Customer service is increasingly an experience delivered by software. "Every business is in the software business," said CA Technologies CTO John Michelsen, pointing to the way his Tesla car has received four software updates without visiting a service centre.
The Internet of things will be an economic reality, with over 200 billion connected devices by the end of the decade, and "software will power these connections," presenting "a new opportunity for all of us," said CA Technologies CEO Mike Gregoire (pictured).
"Software is rewriting the rules of everything," he said, warning "this is not going to be a gentle transformation."
IT should be regarded as "an offensive play," not a cost centre, and it is too important to outsource, said Gregoire, observing that the Bank of America has more application developers than Microsoft does.
One third of users will abandon an app if it doesn't deliver what they want, and one quarter will abandon it forever. This means it is possible to lose a customer in less than three seconds, Gregoire said, warning "the product being purchased doesn't even enter into the equation."
Customer loyalty is to the experience a brand delivers, so "software is the business," he argued.
One example is women's clothing rental company Rent the Runway. Co-founder Jennifer Hyman took part in a panel session (pictured below) accompanying Gregoire's keynote.
The idea behind the company is that 56% of the garments in the average US woman's wardrobe are worn less than three times, so it makes sense to rent rather than buy. Rent the Runway had to build software to support the just-in-time logistics processes needed to get a garment out to the next hirer on the same day that it returned from the previous one.
Hyman said the service saw 100,000 people sign up in its first week, and it was soon apparent that Rent the Runway had under-invested in technology so that was where all the venture capital received was put to work.
Now, "my whole company is based around software and technology," she said, suggesting that it is a bad sign if a CEO refers to "the IT department," as engineers should be regarded as creatives alongside designers and marketers.
"The employee is the customer too," she said, and this means it is important to be able to implement ideas the same day and see how customers receive them, in order to reduce the risk of missing a good idea. "We wanted the engineers to become owners of the product they were developing," said Hyman.
The whole workforce has been given Agile training, and the resulting mindset helps the company through the expectation of innovation every week, she said.
Rent the Runway has a remarkable range of data, including customers' measurements, locations and social calendars. The use of analytics means it is in a position to collaborate with competitors such as department stores. Because women book garments weeks in advance - often before the inventory has been shipped to the company - Rent the Runway is able, for example, to advise designers and suppliers to ship larger quantities of specific garments to particular cities. Hyman did not mention whether or not her company is able to charge for this advice.
"The customer is ready to give us massive amounts of data" if we provide value in return, she said.
Page 2: Nike, the API economy, and more.
Another example is Nike. Consumer technology officer Chris Satchell said "It's all about knowing our consumer."
"Our customers are digital natives … [and] you have to meet people where they are," and provide the same quality experience as they get from the rest of the brand. This means Nike has to be as good at software as it is at shoes and clothing, he said.
But the company has decided it doesn't want to be in the hardware business, so it partners with companies that are, for instance by developing Nike software for Samsung's Gear S smartwatch.
CA executive vice president for enterprise solutions Amit Chatterjee noted that some big companies find they cannot innovate quickly enough within their existing structures, and so are setting up skunkworks operations to get things moving, such as retailing giant Wal-Mart's Wal-Mart Labs in Silicon Valley.
And an unidentified CA customer in the retail sector builds 1400 apps a year, he said, some for internal use and others for its customers.
Other indications that app development is being brought back in house can be seen in Australia. Gregoire noted that Woolworths is following that strategy, and CA president and general manager of Asia Pacific and Japan Kenneth Arredondo said a major Australian bank had invested "seven figures" on app developers.
"It's going to be about your brand," said Gregoire. Apps are too critical to let someone else develop them for you, he said.
Asked whether large development teams are sustainable in the longer term, Gregoire said "it's like painting the Golden Gate Bridge" in that organisations are going to be developing apps for a long time.
"I don't think it's going to be a short-term thing. I think were just scratching the surface."
According to Chatterjee, we are at a transformative moment for IT and society as the emergence of API-assembled applications means the end of reliance on packaged software, allowing organisations to respond faster to changing requirements. The growth opportunity is in using internal data and unique processes, and that means "becoming a software factory for yourself."
Furthermore, APIs can be a significant source of revenue. Chatterjee said 50% of Salesforce.com's revenue comes from other businesses using its APIs.
Organisations are already API-enabling their applications, but CA can provide a better way of doing it, with appropriate security measures based on rules, roles and governance, he said.
Industry analyst firm Gartner has found that a software-savvy CEO is the best indicator of a company's future performance, said Gregoire, noting that we have started to see software people reaching the top levels of non-software companies. "They get the strategy. IT is now at the table," he said.
"When you embrace this future, the rewards will be outstanding," he said.
Disclosure: the writer attended CA World '14 in Las Vegas as a guest of the company.