The First Derivative of Software is Eating the World

Marc Andreesen, venture capitalist at a16z, famously stated in 2011:

Software is eating the world

Wall Street Journal, 2011-08-11

Andreesen’s article describes the immediate impact of software, both as its own product category and as a component of increasing importance in existing (non-software) products.

I want to discuss what I consider the first derivative of Andreesen’s insight, the increase in innovation speed provided by software, and its impact on existing products.

Software is unlike any other product: Pure thought stuff (but potentially complex) with near-zero duplication costs. One consequence of software being pure data is the high speed of shuffling these data around. Specifically, using techniques of continuous delivery, the time from a programmer writing some code to that code delivering its economic value for its owner has shrunk to seconds.

Compare this with the time-frames of say, traditional mechanical engineering, where it takes months, if not years, until some finished design eventually hits the market and generates the hoped-for revenues for the vendor behind it.

This has profound consequences not only for the highly competitive software industry, but also traditional non-software vendors. In particular,

smart traditional vendors are changing their product architectures to move more into software so that they can benefit from this high innovation speed.

Properly architected, they can deliver new value to traditional customers at software speeds, even if their product on the outside looks like a traditional piece of hardware.

In the extreme form, this means moving the fast-evolving parts into the cloud. If you can manage your customer’s car, or fleet of cars, or heating system, or appointment scheduling, or production process from a cloud you operate, you can incrementally develop the software affecting all these traditional products in your cloud at the speed of continuous delivery. Any new finalized product improvement can affect your customers within seconds, rather than within years.

This again is why forward-looking vendors not only rearchitect all their products to increase the software part and move it into the cloud, but are at least as much software vendors as they are more traditional non-software-vendors.