The software-based revenues for organisations will increase from 7% in 2022 to 29% by 2030, said an industry report by Capgemini Research Institute. “The Art of Software: the new route to value creation across industries,” predicts a significant shift in the role of software in business.
The report said that there is a growing trend among companies redefining themselves as software-focused, moving away from traditional hardware-centric models. Currently, 25% of businesses categorise themselves as software companies, with an additional 32% planning a similar transition within the next three to five years.
According to Capgemini, this shift is increasingly recognised as strategically important at the highest levels of business management.
Financial projections within the report suggest significant growth across multiple industries, driven by this software-centric approach. Sectors such as telecommunications, automotive, banking, insurance, and life sciences are expected to see considerable revenue increases, with telecommunications leading the way.
The research indicates that a substantial portion of current research and development (R&D) budgets is being directed towards software-driven initiatives, a trend that is expected to continue.
Generative AI is identified as a key factor in the evolution of software development. The report suggests that these AI tools could significantly streamline the software development process, thereby enhancing efficiency and productivity. This development points to an evolving role for AI in supporting and augmenting human capabilities in software engineering.
However, the report also notes several challenges in fully adopting a software-centric model. Many organisations are in the early stages of this transformation, with a minority having fully scaled their software-driven initiatives. Issues such as interoperability and the transition from legacy systems are highlighted as potential hurdles.
The importance of talent development is emphasised in the context of this shift towards a software-centric business model. As demand for software solutions grows, so does the need for skills in areas such as cybersecurity, AI, and cloud technologies. Addressing this skills shortage is crucial for businesses to fully capitalise on their software-focused strategies.
“Organisations require a mindset shift if they're to differentiate, innovate and remain competitive. Thinking must move away from using digital technologies as an add-on, or tool to fix crinkles and smooth edges. Instead, leaders must view software as a key strategic asset which can unlock a myriad of benefits and establish competitive differentiation,” said William Rozé, CEO, Capgemini Engineering and Member of Capgemini's Group Executive Board.
“But to achieve software excellence and the gains that it has to offer – organisations will need to think holistically: from striking up strategic partnerships where necessary, to defining a clear transformational roadmap to ensure the architecture that underpins it is robust, sustainable, and scalable. Generative AI poses significant potential here – with the ability to vastly accelerate all endeavours,” Rozé added.
