These days, all big companies — and most medium-sized companies — are software companies. By this I mean that the company’s software (particularly custom softwware they’ve made) and associated data is integral to the success of their busines. As an example consider Tesco:
Some background: I worked on some Tesco online projects, I have friends who have worked on their data mining. I’m British but I now live in California. Tesco’s data mining is easily the biggest operation I’ve ever seen. Everything I did at Tesco had a large clubcard component. The clubcard was one of Tesco’s major innovations in Britain. It’s not dissimilar to a Safeway card. Tesco issue these things in keyfobs as well as card so you always have them.
I’ve seen people use their clubcard when they buy a newspaper. They don’t save money, they don’t even get points, it’s just habitual.
You can tell Tesco have really nailed data when you see their customer demographic. I saw something in the Guardian (British newspaper) a couple of years back which showed the Tesco customer wealth demographics matching the population norm almost exactly.
When a retail group can organise their stores and retail inventory such that every walk of life uses them they are on the road to success. Most people I know in Britain that don’t shop at a Tesco as their primary store have a competing store much closer to where they live.
Tesco sell a vast number of different product lines, in thousands of stores. Their software operation keeps track of what they sell in which stores. It allows them to restock accurately. More importantly it tells them which lines will be the most effective in which stores, based on the different demographic types of customer that different stores get.
The fact that every company is a software company has implications. The most important is that software is something companies have to understand. A company can’t hope to just outsource its computing operations and that way the managers not have to deal with or understand it. This is particularly relevant to companies run by bosses in thir 50s or 60s who don’t have a technical background anyway and are secretly a bit frightened by computers — the best things these sorts of bosses could do for their companies is resign.
If you want to see what failure to understand computers and the Internet looks like you only have to look at the music industry and the decline of the Big 4 (Warner, Sony, Universal, and EMI) over the last decade or so as they’ve failed to come to grips with how the Internet is transforming their industry.