Current Management Opportunities And Challenges In The Software Industry – In the last 30 years the world has undergone a dynamic technological change. In retrospect, it can be said without exaggeration that the emergence of electronic devices and the Internet has had a tremendous impact on everyday life as well as management practice to an unexpected extent. The computerization of many business processes and the creation of large databases, among many other fundamental technological advances, have led to enormous cost savings and quality improvements over the years. The linking of financial markets through electronic means and the worldwide adoption of the Internet have greatly reduced transaction and communication costs and brought countries and cultures closer together than ever before. Computers are now fundamental tools in almost all businesses around the world, and their application and adaptation to specific business problems, such as software development, is an activity that many companies do themselves. In the past, computerization and automation efforts were very expensive and therefore practiced only by large companies. However, over the years, the software industry has emerged to offer off-the-shelf solutions and services to small companies. Today, many of the survivors of the dot-com crash of 2000, software development businesses have established themselves as strong players in the technology industry.
The emergence of many computer standards and technologies has created many challenges and opportunities. One of the main opportunities that the software sector provides is the relatively low barrier to entry. Since the software business is not an investment, successful entry into the market depends on industry domain knowledge and specialized knowledge. Entrepreneurs with the right skills can easily compete with large corporations and thus pose a major threat to other large organizations. On the other hand, companies must find ways to reduce turnover and protect their intellectual property; Therefore, the strong dependence on knowledge combined with the relatively short lifespan of computer technologies makes the knowledge worker very important to the organization. Skilled workers in this industry therefore enjoy strong bargaining power and require a different management style and work environment than other sectors, especially industries with high capital requirements to enter the market. This relatively strong position of software personnel challenges organizations’ human resource strategies and it also raises concerns about intellectual property protection.
Current Management Opportunities And Challenges In The Software Industry
The relatively young industry is blessed with endless new opportunities, such as the ability of companies to collaborate with other organizations worldwide and virtually without communication costs. In addition, there are no import tariffs that make the transfer of software across borders very efficient; However, the industry is facing problems of standards and quality with professions such as crafts. Successful management of such dynamic organizations challenges today’s managers as well as contemporary management science because traditional management styles, such as Weberian bureaucracy, are unable to cope with volatile environments.
What Is Software Development?
Many studies have shown that current software development practices are inefficient and wasteful (Flitman, 2003). On average, projects are only 62% efficient, which translates to 37% waste. A typical software development project has the following distribution of work effort: 12% planning, 10% specification, 42% quality control, 17% implementation, and 19% software development (2003). There are several possible interpretations of the nature of this distribution of resources. First, the high proportion of 42% for quality control purposes may reflect a lack of standards and standard work practices. This huge waste of effort can also be the result of poor planning and specification processes. Since the 19% contribution to software production is a function of the complexity of the software, hardware and tools used, there is an opportunity to reduce it through careful management and standardization of internal work processes. Only 17% frustrated with enforcement, however, should be alarming for business owners, since enforcement activities are the primary activity that results in revenue. The relatively low level of productivity reported by Flitman (2003) is also reflected in the fact that the average US programmer produces approximately 7,700 lines of code per year, which translates to only 33 per day (Slavova, 2000). . Considering that a large software project, such as Microsoft Word, is reported by Microsoft to require 2 to 3 million lines of code, it becomes clear how expensive such projects are to produce and manage. Quality is the main concern of today’s software companies. The challenge for contemporary software managers is to find the root of the productivity problem and the solution in the form of management practice.
Many recent studies have addressed software development productivity and quality concerns. Elliott, Dawson, and Edwards (2007) concluded that there is a lack of quality skills in existing organizations. Additionally, researchers place some blame on current organizational cultures, which may lead to unproductive work habits. Among the main problems identified, the lack of project documentation was found because the documentation lacks detail and is not regularly updated. Quality control in the form of software testing is not always practiced and there appears to be a lack of quality assurance processes to ensure that software is built with quality in mind from the start. Organizational culture is found to be lacking in companies where workers avoid conflict and therefore avoid product trials (2007).
Since knowledge workers are the main drivers of software organizations, creating a productive and effective organizational culture is a major challenge for managers today. The relationship between organizational culture and quality and productivity in software enterprises was recently investigated by Matthew (2007). Software organizations tend to be people-oriented and their reliance on knowledge workers is also reflected in large compensation and benefits costs of more than 50% of revenues. As the industry grows and evolves, the challenge for organizations is that large numbers of employees must be managed to bring culture into the focus of management. Mathew (2007) found that the most significant impact on productivity is achieved by creating an environment of mutual trust. High levels of trust lead to employee autonomy and empowerment, which reinforces the current management view that trust and organizational effectiveness are highly correlated. Companies with high levels of trust and empowerment benefit from strong employee engagement and thus achieve better quality products (2007).
However, product quality depends on other factors that go beyond the discussion of work processes. Relatively high employee turnover has been found to have a negative impact on product quality and organizational culture (Hamid and Tariq, 1992). Constant change and the subsequent increase in the cost of completing the project, leads to more delays, and puts the organization at higher risk because their development process can be seriously hampered. While human resource strategies should help find ways to keep key personnel in the company, organizations should prepare for change and reduce their risks. One of the biggest risks for organizations with a people-centric, knowledge workforce is the loss of knowledge when employees leave.
Common Project Management Challenges
Knowledge management has grown into a new discipline in the last two decades but is usually practiced only in large international organizations (Mehta, 2008). As corporations realize the importance of knowledge management activities to reduce the risk of knowledge loss in their organizations, they are beginning to appoint chief knowledge officers and staff with the goal of collecting and organizing information. By building custom knowledge management platforms, companies can take advantage of the transfer, storage, and availability of critical business information. Such activities help firms to innovate and build knowledge capital over time (2008). However, the challenge remains to develop such systems and gain employee support for knowledge management systems. Moreover, these systems open another important question. What happens when the best players take all this knowledge with them when they leave?
Another important variable that affects the quality of software products and services is the involvement of top management. Projects in the software industry often fail due to one or a combination of the following three major factors: poor project planning, a weak business case, and a lack of top management support and involvement (Zwikael, 2008). Software projects are similar to projects in other industries that focus on completing the project on time, budget and specifications, the industry requires special support processes from top management to facilitate the project. These processes are summarized in Table 1. Important support processes, such as the proper assignment of project managers and the measurement of project success, show that successful companies exhibit a higher level of control over project progress than others. However, Zwikael recognizes that senior managers rarely focus on these key processes and prefer to deal with processes that are easier for them to work on personally. Over the past 30 years, the world has been undergoing dynamic technological change. In retrospect, it can be said without exaggeration that the emergence of electronic devices and the Internet has had a tremendous impact on daily life as well as management practice to an unexpected extent. The computerization of many business processes and the creation of large databases, among many other fundamental technological advances, have led to enormous cost savings and quality improvements over the years. Connecting to financial markets through electronic means
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