Current Management and Challenges in the Software Industry

Thirty years ago the world underwent the most dramatic technological change. In hindsight, it can be said that the advent of electronics and the Internet has had a profound effect on everyday life and in unexpected ways of managing. The use of computers for many business processes and the development of big data, among other great technological advances, has led to significant cost savings and improved quality over the years. The integration of financial markets through technological means and the adoption of the Internet worldwide has significantly reduced transaction and communication costs and brought nations and cultures closer to each other than ever before. Computers are now a basic tool for almost every business in the world and their use and adaptation to specific business problems in the form of software development is a practice many companies do on their own. In the past, those attempts to use computers and automation were very expensive and therefore only for large companies. Over the years, however, the software industry has emerged to offer solutions and off-the-shelf services to small companies. Today, after surviving the dotcom disaster of 2000, software development businesses are proving themselves to be powerful players in the technology industry.

The advent of more computer and technology has created many challenges and opportunities. One of the biggest opportunities offered by the software industry is the low entry barrier. Since the software business is relatively inexpensive, successful market access depends largely on the knowledge and specific expertise of the industry. Entrepreneurs with the right skills can easily compete with large companies and thus become a major threat to some of the largest corporations. Companies, on the other hand, need to find ways to lower profits and protect their intellectual property; therefore, a strong reliance on information combined with a short life of computer technology makes information workers more important to the organization. Information workers in the industry therefore enjoy greater negotiation power and need a different management style and work environment than other sectors, especially those industries that have high market access requirements. This strong position of software staff challenges the strategies of employees in organizations and raises concerns about the protection of intellectual property.

The very young industry is blessed with endless new opportunities, such as the ability of companies to partner with other organizations around the world without interruption and at no cost to communication. In addition, there are no import tariffs that make the transfer of software across borders work very well; however, the industry with its works like art suffers from a lack of standards and quality issues. The effective management of these powerful institutions challenges modern management and modern management science because traditional management styles, such as Weberian institutions, seem unable to cope with volatile situations.

Challenges in the Software Industry

Numerous studies show that modern software development methods are inefficient and costly (Flitman, 2003). On average, projects are only 62% efficient, translating into 37% waste. A typical software development project consists of the following distribution of workflow efforts: 12% planning, 10% specificity, 42% quality control, 17% implementation, and 19% software development (2003). There are many possible explanations for the type of resource distribution. Firstly, an unusually high percentage of 42% for quality control purposes may indicate a lack of standard operating standards and practices. This huge waste of effort can also be the result of inefficiencies in specification processes. Because the 19% share of software development is the complexity of the software, Hardware, and tools used, there is an opportunity to reduce by carefully controlling and balancing internal work processes. Only a disappointing 17% of spending, however, should scare business owners, as start-up jobs are a major source of income. The lowest production rate reported by Flitman (2003) seems to indicate that the US program manager produces about 7,700 lines of code per year, translating to only 33 per working day (Slavova, 2000). Given that a major software project, such as Microsoft Word, is reported by Microsoft to require 2 to 3 million lines of code, it is clear how costly such projects are and that production and quality management are a major concern for today’s software businesses. The challenge for current software managers is to find the root of the production problem and work out a solution.

A number of recent studies have focused on software development and quality concerns. In addition, researchers have partially blamed the organization’s general culture, which could lead to unproductive work habits. In large identified areas, project documentation has been found to be in short supply because the documentation is limited in detail and is not updated often enough. Quality control in the form of software testing is not done very often and there seems to be a lack of quality assurance procedures to ensure that the software is built with quality in mind from the outset. The culture of the organization was found to be without a company

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