Remember when creating a piece of software took anything from six months to two years? A time-consuming, resource-heavy process it may have been, but it had one major advantage: the software you created was yours and also your key differentiator. How times have changed.
Thanks to cloud platforms like Microsoft Azure and Amazon Web Services (AWS), you can create some pretty sophisticated software products in days and weeks rather than months and years. You no longer need the ‘vision’ to create a software solution any more than you need the in-house financial or technical resources to bring it to life. These days, all you pretty much need is a developer and to choose your preferred platform.
For example, if I want to create an AI chatbot I can use Amazon’s integrations into Alexa. If I want to create a payment platform or a tracking solution, Azure and AWS both have building blocks in their toolsets to do that. If I want to create a collaboration platform, I can use Microsoft SharePoint / Teams and build a branded wrapper around it. And more recently, with the release of Microsoft’s POWER platform, almost anybody in almost any business can build an app – even with no previous app-development experience. Technology, or more specifically deep technical expertise, is no longer a barrier to entry.
So the big question for software-related businesses is: where does their value lie? Where’s their differential? What’s their USP? Before answering it’s worth recognising the fact that software, in itself, isn’t that special any more. As we’ve seen, there are a myriad of tools out there to help companies develop their own solutions with little to no in-house developer expertise. But that doesn’t mean there’s no value in it – quite the contrary. For me, software’s value lies in three key areas.
Outcomes bring huge value
First of all, there’s value in outcomes. In the same way I buy a lightbulb not because I want a lightbulb, but because I want to read when the sun goes down. It sounds really obvious, but so many software businesses fail to create their software products from an outcome-based perspective and instead focus on features and functionality.
Data analytics is a good example here. People aren’t after a KPI dashboard, they’re looking for a way to improve performance across their business that’s specific to what they do. They don’t just want an interface that presents the data, they want to be able to run this program here, and know their operational efficiency will increase by 3% there. Perhaps your solution frees people up from monotonous tasks to focus on business-critical projects, or helps people achieve better results, or a 1,001 other things? The point is to add intrinsic value to your product by thinking about what it does in terms of outcomes.
Specialism beats generalism
The second area of value is creating industry-specific content. There’s no room for a one-size-fits-all approach here – the specialists will eat the generalists for breakfast, lunch and dinner. Prospects want to know what you’ve done in their industry, what makes your approach more relevant, how is your product going to help them improve their position in their sector?
For example, can you create workflows that make your product better than everybody else’s? Can you use any proprietary industry data creatively, or present information in a truly useful way? What’s the thinking behind your solution? To be truly different, you need to create relevant content that nobody else has.
A case in point is Redstor, a cloud data management software company. It’s differential is the fact that it uses AI to identify malware as part of its data back-up process. Another is Learnlight, a B2B language training platform looking to use machine learning to create a richer and more relevant and contextual experience for language learners. Or even Fluent Money, which is shaking up mortgage lending by using software and automation to make the whole process much more transparent, slick and efficient for its customers.
Grow with the flow
The third area of value, and the one where the companies we invest in rely on us most heavily, is scalability. It’s a broad term by which I mean route-to-market, internationalisation and investment in R&D, which will help a software business and its product set grow.
Do we go through the reseller channel or go direct? Can we access multiple market verticals? Are there opportunities to take the value proposition international? How can we use R&D to keep improving the product’s value to customers. Is there a way to offer a product-lite version to SMEs to eke out more margin, for example, with a premium bells-and whistles-version for enterprises? What will customers need from us in two, five or 10 years?
So to sum up, I’d say if you have a talent for software development you need to think like a marketeer and a user. That is, what problem are you trying to solve for customers, where is there a gap in the market and thirdly, if someone finds your products useful, how can you ensure they’ll always find it useful, wherever their business takes them?