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Why Every Company Is (or Should Become) a Software Company

By Brian Brinkmann | November 25, 2015
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In today’s competitive marketplace, many businesses are struggling to find ways to differentiate their products and services. Even multinational name-brand corporations – from apparel and sporting goods to appliances, automobiles and hospitality – feel the pressure. Success for these businesses no longer comes solely from offering increasingly commoditized products or relying on benefits supposedly imparted by a brand. To really set themselves apart, companies must offer something extra to make their products more desirable and engender brand loyalty.

That something is information – information fueled by data. We are quickly entering the era of Meta-Products, where information added to the product truly creates a superior offering. That information usually comes in the form of analytics that are easy to understand. Any organization, whether it serves government, businesses, education, or consumers, that wants to remain relevant needs to figure out how to transform their product into a meta-product.

The Early Days of Meta-products: FedEx

The story of Federal Express, now FedEx, is mandatory case study material at every business school. FedEx had a disruptive idea based on superior supply chain execution and outstanding customer service that delivered on a promise: “When it absolutely, positively has to get their overnight.” FedEx upended the oligopoly of the US Postal Service and United Parcel Service and put the logistics industry on notice. Naturally, competition responded, but FedEx innovated again with FedEx’s package delivery tracking: simple information the company already had in its possession as part of their supply chain system made available to customers. The “product” became more than the shipped item: it included logistical knowledge associated with the delivery service. With delivery tracking, FedEx set a new bar, differentiated its service, and became one of the first meta-products – a meta-product customers were willing to pay more for. While commonplace now, FedEx positioned itself as an innovator in the logistics industry, which helped fuel its growth and dominance.

Networked Ecosystem of Analytics: Nike

Nike’s FuelBand is a prime example of not just using a data collection to track and improve fitness performance, but also the power of networked ecosystem of applications that work together to achieve a common goal: improved health. Nike wisely added data and analytics to its athletics shoe, apparel, and equipment business to bring an additional benefit to consumers. FuelBand tracks customers’ everyday activity and feeds analytics back to them through an ecosystem of apps and partners that include Apple and GPS stalwart Garmin. In fact, Nike+, the division that manages its data and apps, is likely more valuable as a fitness platform for app development than manufacturing the FuelBand itself. With its data platform, partners, and app, Nike customers become locked-in to an ecosystem of products and information that is so valuable that they pay a premium for its enhanced services. While competitors will certainly match services overtime, the first mover advantage that keeps customers will translate into bottom-line profit.

Changing Our Thinking

Forward-thinking companies like FedEx and Nike have realized that meta-products are the future. So, how can we all follow suit to differentiate our own products?

It starts by fundamentally changing the way we think about ourselves. Every organization should start thinking of itself as a software company.  Software companies create tools, applications, or experiences that ultimately help us work more efficiently, communicate and collaborate, and even entertain us (the worldwide gaming industry is over 91 billion USD)We must go beyond our core offerings and consider adding information to create meta-products that people ultimately prefer.  Apple understands and understood this. Apple could always sell products to their faithful, but to hit mass appeal their products needed to deliver everyday value to far more people.  When Apple released the SDK for iOS, suddenly apps that made your life better were available and Apple products made the leap to mainstream crushing the completion.

Second, you need to think about what data you have and how it is relevant to the product you want to enhance. It can be simple like FedEx or more sophisticated like Nike. Most of the time the data already exists, but we have to find ways to share it in an easy to use fashion so everyone can benefit. Ask your customers what they need and think creatively about how you can use data to satisfy that need.

Third, think about how this information is shared with the end consumer. Is it over the web, to a phone, to a watch? What is essential and what isn’t? The experience is critical. Work hard to get it right. And remember, the experience should be similar across all form factors so there is no confusion when switching say from a phone to a computer screen.

Logi Analytics has been helping organizations share analytics, primarily through their applications, to make choices and decision easier – whether that is on-the-go or in the office. Increasingly, we have been seeing an even stronger demand from our customers to add analytics and information into every aspect of everyone’s day, with the promise of delivering better products and services – meta-products.

Today, everyone expects analytics and information to come with the goods and services they buy. Let’s give people what they want! Bring relevant data to your consumers in an interesting and compelling way they understand and want to use. Create a data experience that makes sense.

The meta-product approach is no longer an option or a “nice to have” for companies. Companies that don’t adopt this approach will shrink, become niche players, or worse, will disappear entirely.

It’s time to recognize that YOU are a software company. Use data to create meta-products with experiences that customers want and you’ll be a leader.

 

About the Author

Brian Brinkmann is the VP of Product Management at Logi Analytics. Brian has over 15 years of analytics and BI software experience. Prior to joining Logi Analytics, he held senior product strategy, management, and marketing positions with MicroStrategy, creating BI applications for marquee customers such as Nike and Franklin Templeton. Brian holds a MBA and a MEM from Northwestern University, as well as a Bachelor of Electrical Engineering from the University of Dayton.

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