Current Management Opportunities and Challenges in the Software Industry
In the past 3 decades the planet went through a very dynamic technological transformation. In retrospective, it may be stated without exaggeration that the emergence of electronics and also the Internet have greatly impacted daily life in addition to managerial practice for an unforeseen extent. The computerization of multiple business processes and the development of massive databases, among many other radical technological advances, have result in enormous cost savings and quality improvements through the years. The interconnection of financial markets through electronic means and also the worldwide adoption from the Internet have greatly reduced transaction and communication costs and brought nations and cultures closer to each other than ever before imaginable. Computers are now fundamental tools in just about all businesses around the world and their application and adaptation to specific business problems as software development is really a practice that lots of companies perform on their own. In the past, such computerization and automation efforts were very expensive and therefore only practiced by large corporations. Through the years, however, the software industry emerged to offer off-the-shelf solutions and services to smaller companies. Today, having survived the massive dotcom crash of the year 2000, software development businesses established themselves as strong players in the technology industry.
The emergence of numerous computer standards and technologies has established many challenges and opportunities. One of the main opportunities supplied by the program sector is comparatively low entry barrier. Because the software clients are not capital intensive, successful market entry largely depends on know-how and specific industry domain knowledge. Entrepreneurs using the right skills can relatively easily compete with large corporations and thereby pose a substantial threat to other, bigger organizations. Companies, on the other hand, must find ways to reduce turnover and protect their intellectual property; hence, the strong knowledge dependence combined with relatively short lifespan laptop or computer technologies makes knowledge workers extremely important to the organization. Knowledge workers in this industry therefore enjoy stronger bargaining power and need a different management style and work environment than in other sectors, particularly those industries which have higher market entry capital requirements. This relatively strong position of software personnel challenges hr strategies in organizations and it also raises concerns concerning the protection of intellectual property.
The relatively young market is blessed with sheer endless new opportunities, like the ability of companies to cooperate along with other organizations around the globe without interruption and incur practically no communication costs. Additionally, no import tariffs exist making the transfer of software across borders extremely powerful; however, the using its craft-like professions suffers from lack of standards and quality problems. The successful control over such dynamic organizations challenges today’s managers as well as contemporary management science because traditional management styles, for example Weberian bureaucracies, appear to be unable to cope with unstable environments.
Challenges in the Software Industry
Many reports say that present-day software development practices are highly inefficient and wasteful (Flitman, 2003). Normally, projects are just 62% efficient, which means a waste of 37 %. The normal software development project has got the following distribution of labor effort: 12% planning, 10% specification, 42% quality control, 17% implementation, and 19% software building (2003). There are lots of possible interpretations from the nature of the distribution of resources. First, the extraordinarily high share of 42% for quality control purposes could mean deficiencies in standards and standardized work practices. This huge waste of effort can also be the result of inefficient planning and specification processes. Because the share of 19% for software building is a function of software complexity, hardware, and tools used, there’s a opportunity to reduce it by carefully managing and standardizing internal work processes. The disappointing share of just 17% for implementation, however, ought to be alarming to business people, since implementation activities are the main activity that results in revenue. The relatively low productivity level reported by Flitman (2003) appears to be also reflected within the fact that the typical U.S. programmer produces approximately 7,700 lines of code each year, which means just 33 per workday (Slavova, 2000). Considering that a sizable software project, such as Microsoft Word, is reported by Microsoft to require 2 to 3 million lines of code, it might be obvious how costly such projects can become and that productivity and quality management are major concerns to today’s software businesses. The task for contemporary software managers is to find the root of the productivity problem along with a remedy in the form of a management practice.
A plethora of recent reports addresses software development productivity and quality concerns. Elliott, Dawson, and Edwards (2007) conclude that there’s a lack of quality skills in current organizations. Furthermore, the researchers put partial blame on prevailing organizational cultures, which can lead to counterproductive work habits. From the main problems identified, project documentation was discovered to become lacking because documents are deficient at length and never updated frequent enough. Qc in the form of software testing is not practiced as frequently there seems to be deficiencies in quality assurance processes to ensure that software programs are constructed with quality in your mind right from the start. Organizational culture was discovered to become deficient in companies were workers often avoid confrontation and therefore avoid product tests altogether (2007).
Since knowledge workers are the primary drive in software organizations, developing a fruitful and efficient organizational culture is really a main challenge to today’s managers. The connection between organizational culture and quality and productivity in software businesses was recently investigated by Mathew (2007). Software organizations are usually people-centered and their dependency on knowledge workers can also be reflected through the enormous spending remuneration and benefits of more than 50% of revenue. Because the industry matures and grows further, the challenge to organizations is that larger number of employees need to be managed which brings culture towards the focus of management. Mathew (2007) discovered that the most important relation to productivity was achieved by creating an environment of mutual trust. Higher levels of trust result in greater employee autonomy and empowerment, which strengthened the present management view that trust and organizational effectiveness are highly related. Those companies with higher trust and empowerment levels benefitted from more intensive employee involvement and thereby achieved higher quality products (2007).
Product quality, however, depends on additional factors as well that reach past the discussion of work processes. Relatively high employee turnover was found to have a detrimental impact on product quality and organizational culture (Hamid & Tarek, 1992). Constant turnover and succession increase project completion costs, cause considerable delays, and expose organization to higher risks because their development processes can be severely disrupted. While recruiting strategies should help find ways to retain key personnel in the company, organizations need to nevertheless be prepared for turnovers and minimize their risks. One of the greatest risks for people-centered, knowledge worker organizations may be the lack of knowledge when employees leave.
Knowledge management has evolved into a comparatively new discipline in the last 2 decades but is mainly practiced by large, global organizations only (Mehta, 2008). As corporations realized the importance of knowledge management activities to mitigate the risk of know-how loss within their organizations, they started employing chief knowledge officers and crews using the goal of collecting and organizing information. Because they build custom knowledge management platforms, companies can benefit from increased transfer, storage, and availability of critical business information. Such activities might help companies innovate and build knowledge capital with time (2008). The task remains, however, to set up such systems and to elicit employee support for knowledge management systems. In addition, these systems leave another critical question open. What goes on when top performers take all of the knowledge together when they leave?
Another crucial variable affecting software product and service quality is top management involvement. Projects within the software industry commonly fail because of one or a combination of the next three major reasons: poor project planning, an inadequate business case, and insufficient top management support and involvement (Zwikael, 2008). Software projects act like projects in other industries by concentrating on timely project completion, budget, and compliance to specifications, the requires specific support processes from top management to facilitate projects. These processes are summarized in Table 1. Key support processes, such as the appropriate assignment of project managers and the existence of project success measurement, indicate that successful companies demonstrate a higher level of project progress control than others; however, Zwikael acknowledges that top managers rarely concentrate on these key processes and instead prefer to cope with those processes which are easier for them to work on personally.