionality such as
messaging customers when their table or
car is ready, they don’t build it themselves.
Instead, they tap into cloud providers like
Twilio, which offer the functionality as
part of a prebuilt platform. In turn, Uber is
sharing its liquid application components
with other developers from companies
as varied as Starbucks and TripAdvisor.7
THE FUTURE OF APPLICATIONS: STRATEGY 1
LIQUID APPLICATIONS
A fundamentally new way to build software
9
Next-generation
integration techniques
Liquid applications must be underpinned
by a liquid architecture that has
important, new characteristics.
Investment in flexible, standardized,
open integration services provides
the ability to efficiently connect
applications and information across the
company. Orchestration and business
process management services allow
applications to be configured and
continuously tuned to meet the needs
of the business. And APIs provide the
glue to allow reusable components to
be accessed from within a company
as well as by external customers and
business partners. With the proliferation
of applications, technologies, providers
and developers, a robust and advanced
API management capability is important
and is already being widely adopted, as
evidenced by solutions such as Apigee,
WS02 and Oracle API Management.
Take Swisscom for example, which
is on the leading edge of new liquid
approaches as it looks to software
components, such as industry-compliant
payment solutions, as a source of
business growth. The company set a
goal of externally exposing 120 new
APIs by 2015, and jumpstarted these
efforts by creating a secure, internal-
only “greenfield” platform. Swisscom’s
head of enterprise architecture, John
de Keijzer, explains: “Corporations often
choose to do things in a complex way
because that’s how it was historically
grown. We knew that having a powerful
API program would help us get out of
the slow corner.” This accelerated pace
of application development would have
been impossible just a few years ago.8
Cloud-first, mobile-first mindset
To enable the shift from frozen legacy
to liquid applications, companies need
a cloud-first, mobile-first mindset.
A cloud-first mindset requires that
applications be engineered to operate
and scale in the cloud, even if the initial
deployment is on premise. Policy-based
architectures will allow organizations
to dynamically decide what parts of
applications run in the cloud, and how.
Companies should establish a common
component repository for their business,
including cloud components and SaaS-
based functionality. Along with that, they
will need to adopt a culture of leveraging
what exists over creating something new.
A mobile-first mindset is also important
for liquid applications, recognizing that
they must be designed and engineered
around how customers and employees
interact with software. More and more,
these interactions are not on a personal
computer or traditional web page,
but rather on smartphones, tablets,
smart watches, digital dashboards or
even on augmented vision displays.
THE FUTURE OF APPLICATIONS: STRATEGY 1
10
HOW: Mobilizing for liquid
Shifting to liquid applications will
create a ripple effect throughout your
organization. Here are three crucial
steps for your liquid roadmap.
Implement new architecture
and abstraction strategies
Ensure that your enterprise architecture
supports platform integration capabilities,
security, monitoring and API lifecycle
services to support liquid applications.
Update application frameworks to include
appropriate abstraction strategies,
which enable the isolation of technical
complexity into platforms and away
from business functionality so that both
new and existing applications appear
less complex. By breaking an application
into smaller components that perform
discrete functions, it becomes easier to
update, replace, remove or augment.
Shift to a DevOps culture
Liquid applications demand that IT be
structured to be more nimble. Agile
development coupled with DevOps
will enable continuous delivery of
software. DevOps, a common industry
term, represents both a technology and
a culture change. It uses automation
techniques for deployment, environment
set-up and configuration and monitoring.
This streamlines and accelerates the
interaction between development
teams, which focus on assembling liquid
applications, and operations teams,
which are accountable for releasing those
applications for live service availability.
The result: faster, more predictable
deployments to market, performed
with radically greater efficiency.
Future-proof your applications
Liquid applications are less focused on
technology and more focused on business
processes, and must enable the digital
business. Set the bar high with user
experience expectations and engineering
standards that are appropriate for the
digital world, and embrace cloud-first and
mobile-first principles as appropriate. Take
advantage of emerging concepts such as
containers so that applications can be
seamlessly deployed across platforms.
THE FUTURE OF APPLICATIONS: STRATEGY 1
11
Liquid is more than just a new approach to
application development. It’s the foundation
upon which you will build your business for
future growth and competitive advantage.
The ability to roll out business capabilities
continuously will be the difference between
companies that can evolve and ones
that stagnate.
THE FUTURE OF APPLICATIONS: STRATEGY 1
12
WHY: Managing increased
volume and velocity
It’s hard for any business to keep up
with the exponential growth in data and
the pace of change that characterizes
our era. As increasing volume and
velocity pushes IT organizations to the
breaking point, businesses need new
approaches to turn runaway complexity
into high-performance outcomes.
WHAT: Building applications
that intelligently automate,
analyze and govern
To manage growing volume, velocity
and complexity, and to maximize the
business value of internal and external
data, companies need to embed software
intelligence everywhere. Software
intelligence is made possible by increased
processing power, advances in data
science, and innovations in natural
language processing, machine learning
and cognitive computing. Thanks to
these advancements, software can be
taught to automate decision making
through rule-based algorithms, and
evolve and innovate on its own through
advanced learning techniques.
Intelligent applications offer three critical
capabilities: intelligent automation,
integrated analytics and self-governance.
Intelligent automation
By automating routine tasks, intelligent
applications offload complexity and
supplement human effort through
technologies such as auto-correction
and robotics. Intelligent automation
improves productivity by doing more
work in a fraction of the time with more
accuracy. Financial institutions such as
Credit Suisse and Goldman Sachs are
using intelligent automation to analyze
traffic on their networks and identify
rogue traders, market manipulators and
policy violators, dramatically reducing
legal, business and compliance risk.9
Integrated analytics
Integrated analytics create systems
that can analyze and comprehend
independently, embedding intelligence
in the processes themselves and
radically improving both business and
IT performance. Netflix, for example, is
able to understand what customers are
watching and when they are starting
and stopping programs, and then use
predictive analytics to optimize content
recommendations based on usage.
Self-governance
Beyond that, intelligent applications
can be taught to act as digital agents
and to learn and govern themselves—
revolutionizing customer service, IT
management and business innovation.
Forward-thinking companies are
already using digital agents to govern
interactions with customers.
INTELLIGENT APPLICATIONS
When applications comprehend, act and learn
THE FUTURE OF APPLICATIONS: STRATEGY 2
13
Meet Amelia, a cognitive knowledge
worker from artificial intelligence
company IPsoft. Amelia can function
as an effective help desk employee—
understanding human speech in 10
languages, searching knowledge
repositories and databases of similar cases
and then returning answers in seconds.
Most important, Amelia’s self-learning
function enables the application’s
governance capabilities to grow over time.
As software intelligence increases in
sophistication, most applications will
learn to evolve and adapt, altering
their behavior and extending their
capabilities based on experience. Consider
the Nest thermostat that learns a
homeowner’s habits and preferences to
eventually program itself. These kinds
of advances will help businesses adapt
quickly to specific customer needs
and preferences and help IT adapt to
dynamic business needs, by applying
intelligence to data feeds from both
the physical and digital worlds.
HOW: Embedding
intelligence everywhere
Intelligence must be embedded
throughout the business—to improve
what applications are built, as
well as how they are built.
Apply intelligent automation to
application lifecycle practices
Companies can use software intelligence
across application development, testing,
deployment and maintenance to manage
increasing volume, velocity and complexity.
Look for automation opportunities across
the application lifecycle where routine
tasks can be reduced or eliminated. By
applying accumulated knowledge and
experience, automation can significantly
improve productivity through effort
reduction and leaner processes. For
example, test automation tools can use
cognitive computing and robotics to
take plain text functional requirements
and automatically generate test
artifacts including test scenarios,
test conditions and expected results.
Post deployment, intelligent tools for
service operations can continuously
accelerate problem resolution by curating
specialized application knowledge and
then accurately applying it using
descriptive analytics and natural language
processing. This kind of knowledge-based,
self-learning solution helped one large
insurer reduce tickets in its critical claims
processing application by more than
85 percent over a three-month period,
leading to substantial productivity
improvement and cost savings.
THE FUTURE OF APPLICATIONS: STRATEGY 2
14
Integrate analytics with
business processes
With the rise of smartphones, social
media, wearables and the Internet
of Things, consumers and businesses
now leave a trail of usable, useful data
behind them wherever they go. That
data can be harnessed and embedded
in business processes in a variety of
ways. DHL’s Resilience 360 solution, for
example, offers customers near real-
time supply chain monitoring. The tool
links data related to natural disasters,
theft, geopolitical and other risks with
a customer’s global manufacturing and
distribution footprint, to visualize and
assess critical supply chain hot spots
and take steps to mitigate risks.10
Extracting the greatest value from Big
Data and analytics requires the right
structure, processes and configuration of
components in your data supply chain.
Companies need to evaluate how to
embed Big Data architectures in their
applications—not just build them on the
side. By integrating Big Data and analytics
in business processes and applications,
companies can move away from having
a separate analytics function whose
reports then need to be interpreted
and acted on. Integrated analytics are
already helping IT organizations become
more business-centric. Industry domain
knowledge and business performance
data—including inventory levels, late
shipments, revenue and regulatory
compliance—can be incorporated
into data supply chains enabling IT
organizations to influence business
performance, not just IT performance.
Consider one pharmaceutical company,
whose IT organization was able to
accelerate clinical trials by reducing
recurring critical application incidents
by 50 percent, thereby eliminating
delays in the submission of trial
outcomes to regulatory agencies.
Teach applications to act
As companies integrate continuous
streams of data and analytics capabilities
into their business and IT processes,
they can empower digital agents to act
on their behalf. Consider how Disney
customers can “program” their all-in-one
MagicBands—through the My Disney
Experience online portal—to set vacation
choices in advance and effortlessly
manage their experience once at the
resort.11
To put digital agents to work,
companies should start by evaluating
how automated decision-making can
be embedded into the normal flow of
both business processes and application
lifecycle practices for better outcomes.
Outcomes must be clearly defined in
advance and then programmatically
represented as self-governing, automated,
analytics-enabled applications that
make business processes intelligent.
Such advancements hold promise for
IT organizations too as they look to
delegate the monitoring, management
and governance of software development
to digital agents. Analytics leveraging
current and historical IT delivery data is
already helping IT run more efficiently
by automatically triggering corrective
and preventive actions in areas such as
scope and requirements management—
a critical capability as the pace of
application change accelerates.
THE FUTURE OF APPLICATIONS: STRATEGY 2
15
How you interact with your customers, how
you buy and sell your products or services,
how you find your next product insights—
these decisions and actions will increasingly
be accomplished with the help of intelligent
applications. Embed intelligence everywhere.
THE FUTURE OF APPLICATIONS: STRATEGY 2
16
WHY: Creating new
competitive frontiers
Connectivity in the age of the software-
driven business is about more than
application integration. It’s about
creating new competitive frontiers using
software. To grow revenue and defend
their market position, companies must
open new dimensions of application
connectivity—with business partner and
customer ecosystems, as well as with the
rapidly growing Internet of Things—that
are essential to delivering new services.
WHAT: Building software
that runs everywhere
Connected applications offer
companies the technical means
to dynamically interface with the
Internet of Things and with business
partner and customer ecosystems.
As the Internet of Things matures,
connected applications will run
everywhere—not just on traditional
hardware such as phones, tablets and
PCs, but also in manufacturing, pipelines,
industrial equipment, cars, wearables
and more—to convert products into
connected product-service hybrids.
These applications change the way
companies operate by opening up their
manufacturing operations, production
facilities, products and services to new
technologies. For example, the OMNETRIC
Group, a Siemens and Accenture company,
is helping utility companies combine
vast volumes of data from smart meters,
as well as grid-sensing devices such as
sensors and transformers, with enterprise
and operational data to improve
asset management, grid operations
and customer service. This capability
provides utilities with an integrated view
of their systems and data to support
advanced analysis and decision making.
Connected applications are also required
to dynamically interface with business
partner and customer ecosystems in
today’s highly networked, digital business
environment. When properly designed
and managed, an ecosystem multiplies
the power of all the participants, leading
to combinations of functionality—and
revenue opportunities—that would
previously have been difficult to achieve.
Think about John Deere, a company
that understands the power of software
as well as business ecosystems. This
175-year-old manufacturer of tractors
and other industrial equipment
introduced MyJohnDeere in 2012.
THE FUTURE OF APPLICATIONS: STRATEGY 3
CONNECTED APPLICATIONS
Extending company boundaries through software
17
It is a centralized, open, online
platform to help agricultural producers
manage all the data related to their
equipment and operations in the field.
MyJohnDeere allows farmers, dealers
and other organizations to access and
share information that helps them
run their businesses more effectively.
For example, DuPont Pioneer is
collaborating with John Deere to deliver
near real-time, field-level data via the
MyJohnDeere platform. This data helps
farmers and dealers make important
revenue-generating decisions about
seed, fertilizer and purchasing.12
And, the
MyJohnDeere platform has enabled John
Deere to expand from being a provider
of agricultural equipment to a provider
of data-based agricultural services.
The community forming around the
platform is strong enough and extensive
enough that, in 2013, John Deere hosted
its first API Integrator Conference
that drew representatives from 50
companies across eight countries.13
HOW: Building and
nurturing ecosystems
How do software-driven companies
create and manage new dimensions
of application connectivity to grow
revenue and defend their market
position? Here are three components
of a successful overall strategy.
Develop and implement an
ecosystem strategy
Enterprises need multiphase strategies to
build and nurture an ecosystem. Start—
and learn—with your internal developers
and business functions, and then create a
broader ecosystem that includes external
entities such as business partners and
customers. Drugstore retailer Walgreens
has developed a health ecosystem around
its Prescription Refill API that companies
like CloudMetRx use to offer mobile refill
capabilities within their solutions. As a
result of its health ecosystem strategy,
Walgreens now refills a prescription
every second on average.14
Software-
driven businesses will need new skills and
approaches in ecosystem management—
not only in the leadership ranks but
also deeper into the organization. Both
business and IT staff should be tasked
with identifying new strategic partnership
opportunities for the company.
THE FUTURE OF APPLICATIONS: STRATEGY 3
18
Prepare for resiliency
As applications become increasingly
connected, companies need to design for
resiliency and proactively manage security
across the extended business ecosystem
and the physical world. Companies,
customers and other stakeholders will
have to work together to mitigate the
risks of connected applications. Resiliency
capabilities, including security, need to
be designed into applications, embedded
into platforms, cloud services and APIs,
and incorporated into connected physical
assets. Design applications so that
an attack won’t take down the whole
system. A well-thought-out architecture
is required to augment existing risk
management practices and avoid the
economic impact of attacks and failures.
For example, obsolete and legacy software
must be tightly managed since it likely
has limited or no security built in. When
compromised software is detected,
companies must be ready with a strategy
for immediate remediation. Services that
continuously test applications across all
parts of their lifecycle, including those in
production, will also help maintain the
resiliency of the overall architecture.
Integrate Information Technology
(IT) and Operational Technology (OT)
To grow revenue from new product-
service hybrids, companies need a
way to combine physical assets with
software and third-party services. To
date, IT, such as resource planning,
customer relationship management
and decision support systems, and OT,
such as equipment monitoring and
management and industrial process
support systems, have been managed
separately. Now, companies must weave
together previously unavailable, or
inaccessible, enterprise and machine-
generated data—binding together IT
and OT. Sensors, communications and
other operational technologies will work
together with IT, most likely meshing
in the cloud, to create new connected
products and services. The merger of IT
and OT offers an opportunity to integrate
different business functions that operate
under different technical standards
and are served by different vendors.
THE FUTURE OF APPLICATIONS: STRATEGY 3
19
The high-velocity world demands that
companies rewire themselves to become
borderless businesses. Building an extended
external ecosystem and managing the
Internet of Things is now an imperative for
companies in every industry—providing the
strategic and technological means to enter
and succeed in new markets.
THE FUTURE OF APPLICATIONS: STRATEGY 3
20
Many companies’ existing operating model for software development
is not fit for purpose in today’s high-velocity business environment.
Effectively driving business strategy through software will require a
new business and IT operating model.
The IT organization must be prepared
to define and execute business strategy
through software that is liquid,
intelligent and connected. For its
part, the business must strive to gain
more technology savvy as it assumes
a bigger role in building software.
Innovations must be driven jointly, tied
to new strategic planning processes that
span both business and technology. In
this operating model, software becomes
a revenue-generating product of the
company. Business needs IT to ensure
the company’s software products are
market relevant, and IT needs business
to identify new markets where they can
introduce these software products.
CONTINUOUS INNOVATION
CONTINUOUS INNOVATION
BUSINESS
STRATEGIES
APPLICATION
STRATEGIES
THE FUTURE OF APPLICATIONS: NEW OPERATING MODEL AND ROLES
Embracing a new operating model and
new roles in the software-driven world
21
PLATFORM DIRECTORS
As software platforms become a product of the enterprise,
both business and IT become involved in a new form of
product management. Platform directors take responsibility
for architecting and executing the abstraction strategies
that enable evolution to liquid applications. As with
product managers, platform directors need to have an eye
on innovation to proactively identify the “next big thing.”
In addition, an orientation to serving the customer—the
developer—is essential. Platform directors need to continuously
filter and rapidly respond to business change and then
translate user needs back to the engineering team. They also
need to make sure that all essential software components
are architected with proper resiliency to maintain an
“always on” developer experience. Finally, platform directors
will need to establish and manage governance models that
strike a balance between enabling open innovation, and
setting and enforcing standards for software development.
ECOSYSTEM BUILDERS
The job of ecosystem builders is to establish an
environment where partners and developers are empowered
to generate new sources of revenue and growth. Ecosystem
builders begin internally and then shift externally, to
successfully execute business strategy. By adopting a
borderless business mindset, ecosystem builders enable
the company to collaborate with new partners, suppliers
and even competitors in the delivery of new products and
services to the market. Instead of focusing on the question
of who our customers are, ecosystem builders adopt an
outside-in view and ask, “Who should our customers
be?” And, while the various members of the ecosystem
will jointly nurture these new products and services,
each is also able to market its core products and services
independently throughout the expanded ecosystem.
INTELLIGENCE ARCHITECTS
The promise of intelligent applications is systems that can
interpret data or conditions, apply codified knowledge
or logic, and make decisions—all with minimal human
intervention. But first, someone has to teach the
applications how. Enter intelligence architects. Developing
intelligent applications is different from developing
traditional systems. Instead of following the usual phases
of plan, design, test and deploy, development focuses
on identifying and curating data sources, and designing
intelligent capabilities into applications. Such an approach
requires different skills and mindsets, as well as different
methodologies—something to be managed by intelligence
architects. In addition, these architects ensure that
applications with embedded intelligence, including digital
agents, are trained in a particular business domain—
similar to how we train new employees—to make the
software useful.
CITIZEN DEVELOPERS
As liquid applications and expanded ecosystems are
introduced, developers no longer reside exclusively within
IT organizations. Instead, they emerge from the lines
of business or even from outside the company. Citizen
developers support the new reality of increasing speed and
complexity by assembling functional solutions or liquid
applications as the business needs them. Then, they release
the software to production at any point in time. Customer-
facing digital and mobile applications, for example, require
quick changes to respond to very short feedback cycles
from customers without compromising quality. Existing
applications, too, call for more efficient and automated
development and deployment approaches to keep pace
with business. Citizen developers are able to address such
needs with agility at the point of need.
Within this new operating model, companies must embrace four new
roles—platform directors, intelligence architects, ecosystems builders and
citizen developers—to deliver liquid, intelligent and connected applications.
THE FUTURE OF APPLICATIONS: NEW OPERATING MODEL AND ROLES
Four new roles to leap
ahead of the competition
THE FUTURE OF APPLICATIONS: CONCLUSION
Today, the business of applications
is changing how companies operate
and grow. No longer a supporting
capability, applications are a driver of
strategy and competitive differentiation.
They can enable entirely new services
for new and existing markets. The
future of applications is an exciting
one for companies that are willing
to develop a new operating model
for software development and then
fundamentally change the way they
design, build and use software.
The velocity of change—in technology,
in the marketplace and in entire
industries—is unprecedented. Success
requires responding proactively to
those changes and to the disruptive
effects of software on your industry.
Architecting liquid applications, for
example, requires changes to how
IT operates, how IT and the business
collaborate and how companies train
leaders and manage culture change.
Building intelligent applications not only
requires leveraging the latest advances
in data science for automation and
integrated analytics, but also involves
teaching applications to govern and
evolve on their own. Creating connected
applications requires entirely new
methods for managing the Internet of
Things and establishing business partner
and customer ecosystems to enable the
borderless business. And underneath
it all is your operating model. Do you
have the right technology know-how
and planning processes in place to drive
business strategy with software?
Both IT and business leaders must
understand what it means to be a
software-driven business. They need
to understand how software can
spur growth, shape new markets and
reach new customers. And, they must
work together closely to orchestrate
new business solutions. When
long-term competitive advantage
depends on software, being a “fast
follower” may not be fast enough.
Are you ready to take the lead?
CONCLUSION
Taking the lead
22
About the methodology
“The Future of Applications” is the result
of a comprehensive research program at
Accenture throughout 2014. It involved
interviews with dozens of Accenture
executives, input from clients and
industry analysts, and extensive secondary
research, as well as our experience
working on advanced information
technology solutions with thousands
of clients globally.
Notes
1
“IT Speed: The Crisis and the Savior of
the Enterprise,” A Forrester Consulting
study commissioned by Chef, December
2013. https://www.getchef.com/
blog/2013/12/09/big-day-for-chef/.
2
“Becoming—or Finding—the Next
Digital Business Leader,” Margot
McShane, Russell Reynolds Associates
presentation to Forrester’s Forum
for eBusiness & Channel Strategy
Professionals, October 28, 2014.
3
	ITS World Congress Keynote: Bill Ford,
Executive Chairman, Ford Motor
Company, 2014 World Congress on
Intelligent Transportation Systems,
September 8, 2014.
http://www.youtube.com/
watch?v=gmOmUiNpe84.
4
“How Legacy Code Is Exposing
Business and Government Systems,”
Security InfoWatch, April 8, 2014.
http://www.securityinfowatch.com/
article/11386786/advanced-persistent-
threats-plague-applications-that-
were-written-decades-ago-in-
dead-programming-languages.
5
	Cisco, “The Internet of Things: How
the Next Evolution of the Internet Is
Changing Everything.”
http://www.cisco.com/web/about/ac79/
docs/innov/IoT_IBSG_0411FINAL.pdf.
6
“Microsoft Partner Network Guide,”
Microsoft, July 2012.
7
“Introducing the Uber API,” Uber blog,
August 20, 2014. http://blog.uber.com/api.
8
“Swisscom—Changing DNA Through
Digital Transformation,” Apigee case
study. http://apigee.com/about/
customer-story/swisscom-changing-
dna-through-digital-transformation.
9
“Nothing to Hide, Everything to Fear,”
Fortune, August 14, 2014.
http://fortune.com/2014/08/14/digital-
reasoning-cognitive-computing/.
10
“DHL Digs Into ‘Big Data’ for New
Customer Solutions,” CEP-Research,
February 17, 2014. http://www.cep-
research.com/cepresearch/repository/
news/2014/february/1702147.html.
11
Disney website: https://disneyworld.
disney.go.com/plan/my-disney-
experience/bands-cards/.
12
	“DuPont Pioneer and John Deere Offer
Next Level of Decision Services to
Growers,” DuPont Pioneer press release,
November 8, 2013.
13
“John Deere Announces Developer.
Deere.com,” Precision AGWired,
October 9, 2013. http://precision.
agwired.com/2013/10/09/john-deere-
announces-developer-deere-com/.
14
“Walgreens Finds Mobile Customers To
Be Better Customers,” MobiHealthNews,
May 30, 2013. http://mobihealthnews.
com/22686/walgreens-finds-mobile-
customers-to-be-better-customers/.
ABOUT THE REPORT
23
24
About Accenture
Accenture is a global management
consulting, technology services and
outsourcing company, with approximately
319,000 people serving clients in
more than 120 countries. Combining
unparalleled experience, comprehensive
capabilities across all industries and
business functions, and extensive research
on the world’s most successful companies,
Accenture collaborates with clients to
help them become high-performance
businesses and governments. The company
generated net revenues of US$30.0 billion
for the fiscal year ended Aug. 31, 2014.
Its home page is www.accenture.com.
Copyright © 2015 Accenture
All rights reserved.
Accenture, its logo, and
High Performance Delivered
are trademarks of Accenture. 15-0273
This document makes descriptive reference
to trademarks that may be owned by others.
The use of such trademarks herein is not an
assertion of ownership of such trademarks
by Accenture and is not intended to represent
or imply the existence of an association
between Accenture and the lawful owners
of such trademarks.

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The Future of Applications: Three Strategies for the High-velocity, Software-driven Business

  • 1. The Future of Applications Three Strategies for the High-velocity, Software-driven Business An Accenture Technology Point of View
  • 3. 3 Today’s business world is increasingly high velocity and software driven. Sooner or later, these two realities will push every company to rethink its potential and reinvent itself. In this point of view, we urge companies to begin that reinvention today, starting with a fundamentally new approach to the business of applications. While some aspects of technology are moving with incredible speed— social, mobile, analytics and cloud as well as wearables, crowdsourcing and the Internet of Things—business processes and applications lag behind. In a recent Forrester survey, just 17 percent of information technology (IT) executives said they deliver fast enough for the pace of business.1 IT is not alone in its struggles with these new realities. Business is also challenged to cope with the speed of change. Now, more than ever, software strategy must be part of your business strategy. This is not just a matter of sustaining competitive advantage; it’s a matter of survival. It should prompt every business leader to ask some important questions: Is software playing a strategic role in my company? Are we using it to proactively drive disruption, to create new markets, customers and opportunities? “The Future of Applications” defines three powerful strategies that can help companies address the velocity of technology change and become successful, software-driven businesses. By mastering these strategies, companies can accelerate applications—including custom, ERP and SaaS—to the pace of business. We take it a step further by defining a new operating model that takes technology “out of the box.” In today’s business environment, technology can no longer be a specialty function. It must be a competency that every business leader embraces. We hope you find the possibilities as intriguing as we do. It’s time to stake out a new competitive frontier with applications. PREFACE Bhaskar Ghosh Group Chief Executive Accenture Technology Delivery Paul Daugherty Chief Technology Officer
  • 4. 4 THE FUTURE OF APPLICATIONS: EXECUTIVE SUMMARY The velocity and volume of technology change today are rocking companies, industries and entire societies to their core. One recent research report found that two-thirds of business executives believe their organization is currently being disrupted by information technology and 72 percent agree that they will be disrupted over the next 12 months.2 At the same time, software is now a key driver of differentiation and innovation. It’s a gateway to new services and revenue streams, seamless customer experiences and expansion into new markets. It’s redefining every industry. Think about it: Bill Ford, executive chairman of Ford Motor Company, envisions radically new business models for the auto industry in the age of connected vehicles. Ford is working to ensure it is not simply a hardware manufacturer in the future, with “all the value elsewhere,” but also a provider of software-driven services that improve customer safety and increase transportation efficiency.3 To succeed amidst this disruption, companies must respond by changing the way they design, build and use software. EXECUTIVE SUMMARY New technologies are accelerating the pace of business, but existing business and IT approaches lag behind. Companies need to fundamentally redefine the business of applications.
  • 5. 5 What stands in the way of such fundamental change? First, IT is showing its age. The fact is, many companies are trying to compete in the world of social, mobile, analytics and cloud with applications that were designed for another era. Monolithic applications are often built from the ground up— slow to implement and slow to change. About 70 percent of today’s business transactions are still processed in COBOL.4 IT organizations typically spend more than 60 percent of their budgets just maintaining existing systems, leaving precious little time for innovation. The pace of change and rising complexity are also daunting to many IT organizations, which have to track more technologies and types of solutions than ever before. Some estimates predict that more than 50 billion “things” will be connected to the Internet by 2020,5 and the number of partners and providers a company must interact with continues to expand. Microsoft alone already has more than 640,000 partners in its business ecosystem.6 In contrast to today’s monolithic applications, future applications need to be more nimble. Companies that begin their reinvention now will benefit from applications that can adapt to the pace of business, manage rising complexity and open doors to more interconnected business environments. The challenge of aging IT and accelerating business Weight of legacy 70%of business transactions are still processed in COBOL Microsoft has 640,000 partners in its ecosystem 50 billion “things” will be connected to the Internet by 2020 Rising application complexity Expanding array of partners THE FUTURE OF APPLICATIONS: EXECUTIVE SUMMARY
  • 6. 6 THE FUTURE OF APPLICATIONS: EXECUTIVE SUMMARY LIQUID APPLICATIONS: To compete with agility and speed, companies can no longer afford complex, lengthy and expensive coding of applications, or massive, multi-year system implementations. What’s needed is a new way to build software—faster, flexible and more liquid—with reusable components that allow for rapid assembly of applications in support of dynamic business needs. This approach requires modular architectures, next-generation integration techniques and a cloud-first, mobile- first mindset. Application programming interface (API) architectures underpin liquid applications, opening them up to flexibly and efficiently access internal or external software components and services. Engineering innovations such as Agile and DevOps further accelerate development and deployment. INTELLIGENT APPLICATIONS: Companies need to embed software intelligence everywhere in their applications and processes to manage growing volume, velocity and complexity, and to maximize the business value of internal and external data—including that from the physical world. Software intelligence is made possible by an influx of data, processing power and advances in data science such as natural language processing, machine learning and cognitive computing. Thanks to these advancements, applications can automate routine tasks, improve business processes through integrated analytics and ultimately govern themselves. CONNECTED APPLICATIONS: To grow revenue and defend their market position, companies will need to create new competitive frontiers using software. Doing so requires opening multiple dimensions of application connectivity—with business partner and customer ecosystems, as well as with the rapidly growing Internet of Things that is essential to delivering new services. Connected applications will run everywhere—not just on phones, tablets and PCs, but also in manufacturing, pipelines, industrial equipment, cars, wearables and more—to convert products into product-service hybrids. These three new application strategies also depend on embracing an entirely new operating model for software development. In too many companies, technology is “in a box.” It is considered to be contained within IT as a specialty function rather than a competency that every business leader must embrace. Siloed business and IT functions hinder organizational agility. A new, more cooperative approach is essential. IT must help shape business strategy and the business must help IT shape how software is being used to enter new markets, reach new customers and drive competitive differentiation. New application strategies to shape your future Three new application strategies—liquid, intelligent and connected— can help you shape your future and lead your industry.
  • 7. 7THE FUTURE OF APPLICATIONS: EXECUTIVE SUMMARY LIQUID A fundamentally new way to build software INTELLIGENT When applications comprehend, act and learn CONNECTED Extending company boundaries through software WHY To compete with agility and speed, companies can no longer afford massive, multi-year system implementations. To manage growing volume, velocity and complexity, and to maximize the business value of internal and external data, companies need to harness software intelligence. To grow revenue and defend their market position, companies must open new dimensions of application connectivity—creating new competitive frontiers with software. WHAT Liquid applications are assembled leveraging modular architectures, next-generation integration techniques and a cloud-first, mobile-first mindset. Intelligent applications offer three critical capabilities—intelligent automation, integrated analytics and self-governance. Connected applications provide companies with the technical means to interface with business partner and customer ecosystems, and with the Internet of Things. HOW Adopt new development approaches that incorporate smaller, reusable components to continuously deliver software. Embed intelligence everywhere to automate routine tasks, improve business processes through integrated analytics and teach applications to act. Rewire for the borderless business by introducing new ecosystem strategies, designing applications for resiliency, and integrating information and operational technologies.
  • 8. 8 WHY: Competing with agility and speed To compete with agility and speed, companies can no longer afford complex, lengthy and expensive coding of applications, or massive, multi- year system implementations. WHAT: Architecting for change What’s needed is a new way to build software—one that is faster, flexible and more liquid. No longer can applications be “built” as one distinct activity and “maintained” as another. Liquid applications will be assembled leveraging modular architectures, next-generation integration techniques and a cloud-first, mobile-first mindset. These elements, combined with engineering innovations such as Agile and DevOps, mean that software can be continuously delivered and evolve as business needs change. This approach represents a shift away from monolithic applications to a world of smaller components and service modules, which can either be built or bought. In the future, liquid is the way companies will develop every application, including custom, ERP and SaaS. Modular architectures Liquid applications require enterprises to create application architectures that are modular, featuring reusable components sourced internally or externally. One of the key components is emerging software platforms, including platforms as a service, which provide well-defined technical architectures along with standards, governance and reusable code. Platforms facilitate more rapid creation and assembly of liquid business solutions, as applications are increasingly assembled from pre-built components. Think about companies like OpenTable, the popular online restaurant reservation system, and Uber, the personal transportation service. When they want to add new application functionality such as messaging customers when their table or car is ready, they don’t build it themselves. Instead, they tap into cloud providers like Twilio, which offer the functionality as part of a prebuilt platform. In turn, Uber is sharing its liquid application components with other developers from companies as varied as Starbucks and TripAdvisor.7 THE FUTURE OF APPLICATIONS: STRATEGY 1 LIQUID APPLICATIONS A fundamentally new way to build software
  • 9. 9 Next-generation integration techniques Liquid applications must be underpinned by a liquid architecture that has important, new characteristics. Investment in flexible, standardized, open integration services provides the ability to efficiently connect applications and information across the company. Orchestration and business process management services allow applications to be configured and continuously tuned to meet the needs of the business. And APIs provide the glue to allow reusable components to be accessed from within a company as well as by external customers and business partners. With the proliferation of applications, technologies, providers and developers, a robust and advanced API management capability is important and is already being widely adopted, as evidenced by solutions such as Apigee, WS02 and Oracle API Management. Take Swisscom for example, which is on the leading edge of new liquid approaches as it looks to software components, such as industry-compliant payment solutions, as a source of business growth. The company set a goal of externally exposing 120 new APIs by 2015, and jumpstarted these efforts by creating a secure, internal- only “greenfield” platform. Swisscom’s head of enterprise architecture, John de Keijzer, explains: “Corporations often choose to do things in a complex way because that’s how it was historically grown. We knew that having a powerful API program would help us get out of the slow corner.” This accelerated pace of application development would have been impossible just a few years ago.8 Cloud-first, mobile-first mindset To enable the shift from frozen legacy to liquid applications, companies need a cloud-first, mobile-first mindset. A cloud-first mindset requires that applications be engineered to operate and scale in the cloud, even if the initial deployment is on premise. Policy-based architectures will allow organizations to dynamically decide what parts of applications run in the cloud, and how. Companies should establish a common component repository for their business, including cloud components and SaaS- based functionality. Along with that, they will need to adopt a culture of leveraging what exists over creating something new. A mobile-first mindset is also important for liquid applications, recognizing that they must be designed and engineered around how customers and employees interact with software. More and more, these interactions are not on a personal computer or traditional web page, but rather on smartphones, tablets, smart watches, digital dashboards or even on augmented vision displays. THE FUTURE OF APPLICATIONS: STRATEGY 1
  • 10. 10 HOW: Mobilizing for liquid Shifting to liquid applications will create a ripple effect throughout your organization. Here are three crucial steps for your liquid roadmap. Implement new architecture and abstraction strategies Ensure that your enterprise architecture supports platform integration capabilities, security, monitoring and API lifecycle services to support liquid applications. Update application frameworks to include appropriate abstraction strategies, which enable the isolation of technical complexity into platforms and away from business functionality so that both new and existing applications appear less complex. By breaking an application into smaller components that perform discrete functions, it becomes easier to update, replace, remove or augment. Shift to a DevOps culture Liquid applications demand that IT be structured to be more nimble. Agile development coupled with DevOps will enable continuous delivery of software. DevOps, a common industry term, represents both a technology and a culture change. It uses automation techniques for deployment, environment set-up and configuration and monitoring. This streamlines and accelerates the interaction between development teams, which focus on assembling liquid applications, and operations teams, which are accountable for releasing those applications for live service availability. The result: faster, more predictable deployments to market, performed with radically greater efficiency. Future-proof your applications Liquid applications are less focused on technology and more focused on business processes, and must enable the digital business. Set the bar high with user experience expectations and engineering standards that are appropriate for the digital world, and embrace cloud-first and mobile-first principles as appropriate. Take advantage of emerging concepts such as containers so that applications can be seamlessly deployed across platforms. THE FUTURE OF APPLICATIONS: STRATEGY 1
  • 11. 11 Liquid is more than just a new approach to application development. It’s the foundation upon which you will build your business for future growth and competitive advantage. The ability to roll out business capabilities continuously will be the difference between companies that can evolve and ones that stagnate. THE FUTURE OF APPLICATIONS: STRATEGY 1
  • 12. 12 WHY: Managing increased volume and velocity It’s hard for any business to keep up with the exponential growth in data and the pace of change that characterizes our era. As increasing volume and velocity pushes IT organizations to the breaking point, businesses need new approaches to turn runaway complexity into high-performance outcomes. WHAT: Building applications that intelligently automate, analyze and govern To manage growing volume, velocity and complexity, and to maximize the business value of internal and external data, companies need to embed software intelligence everywhere. Software intelligence is made possible by increased processing power, advances in data science, and innovations in natural language processing, machine learning and cognitive computing. Thanks to these advancements, software can be taught to automate decision making through rule-based algorithms, and evolve and innovate on its own through advanced learning techniques. Intelligent applications offer three critical capabilities: intelligent automation, integrated analytics and self-governance. Intelligent automation By automating routine tasks, intelligent applications offload complexity and supplement human effort through technologies such as auto-correction and robotics. Intelligent automation improves productivity by doing more work in a fraction of the time with more accuracy. Financial institutions such as Credit Suisse and Goldman Sachs are using intelligent automation to analyze traffic on their networks and identify rogue traders, market manipulators and policy violators, dramatically reducing legal, business and compliance risk.9 Integrated analytics Integrated analytics create systems that can analyze and comprehend independently, embedding intelligence in the processes themselves and radically improving both business and IT performance. Netflix, for example, is able to understand what customers are watching and when they are starting and stopping programs, and then use predictive analytics to optimize content recommendations based on usage. Self-governance Beyond that, intelligent applications can be taught to act as digital agents and to learn and govern themselves— revolutionizing customer service, IT management and business innovation. Forward-thinking companies are already using digital agents to govern interactions with customers. INTELLIGENT APPLICATIONS When applications comprehend, act and learn THE FUTURE OF APPLICATIONS: STRATEGY 2
  • 13. 13 Meet Amelia, a cognitive knowledge worker from artificial intelligence company IPsoft. Amelia can function as an effective help desk employee— understanding human speech in 10 languages, searching knowledge repositories and databases of similar cases and then returning answers in seconds. Most important, Amelia’s self-learning function enables the application’s governance capabilities to grow over time. As software intelligence increases in sophistication, most applications will learn to evolve and adapt, altering their behavior and extending their capabilities based on experience. Consider the Nest thermostat that learns a homeowner’s habits and preferences to eventually program itself. These kinds of advances will help businesses adapt quickly to specific customer needs and preferences and help IT adapt to dynamic business needs, by applying intelligence to data feeds from both the physical and digital worlds. HOW: Embedding intelligence everywhere Intelligence must be embedded throughout the business—to improve what applications are built, as well as how they are built. Apply intelligent automation to application lifecycle practices Companies can use software intelligence across application development, testing, deployment and maintenance to manage increasing volume, velocity and complexity. Look for automation opportunities across the application lifecycle where routine tasks can be reduced or eliminated. By applying accumulated knowledge and experience, automation can significantly improve productivity through effort reduction and leaner processes. For example, test automation tools can use cognitive computing and robotics to take plain text functional requirements and automatically generate test artifacts including test scenarios, test conditions and expected results. Post deployment, intelligent tools for service operations can continuously accelerate problem resolution by curating specialized application knowledge and then accurately applying it using descriptive analytics and natural language processing. This kind of knowledge-based, self-learning solution helped one large insurer reduce tickets in its critical claims processing application by more than 85 percent over a three-month period, leading to substantial productivity improvement and cost savings. THE FUTURE OF APPLICATIONS: STRATEGY 2
  • 14. 14 Integrate analytics with business processes With the rise of smartphones, social media, wearables and the Internet of Things, consumers and businesses now leave a trail of usable, useful data behind them wherever they go. That data can be harnessed and embedded in business processes in a variety of ways. DHL’s Resilience 360 solution, for example, offers customers near real- time supply chain monitoring. The tool links data related to natural disasters, theft, geopolitical and other risks with a customer’s global manufacturing and distribution footprint, to visualize and assess critical supply chain hot spots and take steps to mitigate risks.10 Extracting the greatest value from Big Data and analytics requires the right structure, processes and configuration of components in your data supply chain. Companies need to evaluate how to embed Big Data architectures in their applications—not just build them on the side. By integrating Big Data and analytics in business processes and applications, companies can move away from having a separate analytics function whose reports then need to be interpreted and acted on. Integrated analytics are already helping IT organizations become more business-centric. Industry domain knowledge and business performance data—including inventory levels, late shipments, revenue and regulatory compliance—can be incorporated into data supply chains enabling IT organizations to influence business performance, not just IT performance. Consider one pharmaceutical company, whose IT organization was able to accelerate clinical trials by reducing recurring critical application incidents by 50 percent, thereby eliminating delays in the submission of trial outcomes to regulatory agencies. Teach applications to act As companies integrate continuous streams of data and analytics capabilities into their business and IT processes, they can empower digital agents to act on their behalf. Consider how Disney customers can “program” their all-in-one MagicBands—through the My Disney Experience online portal—to set vacation choices in advance and effortlessly manage their experience once at the resort.11 To put digital agents to work, companies should start by evaluating how automated decision-making can be embedded into the normal flow of both business processes and application lifecycle practices for better outcomes. Outcomes must be clearly defined in advance and then programmatically represented as self-governing, automated, analytics-enabled applications that make business processes intelligent. Such advancements hold promise for IT organizations too as they look to delegate the monitoring, management and governance of software development to digital agents. Analytics leveraging current and historical IT delivery data is already helping IT run more efficiently by automatically triggering corrective and preventive actions in areas such as scope and requirements management— a critical capability as the pace of application change accelerates. THE FUTURE OF APPLICATIONS: STRATEGY 2
  • 15. 15 How you interact with your customers, how you buy and sell your products or services, how you find your next product insights— these decisions and actions will increasingly be accomplished with the help of intelligent applications. Embed intelligence everywhere. THE FUTURE OF APPLICATIONS: STRATEGY 2
  • 16. 16 WHY: Creating new competitive frontiers Connectivity in the age of the software- driven business is about more than application integration. It’s about creating new competitive frontiers using software. To grow revenue and defend their market position, companies must open new dimensions of application connectivity—with business partner and customer ecosystems, as well as with the rapidly growing Internet of Things—that are essential to delivering new services. WHAT: Building software that runs everywhere Connected applications offer companies the technical means to dynamically interface with the Internet of Things and with business partner and customer ecosystems. As the Internet of Things matures, connected applications will run everywhere—not just on traditional hardware such as phones, tablets and PCs, but also in manufacturing, pipelines, industrial equipment, cars, wearables and more—to convert products into connected product-service hybrids. These applications change the way companies operate by opening up their manufacturing operations, production facilities, products and services to new technologies. For example, the OMNETRIC Group, a Siemens and Accenture company, is helping utility companies combine vast volumes of data from smart meters, as well as grid-sensing devices such as sensors and transformers, with enterprise and operational data to improve asset management, grid operations and customer service. This capability provides utilities with an integrated view of their systems and data to support advanced analysis and decision making. Connected applications are also required to dynamically interface with business partner and customer ecosystems in today’s highly networked, digital business environment. When properly designed and managed, an ecosystem multiplies the power of all the participants, leading to combinations of functionality—and revenue opportunities—that would previously have been difficult to achieve. Think about John Deere, a company that understands the power of software as well as business ecosystems. This 175-year-old manufacturer of tractors and other industrial equipment introduced MyJohnDeere in 2012. THE FUTURE OF APPLICATIONS: STRATEGY 3 CONNECTED APPLICATIONS Extending company boundaries through software
  • 17. 17 It is a centralized, open, online platform to help agricultural producers manage all the data related to their equipment and operations in the field. MyJohnDeere allows farmers, dealers and other organizations to access and share information that helps them run their businesses more effectively. For example, DuPont Pioneer is collaborating with John Deere to deliver near real-time, field-level data via the MyJohnDeere platform. This data helps farmers and dealers make important revenue-generating decisions about seed, fertilizer and purchasing.12 And, the MyJohnDeere platform has enabled John Deere to expand from being a provider of agricultural equipment to a provider of data-based agricultural services. The community forming around the platform is strong enough and extensive enough that, in 2013, John Deere hosted its first API Integrator Conference that drew representatives from 50 companies across eight countries.13 HOW: Building and nurturing ecosystems How do software-driven companies create and manage new dimensions of application connectivity to grow revenue and defend their market position? Here are three components of a successful overall strategy. Develop and implement an ecosystem strategy Enterprises need multiphase strategies to build and nurture an ecosystem. Start— and learn—with your internal developers and business functions, and then create a broader ecosystem that includes external entities such as business partners and customers. Drugstore retailer Walgreens has developed a health ecosystem around its Prescription Refill API that companies like CloudMetRx use to offer mobile refill capabilities within their solutions. As a result of its health ecosystem strategy, Walgreens now refills a prescription every second on average.14 Software- driven businesses will need new skills and approaches in ecosystem management— not only in the leadership ranks but also deeper into the organization. Both business and IT staff should be tasked with identifying new strategic partnership opportunities for the company. THE FUTURE OF APPLICATIONS: STRATEGY 3
  • 18. 18 Prepare for resiliency As applications become increasingly connected, companies need to design for resiliency and proactively manage security across the extended business ecosystem and the physical world. Companies, customers and other stakeholders will have to work together to mitigate the risks of connected applications. Resiliency capabilities, including security, need to be designed into applications, embedded into platforms, cloud services and APIs, and incorporated into connected physical assets. Design applications so that an attack won’t take down the whole system. A well-thought-out architecture is required to augment existing risk management practices and avoid the economic impact of attacks and failures. For example, obsolete and legacy software must be tightly managed since it likely has limited or no security built in. When compromised software is detected, companies must be ready with a strategy for immediate remediation. Services that continuously test applications across all parts of their lifecycle, including those in production, will also help maintain the resiliency of the overall architecture. Integrate Information Technology (IT) and Operational Technology (OT) To grow revenue from new product- service hybrids, companies need a way to combine physical assets with software and third-party services. To date, IT, such as resource planning, customer relationship management and decision support systems, and OT, such as equipment monitoring and management and industrial process support systems, have been managed separately. Now, companies must weave together previously unavailable, or inaccessible, enterprise and machine- generated data—binding together IT and OT. Sensors, communications and other operational technologies will work together with IT, most likely meshing in the cloud, to create new connected products and services. The merger of IT and OT offers an opportunity to integrate different business functions that operate under different technical standards and are served by different vendors. THE FUTURE OF APPLICATIONS: STRATEGY 3
  • 19. 19 The high-velocity world demands that companies rewire themselves to become borderless businesses. Building an extended external ecosystem and managing the Internet of Things is now an imperative for companies in every industry—providing the strategic and technological means to enter and succeed in new markets. THE FUTURE OF APPLICATIONS: STRATEGY 3
  • 20. 20 Many companies’ existing operating model for software development is not fit for purpose in today’s high-velocity business environment. Effectively driving business strategy through software will require a new business and IT operating model. The IT organization must be prepared to define and execute business strategy through software that is liquid, intelligent and connected. For its part, the business must strive to gain more technology savvy as it assumes a bigger role in building software. Innovations must be driven jointly, tied to new strategic planning processes that span both business and technology. In this operating model, software becomes a revenue-generating product of the company. Business needs IT to ensure the company’s software products are market relevant, and IT needs business to identify new markets where they can introduce these software products. CONTINUOUS INNOVATION CONTINUOUS INNOVATION BUSINESS STRATEGIES APPLICATION STRATEGIES THE FUTURE OF APPLICATIONS: NEW OPERATING MODEL AND ROLES Embracing a new operating model and new roles in the software-driven world
  • 21. 21 PLATFORM DIRECTORS As software platforms become a product of the enterprise, both business and IT become involved in a new form of product management. Platform directors take responsibility for architecting and executing the abstraction strategies that enable evolution to liquid applications. As with product managers, platform directors need to have an eye on innovation to proactively identify the “next big thing.” In addition, an orientation to serving the customer—the developer—is essential. Platform directors need to continuously filter and rapidly respond to business change and then translate user needs back to the engineering team. They also need to make sure that all essential software components are architected with proper resiliency to maintain an “always on” developer experience. Finally, platform directors will need to establish and manage governance models that strike a balance between enabling open innovation, and setting and enforcing standards for software development. ECOSYSTEM BUILDERS The job of ecosystem builders is to establish an environment where partners and developers are empowered to generate new sources of revenue and growth. Ecosystem builders begin internally and then shift externally, to successfully execute business strategy. By adopting a borderless business mindset, ecosystem builders enable the company to collaborate with new partners, suppliers and even competitors in the delivery of new products and services to the market. Instead of focusing on the question of who our customers are, ecosystem builders adopt an outside-in view and ask, “Who should our customers be?” And, while the various members of the ecosystem will jointly nurture these new products and services, each is also able to market its core products and services independently throughout the expanded ecosystem. INTELLIGENCE ARCHITECTS The promise of intelligent applications is systems that can interpret data or conditions, apply codified knowledge or logic, and make decisions—all with minimal human intervention. But first, someone has to teach the applications how. Enter intelligence architects. Developing intelligent applications is different from developing traditional systems. Instead of following the usual phases of plan, design, test and deploy, development focuses on identifying and curating data sources, and designing intelligent capabilities into applications. Such an approach requires different skills and mindsets, as well as different methodologies—something to be managed by intelligence architects. In addition, these architects ensure that applications with embedded intelligence, including digital agents, are trained in a particular business domain— similar to how we train new employees—to make the software useful. CITIZEN DEVELOPERS As liquid applications and expanded ecosystems are introduced, developers no longer reside exclusively within IT organizations. Instead, they emerge from the lines of business or even from outside the company. Citizen developers support the new reality of increasing speed and complexity by assembling functional solutions or liquid applications as the business needs them. Then, they release the software to production at any point in time. Customer- facing digital and mobile applications, for example, require quick changes to respond to very short feedback cycles from customers without compromising quality. Existing applications, too, call for more efficient and automated development and deployment approaches to keep pace with business. Citizen developers are able to address such needs with agility at the point of need. Within this new operating model, companies must embrace four new roles—platform directors, intelligence architects, ecosystems builders and citizen developers—to deliver liquid, intelligent and connected applications. THE FUTURE OF APPLICATIONS: NEW OPERATING MODEL AND ROLES Four new roles to leap ahead of the competition
  • 22. THE FUTURE OF APPLICATIONS: CONCLUSION Today, the business of applications is changing how companies operate and grow. No longer a supporting capability, applications are a driver of strategy and competitive differentiation. They can enable entirely new services for new and existing markets. The future of applications is an exciting one for companies that are willing to develop a new operating model for software development and then fundamentally change the way they design, build and use software. The velocity of change—in technology, in the marketplace and in entire industries—is unprecedented. Success requires responding proactively to those changes and to the disruptive effects of software on your industry. Architecting liquid applications, for example, requires changes to how IT operates, how IT and the business collaborate and how companies train leaders and manage culture change. Building intelligent applications not only requires leveraging the latest advances in data science for automation and integrated analytics, but also involves teaching applications to govern and evolve on their own. Creating connected applications requires entirely new methods for managing the Internet of Things and establishing business partner and customer ecosystems to enable the borderless business. And underneath it all is your operating model. Do you have the right technology know-how and planning processes in place to drive business strategy with software? Both IT and business leaders must understand what it means to be a software-driven business. They need to understand how software can spur growth, shape new markets and reach new customers. And, they must work together closely to orchestrate new business solutions. When long-term competitive advantage depends on software, being a “fast follower” may not be fast enough. Are you ready to take the lead? CONCLUSION Taking the lead 22
  • 23. About the methodology “The Future of Applications” is the result of a comprehensive research program at Accenture throughout 2014. It involved interviews with dozens of Accenture executives, input from clients and industry analysts, and extensive secondary research, as well as our experience working on advanced information technology solutions with thousands of clients globally. Notes 1 “IT Speed: The Crisis and the Savior of the Enterprise,” A Forrester Consulting study commissioned by Chef, December 2013. https://www.getchef.com/ blog/2013/12/09/big-day-for-chef/. 2 “Becoming—or Finding—the Next Digital Business Leader,” Margot McShane, Russell Reynolds Associates presentation to Forrester’s Forum for eBusiness & Channel Strategy Professionals, October 28, 2014. 3 ITS World Congress Keynote: Bill Ford, Executive Chairman, Ford Motor Company, 2014 World Congress on Intelligent Transportation Systems, September 8, 2014. http://www.youtube.com/ watch?v=gmOmUiNpe84. 4 “How Legacy Code Is Exposing Business and Government Systems,” Security InfoWatch, April 8, 2014. http://www.securityinfowatch.com/ article/11386786/advanced-persistent- threats-plague-applications-that- were-written-decades-ago-in- dead-programming-languages. 5 Cisco, “The Internet of Things: How the Next Evolution of the Internet Is Changing Everything.” http://www.cisco.com/web/about/ac79/ docs/innov/IoT_IBSG_0411FINAL.pdf. 6 “Microsoft Partner Network Guide,” Microsoft, July 2012. 7 “Introducing the Uber API,” Uber blog, August 20, 2014. http://blog.uber.com/api. 8 “Swisscom—Changing DNA Through Digital Transformation,” Apigee case study. http://apigee.com/about/ customer-story/swisscom-changing- dna-through-digital-transformation. 9 “Nothing to Hide, Everything to Fear,” Fortune, August 14, 2014. http://fortune.com/2014/08/14/digital- reasoning-cognitive-computing/. 10 “DHL Digs Into ‘Big Data’ for New Customer Solutions,” CEP-Research, February 17, 2014. http://www.cep- research.com/cepresearch/repository/ news/2014/february/1702147.html. 11 Disney website: https://disneyworld. disney.go.com/plan/my-disney- experience/bands-cards/. 12 “DuPont Pioneer and John Deere Offer Next Level of Decision Services to Growers,” DuPont Pioneer press release, November 8, 2013. 13 “John Deere Announces Developer. Deere.com,” Precision AGWired, October 9, 2013. http://precision. agwired.com/2013/10/09/john-deere- announces-developer-deere-com/. 14 “Walgreens Finds Mobile Customers To Be Better Customers,” MobiHealthNews, May 30, 2013. http://mobihealthnews. com/22686/walgreens-finds-mobile- customers-to-be-better-customers/. ABOUT THE REPORT 23
  • 24. 24 About Accenture Accenture is a global management consulting, technology services and outsourcing company, with approximately 319,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$30.0 billion for the fiscal year ended Aug. 31, 2014. Its home page is www.accenture.com. Copyright © 2015 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture. 15-0273 This document makes descriptive reference to trademarks that may be owned by others. The use of such trademarks herein is not an assertion of ownership of such trademarks by Accenture and is not intended to represent or imply the existence of an association between Accenture and the lawful owners of such trademarks.