Current Management Opportunities and Challenges in the Software Industry


During the beyond 30 years, the world went thru a completely dynamic technological transformation. In retrospect, it could be stated without exaggeration that the emergence of electronic gadgets and the Internet have significantly impacted day-by-day lifestyles and managerial practice to an unexpected quantity. The computerization of more than one commercial enterprise processes and the creation of huge scale databases, among many different radical technological advances, have cause full-size value financial savings and great improvements over the years. The interconnection of

The Know It Guy

monetary markets through the digital approach and the worldwide adoption of the Internet have significantly reduced transaction and verbal exchange expenses and brought countries and cultures in each other’s direction than ever imaginable. Computers are fundamental equipment in almost all corporations around the sector, and their application and edition to precise commercial enterprise issues in the form of software improvement is an exercise that many organizations carry out on their personal. In the beyond, such computerization and automation efforts have been very pricey and consequently only practiced through huge agencies. Over the years but, the software industry emerged to provide off-the-shelf answers and services to smaller agencies. Today, having survived the large dotcom crash of the yr 2000, software development corporations established themselves as sturdy players inside the era enterprise.

The emergence of numerous computer standards and technology has created many demanding situations and possibilities. One of the main possibilities supplied with the software program region’s aid is a noticeably low access barrier. Since the software business isn’t always capital extensive, a hit marketplace access in large part depends on information and specific enterprise domain information. Entrepreneurs with the proper abilties can quite without problems compete with massive companies and thereby pose a massive risk to other, much large agencies. However, companies want to find ways to lessen turnover and protect their highbrow assets; therefore, the sturdy know-how dependence combined with the distinctly quick lifespan of laptop technologies makes expert people very crucial to the corporation. Knowledge employees in this industry consequently experience stronger bargaining electricity and require a different control fashion and paintings environment than in different sectors, specifically those with higher marketplace access capital requirements. This noticeably sturdy role of software program personnel challenges human useful resource strategies in organizations, and it also raises concerns approximately the protection of highbrow assets.


The distinctly young industry is blessed with sheer endless new possibilities, consisting of organizations’ potential to cooperate with other groups around the globe with out interruption and incur practically no verbal exchange expenses. Also, no import tariffs exist, making the switch of software programs across borders very efficient; however, the enterprise with its craft-like professions suffers from loss of standards and satisfactory issues. The hit control of such dynamic businesses challenges today’s managers and current management technological know-how because traditional control styles, consisting of Weberian bureaucracies, appear unable to cope with risky environments.

Challenges in the Software Industry

Many research imply that gift-day software development practices are noticeably inefficient and wasteful (Flitman, 2003). On average, projects are most effective sixty two% green, which translates to a waste of 37 %. The usual software program development undertaking has the following distribution of work attempts: 12% making plans, 10% specification, forty-two% quality manipulate, 17% implementation, and 19% software program constructing (2003). There are many possible interpretations of the character of this distribution of sources. First, the relatively high percentage of 42% for first-class control functions can indicate a lack of requirements and standardized paintings practices. This big waste of attempt can also be the result of inefficient making plans and specification tactics. Because the share of 19% for software construction is a characteristic of software complexity, hardware, and gear used, there may be a risk to lessen it by cautiously dealing with and standardizing internal painting methods. However, the disappointing proportion of the handiest 17% for implementation must be alarming to business owners, given that implementation activities are the primary activity that consequences in revenue. The surprisingly low productivity stage stated through Flitman (2003) appears to be additionally pondered in the truth that the common U.S. Programmer produces approximately 7, seven hundred strains of code per 12 months, which interprets to simply 33 consistent with workday (Slavova, 2000). Considering that a massive software program assignment, together with Microsoft Word, is pronounced via Microsoft to require 2 to three million code strains, it turns apparent how pricey such tasks can end up. That productiveness and excellent management are fundamental concerns to brand new software program companies. Modern-day software program managers’ task is to locate the foundation of the productiveness problem and treatment inside the form of control practice.

A plethora of latest research addresses software improvement productivity and exceptional concerns. Elliott, Dawson, and Edwards (2007) conclude that there may be a lack of cutting-edge organizations’ best competencies. Furthermore, the researchers placed partial blame on winning organizational cultures, resulting in counterproductive painting habits. Of the main issues identified, project documentation changed into observed to be lacking due to the fact files are deficient in detail and not updated common sufficient. Quality control inside the shape of software testing is not practiced as regularly. There seems to be a lack of best warranty strategies to ensure that the software program is built with exceptional minds from the start. The organizational tradition became poor in agencies have been people tend to keep away from the war of words and therefore avoid product assessments altogether (2007).

Since know-how people are the main power in software agencies, growing a fruitful and green organizational culture constitutes a main challenge to modern managers. The relationship between organizational lifestyle and first-class and productiveness in software organizations changed into currently investigated by way of Mathew (2007). Software agencies tend to be humans-focused, and their dependency on knowledge workers is likewise pondered through the great spending remuneration and benefits of more than 50% of revenue. As the industry matures and grows further, the undertaking to groups is that a larger number of employees needs to be controlled, which brings a way of life to the point of interest of management. Mathew (2007) observed that the maximum crucial effect on productivity bbecomesexecuted by growing an environment of mutual trust. Higher tiers of agreeing to lead to more employee autonomy and empowerment bolstered the existing management view, which is enormously associated with organizational effectiveness. Those organizations with the better agreement and empowerment tiers benefitted from extra in-depth employee involvement and thereby executed higher-excellent merchandise (2007).

However, the product greatly depends on different factors that reach past the dialogue of work methods. Relatively excessive worker turnover changed into located to have a destructive effect on product satisfaction and organizational tradition (Hamid & Tarek, 1992). Constant turnover and succession growth are crowning glory prices, motive sizable delays, and revealing enterprise to greater dangers because their improvement methods may be significantly disrupted. While human resources strategies should help discover ways to keep key personnel in the enterprise, groups want to be organized for turnovers and limit their dangers. One of the finest risks for human beings-targeted, know-how employee organizations is the lack of information when personnel go away.


Knowledge control has developed right into an extraordinarily new area in the last two years but is mostly practiced by massive, international companies only (Mehta, 2008). As agencies found out the importance of know-how management activities to mitigate the hazard of information loss inside their groups, they started using chief expertise officers and crews with the intention of accumulating and organizing facts. By building custom understanding control structures, groups can gain from increased transfer, garage, and availability of essential business facts. Such activities can help corporations innovate and construct expertise capital over time (2008). The challenge stays, but to install such systems and to elicit worker assistance for expertise control structures. In addition, these structures leave any other important query open. What takes place while top performers take all of the knowledge with them once they depart?

Another critical variable affecting software product and carrier first-rate is top management involvement. Projects inside the software program industry generally fail because of one or a combination of the subsequent three most important reasons: poor task planning, a vulnerable business case, and absence of pinnacle management aid and involvement (Zwikael, 2008). Software initiatives are much like tasks in different industries through focusing on timely task finishing touch, price range, and compliance to specifications; the enterprise calls for particular assist processes from pinnacle management to facilitate projects. These strategies are summarized in Table 1. Key guide methods, consisting of the best project of mission managers and the life of assignment achievement dimension, suggest that a hit groups exhibit a better stage of undertaking development control than others; however, Zwikael acknowledges that top managers not often attention on these key processes and alternatively prefer to deal with the ones methods which are less difficult for them to work on individually.

Table 1

The ten most vital pinnacle management aid processes inside the software program area (Zwikael, 2008). Those procedures marked with an asterisk (*) have been found to be the maximum vital.

  • Support Process
  • Appropriate task manager assignment *
  • Refreshing challenge processes
  • Involvement of the mission manager all through the initiation stage
  • Communication between the mission manager and the business enterprise *
  • Existence of task success dimension *
  • Supportive assignment organizational shape
  • Existence of interactive interdepartmental undertaking groups *
  • Organizational projects resource making plans.
  • Project management office involvement
  • Use of widespread undertaking management software program *
  • Opportunities inside the Software Industry

The creation of low price verbal exchange thru the Internet and the diversification of the software program enterprise into many special branches delivered a mess of new marketplace opportunities. Some of the main opportunities are rooted within the low prices of verbal exchange, whilst others originated from the possibility of geographic diversification and global collaboration.

One predominant opportunity which especially larger groups are searching for to capture is geographic diversification in the shape of globally dispensed software development. Kotlarsky, Oshri, van Hillegersberg, and Kumar (2007) have researched this source of possibilities that is particularly practiced with multinational groups’ aid; however, an increasing number of small agencies is likewise said to be benefitting from dispersed software improvement across countrywide boundaries. The take a look at discovered that software program agencies can attain considerably higher levels of productivity with the aid of developing reusable software components and decreasing venture interdependencies. By reducing interdependence, the produced modules are much more likely to emerge as useful in future tasks independently; moreover, this discount of intertwined laptop code also has a fine impact on mission groups. Teams in companies that globally distribute their tendencies benefit from elevated autonomy and reduced conversation necessities. The authors point out that the conditions to distribute software improvement aren’t only suitable project planning but also the standardization of tools and improvement methods. Without such rearrangements, it can grow to be almost impossible to manage and consolidate the various allotted team sports (2007). Especially for groups operating throughout nations away from each other, it could pay off to deploy video or other Internet-based conferencing technologies and make the most huge financial savings potentials. But are those means of verbal exchange effective?

In the last decade, a brand new form of organization has emerged that has taken the Internet’s maximum advantage. Virtual organizations exist absolutely in cyberspace, and their team contributors speak in general, if now not exclusively, via the Internet using webcams and messaging software programs. The task for managers in virtual groups is to exploit the brand new generation and locate approaches to encourage and direct the personnel and painting tactics. A observe via Andres (2002) in comparison virtual software program improvement groups with face-to-face groups and diagnosed several demanding situations and opportunities for virtual managers. Managing paintings from a special time sector may be complex due to the dearth of bodily presence. Communication will need to be asynchronous or can most effectively raise at work hours that overlap each time zone. Virtual teams facilitate this manner with the aid of using electronic mail and voice/textual content messaging, however greater importantly, by reducing the interdependency of tasks. Andres (2002) suggested that those forms of communication have lower “social presence” which means that people have a want and ability to feel others presence within the group. The trouble with many automatic communique channels is that visual clues, utterances, frame language clues, and clues from the character’s voice are lacking. When located on a social presence continuum, the diverse conversation sorts rank as follows from the lowest to the best: e mail, phone, video conferencing, and face-to-face conferences. Andres’ comparison among development groups using video-conferencing instead of face-to-face meetings revealed that the latter institution becomes way more efficient and effective. However, the video-conferencing crew benefitted from reduced journey charges time.

The observe conducted in 2002, however, has several shortcomings. First, it’s far already seven years old and Internet prices have dropped and speeds have improved substantially considering then. Considering the enhancements in video satisfaction and availability and pc speeds, this communication shape has become greater possible these days. In addition, latest managers are simply now starting to learn how to use those way of communique successfully. For instance, even though e mail technology has been around for 2 years now, many managers nevertheless find that emails can create loads of ambiguity. The challenge to future generations of managers might be to alternate their writing fashion to match email restrictions and different text messaging technologies. Another essential component to consider is that written conversation can be saved indefinitely and feature prison effects; consequently, extra often than now not, managers can also deliberately opt to keep away from such conversation channels for political or criminal reasons. The have a look at by using Andres (2002), however, ended in a terrible view of video conferencing probably due to the fact the generation became no longer yet matured and the crew members have been no longer yet at ease with it.

For video conferencing to paintings nicely, all participants want to be knowledgeable of the peculiar traits of that generation and alter their communique style and speech hence. Regardless of assembly type, any other important factor is coaching. What may be researched at the side of Andres’s examination within the future is the group’s degree of preparation. Do crew individuals make investments enough time to get ready questions and solutions for their teammates before coming to the meeting? Video conferences might also require greater practise than face-to-face conferences in a few instances.

Another possibility for software companies and tasks for managers global is outsourcing. In the yr 2007, $70 billion have been spent globally for outsourced software improvement (Scott, 2007). Given the intense shortage of IT abilties in the U.S. And Europe, many businesses benefit from globalization by choosing global providers for their software improvement obligations. Outsourcing, however, requires difficult coordination between the enterprise and its many provider corporations. The idea is that overall, coordination prices and problems are much less high-priced than in-house improvement; but, this aim isn’t continually carried out. While outsourcing, when it’s far deployed and coordinated successfully, can bring about 24-hour improvement worldwide and offer continuous offerings to the agency around the clock, it can bring about the lack of intellectual assets. While mechanic elements are patentable in maximum countries that aid highbrow property rights, software isn’t always patentable in most outdoor North America. countries

In addition to the mission of coping with outsourcing, software businesses exploit technology in numerous ways to keep charges, as an instance with the aid of presenting remote get admission to, telecommuting, and provider-oriented architectures (SOA) (Scott, 2007). Remote access and telecommuting has extended six-fold between 1997 and 2005 and resulted in $300 million annual savings because of a discount of workplace space (2007). SOA is a comparable idea and entails a software apartment for customers. Instead of buying, putting in, and retaining software and servers, customers can hire a service on-line and decrease the full price of possession because these activities are no longer required at the purchaser’s side. Gradually, the software program enterprise’s virtualization opens new horizons and offers further possibilities; however, it also provides managers with infinite challenges.

Some of the strengths and weaknesses of offshore and virtual team improvement had been studied through Slavova (2000). In the 12 months 2000, India and Ireland were the largest offshore software program improvement places. Offshore agencies can provide a 60% cost discount, a quicker final touch of improvement responsibilities by distributing them around theworldwideific domain knowledge they obtained over time, supplying comparable offerings to different clients. The integration of labor from outside sources, however, constitutes a primary hurdle. Furthermore, language and cultural troubles can reason extreme verbal exchange issues that placed the mission at threat, especially whilst misunderstandings motive misinterpretations of challenge specification files. Slavova (2000) determined that the maximum not unusual treatment and strategy averting troubles with offshore providers is to go to them often face-to-face; but, this tactic outcomes in better tour prices and disruptions of the managers’ workflows and subsequently may additionally offset the blessings received for outsourcing altogether. Managers inside the software program commercial enterprise need to stability the risks and opportunity potentials before engaging in outsourcing because for many groups, this strategy failed to pay off in the end.

A huge possibility that emerged within the last decade is on-line innovation. The collective innovation effort of many individuals and groups is commonly referred to as open-source on the Internet. It has led to many advances in computer generation, inclusive of the loose Linux running gadget. At first, corporations felt threatened by using this wave of traits available on the market because they perceived that open-source solutions had been in opposition with their merchandise. In many cases, this turned into and still is in truth true; but, inclusive of IBM, more than one business exploits this new way of innovation for his or her own and a not unusual gain (Vujovic & Ulhøi, 2008). Because software companies operate in an increasingly more instable environment, they conflict to create constantly new and better merchandise. By exposing the laptop code to the general public at the Internet, businesses can benefit from thoughts submitted by using the general public, especially other organizations. Furthermore, groups advantage from free worm finding and trying out by using external customers but one of the primary reasons for “going open-source” is the short adoption and unfold of the company’s generation at a distinctly very little fee. The unfold of IBM’s open-supply generation, as an instance, is likewise loose marketing for the agency. But how can businesses make money by means of imparting some thing at no cost?

The closed innovation model (the traditional version of presenting software without revealing the software program code) may be combined with open-source so that the organization can rate for the product. In other cases, the business enterprise can monitor the Internet’s technological platform without cost, selling specialized tools that utilize the brand new platform. The huge cash savers are obviously the shared improvement, testing, and protection charges because many fascinated parties work on the identical assignment. The understanding-sharing model of open-supply is nothing new, however. The philosophy and the advantages of open innovation fashions had been already realized inside the third sector of the 19th century. Back then, open innovation was practiced within the UK iron and

US metallic industry. TManyenterprise gamers’ cooperation ended the domination of proprietary technology for which pricey royalties were due (Vujovic & Ulhøi, 2008). Given the dynamic surroundings of the IT enterprise and the fast lifespan of pc technologies, the adoption of open innovation models won a great deal more popularity. By analyzing the largest open-supply gamers in the market, Vujovic and Ulhøi prepare a list of supportive techniques proven in Table 2. Several of those techniques are quite relevant from a pinnacle control perspective as nicely, together with deploying open-source to block a competitor and using the open model as a gateway for greater market share.

  • Table 2
  • Strategies for adopting the open-source approach (Vujovic & Ulhøi, 2008).
  • Business Strategy
  • Obtaining higher marketplace share
  • Obtaining marketplace electricity
  • Better adoption of a product and thereby establishing standards
  • Shifting aggressive gain to some other architectural layer
  • Making the product more ubiquitous
  • Delivering faster time-to-market
  • Spurring innovation
  • Complementing a revenue middle circulation
  • Blocking a competitor


Reviewing the as an alternative current emergence of the IT enterprise and the software program enterprise specifically, several parallels may be interested in control history. While Taylor’s clinical control turned into a spotlight within the evolution of control technology (Wren, 2005), the software industry appears to be lagging in the back of such tremendous development. Due to its high stage of complexity, the software program development area is still plagued with satisfactory issues stemming from a lack of standardization. Like Taylor’s efforts, managers want to analyze software program development procedures and develop enterprise-extensive requirements and measures. Once such measures and strategies exist, this will help make software initiatives plenty extra predictable.

Much of modern-day software industry practices would had been a déjà vu for Taylor, if he changed into still alive. In addition, the anomie and social disorganization issues all through the social individual generation follow nowadays more dramatically than within the beyond. Mayo defined inside the Forties how managers overemphasized technical troubles inside the desire to elevate efficiency, ignoring the human social element (p. 296). The same state of affairs is now glaring to a larger diploma within the computer industry. The fast technological advances have created many opportunities and changed the work environment extensively. However, at the equal time, management bcannotprepare for those dramatic shifts that might bring to the workplace. At fine, managers are simply reacting to technological advances because the consequences are unpredictable given the complexity of human nature. For example, email delivered several advantages: low price and easy asynchronous conversation; however, many electronic mail messages are misunderstood because they’re not written accurately. Moreover, IT information employees are struggling to preserve up with the giant range of messages received according to day as they constitute a extreme disruption of the every day workflow.

As knowledge people are becoming an increasing number of critical to an agency’s survival and as agencies in this industry mature and require extra headcounts, the span of manipulate is becoming an problem for managers to deal with effectively. As men (2005), mentioned because the team length increases, the variety of interrelations to be managed rise astronomically (p. 353). Managing larger groups poses remarkable trouble because the sheer wide variety of interrelations makes it extra hard to expand belief within the team. Motivating massive agencies of knowledge employees can be elaborate, particularly because innovative tasks can require a massive diploma of collaboration. Work design is subsequently a first-rate hurdle for future managers to conquer. Much emphasis has been on hygiene elements and no longer on motivators of the body of workers. Flexible hours, telecommuting, empowerment, and elevated responsibility might also assist within the brief-term; however, management will need to discover new techniques for retaining understanding employees for the lengthy-term.

Product first-rate remains a large problem. Deming’s ideas are exact however great guarantee within the software program global is difficult to implement because of the lack of requirements and measures. The open-source innovation model may also offer a few alleviation on this appreciation because external developers more involvement oan assist improve usual first-rate. On the opposite hand, however, open-source initiatives are hard to manage for the same motive. Since open-source projects are self-directed and now not owned by using anyone specifically, the ones tasks every so often be afflicted by uncontrolled, tumorlike growth.


Several of Deming’s deadly sins (Wren, 2005, p. 463) apply directly to the software industry. Most products are made from scratch rather than from components, and there may be little standardization in software program corporations. Since software developers tend to see their activity as a craft they defy requirements and methods. In addition, the as an alternative complicated environment with its dynamic requirements and the rush for assembly time limits make it easy for practitioners to lose sight of great upgrades via the preparation of organizational requirements. High turnover and person performance measures remain enterprise exercise, despite the fact that many scientists, along with Deming, have argued for long that such measures are counterproductive.

Future managers need to discover ways to atone for the excessive turnover, in the event that they can not find a manner to keep away from it. The hard work division might make paintings nicely for the employer; however, it isn’t nicely perceived via the staff, which tends to require consistent venture. Top performers disfavor mundane duties and prefer to walk away with all their knowledge. IBM has correctly deployed activity enlargement for a while to combat this phenomenon (Wren, 2005, p.332). Unfortunately, this method may not work for every corporation and it may simplest be used within positive obstacles of the organisation. Given the closing of many years, managers will need to confront the discipline of understanding employee control and discover a possible answer for their organization.

The integration of management technological know-how with the advances in psychology and sociology may offer a path closer to the expertise worker control hassle’s answer. Managers need to have accurate information of the motivational drives for this particular group of workers body. These employees experience better profits, more flexibility and freedom, and more good deal electricity. This puts them in a gray quarter among the traditional, decreased skilled worker and an owner in the company because understanding people create intellectual capital within the agency. Because most of this capital is misplaced and stays with the employees once they decide to depart the corporation, turnover may be an awful lot more damaging than traditional workers. Managers can consequently not actually observe conventional techniques to this dissimilar organization of employees; as an alternative, they need to seek for greater innovative incentives for motivating and retaining knowledge people.