Here's What's Eating Software
Analytics is the new king of the hill in the application economy.
In the five years since Marc Andreessen proclaimed that software is eating the world, countless examples have proven his observation to be largely true.
Uber is eating the taxi industry. Airbnb is eating the hotel industry. The term unicorn has entered the modern business lexicon. And there’s little dispute that the application economy, accompanied by disruption of traditional business models, is upon us.
While software continues to eat the world at an ever-increasing pace, there’s a new sheriff in town—one that threatens to consume the consumer: analytics. No, not your garden variety reporting tool or dashboard, but a far more intelligent form of analytics enabled by powerful, next-generation technologies and access to big data in real time.
Advanced analytics advises software, and people, of actions to take in real time that will produce better outcomes. Its natural destiny is to automate the decision-making process.
It’s the New King of the Hill, and This King Has a Big Appetite
Since its inception, analytics has co-existed with software applications. Analytics used for analysis purposes and software apps used for everything else: transactions, experiences, accounting, etc.
Analytics was historically retrospective and analytics products were offered by specialist vendors such as Cognos, Business Objects and, more recently, Tableau, Qlik and Splunk.
Now analytics is prospective. It’s smart. It uses machine learning and powerful algorithms to spot patterns and anomalies in real time. It makes use of the network effect of data to determine optimal outcomes and prescribe actions in flight.
For this reason, we will see fewer and fewer standalone analytics apps and more apps with analytics embedded under the covers, determining actions. This “applied analytics” will be part of the application stack, just like the recommendation engines from Amazon and Netflix drive their experiences.
And they will not be produced by specialist analytics vendors, they will come from functional and vertical app vendors that understand the subject matter at hand (i.e., the problem).
Thomas H. Davenport, a distinguished professor at Babson College and research fellow at the MIT Center for Digital Business, refers to the prescriptive nature of what he refers to as Analytics 3.0 as “the ability to embed analytics and optimization into every business decision made at the front lines of your operations.”
We’re already seeing cybersecurity apps that not only monitor for security threats, but also predict attacks and propose prescriptive countermeasures to prevent them from ever occurring. It’s not a generic analytics app—it’s a security app with an analytics engine.
So how is analytics “eating software”? Smarter apps powered by advanced analytics and designed to produce optimal outcomes in real-time will displace less smart legacy apps designed for myriad outcomes, good and bad. No one has time for bad outcomes—life is too short.