INDUSTRY PROFILE: Software & IT

Opportunities in the IT industry continue to increase, and the industry is a leader in innovation. From healthcare to telecommunications, transportation to entertainment, the work of software and IT companies has become integral to the success of countless other industries.

Recent world events had a significant impact on the technology sector, affecting supply (raw materials, chips and assembly in Asia), disrupting the electronics value chain and causing price increases. More positively though, the disruptions accelerated the adoption of remote work and a focus on evaluating and de-risking the end-to-end value chain.

Finally, cybersecurity breaches continue to highlight the risks of failing to secure a business’s data, pressuring demand for security software.

Overview

The industry’s workforce is concentrated in cities and typically well-educated, young and earning above-average pay. Although much of the industry is famously located in northern California’s Silicon Valley, metro regions here in the Pacific Northwest have vibrant IT sectors and self-employed contractors across the country cater to the extra demand.

IT and software businesses can generally be divided into those providing services (typically IT infrastructure) and those developing products (typically software as a service or cloud-based product).

More than half of software companies export their services so, while the head offices of businesses developing and exporting software (“weightless exports”) are largely based in the U.S., they typically require a presence in their export markets of offices and staff for marketing, sales and after-sales support, for example.

Success characteristics

Successful software and IT businesses share these common attributes:

• Have robust business continuity plans in place to deal with major disruptions (like global events or security breaches)

• Can recruit and retain skilled staff, offering work/life balance and career development

• Leverage social media and the IT community to promote their business and form partnerships

• Deliver excellent after-sales support in real time

• Raise capital to invest in expansion/research and development

• Source innovative ideas from customers, staff and business networks

• Are aware of and look into all available support, not just financial

• Keep an eye on competitors and advances in relevant technologies

• Consider growth through exporting

• Protect their intellectual property

• Are clear on the benefits of what they sell

Research and development

Almost half of all businesses in the IT sector invest in expansion—almost twice the national average. One third undertook research and development, four times the national average.

State and federal government offices offer initiatives targeted toward encouraging business innovation in cybersecurity and efficiency, supporting the growth of the IT and software sectors.

Challenges

The rise in remote work has introduced challenges such as setting up and managing remote workers as well as how to maintain the culture of a team working in different locations and time zones. Other issues to consider include:

• Understanding a potential market’s needs and addressing the costs and logistical challenges setting up and when it may not be possible to visit in person.

• Recruiting highly skilled professionals.

• Complying with foreign employment law if employing offshore staff.

• Accessing capital for future growth and how to value a business for equity investment.

• Failing to validate the market, resulting in difficulty maintaining momentum after an initial launch.

• Shifting resources from a product and management heavy workforce in the startup phase into sales and distribution as a company stabilizes.

• Inexperience in valuing and protecting intellectual assets such as market knowledge, code, experience, customer needs assessments, reputation and credibility.

See page 8 for more on what qualifies as intellectual property and how to protect it.

Software & IT trends

User and customer experience focus

Software is ultimately tied to user and customer experience, and that emphasis will continue to drive long-term success. Investment into connectivity, speed, data storage and computing capabilities as well as intuitive user interfaces, such as conversational AI, gesture analysis and virtual reality, will be critical.

Accessibility standards

Web Content Accessibility Guidelines (WCAG) are developed in cooperation with organizations around the world to provide a single shared standard for web content accessibility. WCAG aims to ensure everyone can access software, tools and digital content.

For example, software must:

• Provide text alternatives for non-text content.

• Provide captions and other alternatives for multimedia.

• Make all functionality available from a keyboard, gestures or voice commands.

• Give users time to search, navigate, read and use content.

• Make text readable and legible.

• Make content display and function in predictable ways.

• Help users avoid and correct mistakes.

• Maximize compatibility with current and future user tools.

Privacy and security focus

Scores of privacy failures from technology companies in recent years have highlighted how critical privacy and data security is. Software companies must adopt strict processes to protect their (and customers’) data as cybercriminals continually test for holes in security systems, causing service disruptions and stealing valuable data. Software developers will have to continue to stay one step ahead of hackers and strengthen their security measures and systems.

A global mindset

It’s increasingly easier for software businesses to compete globally. Having a global mindset in your software development includes ensuring the product you’re developing will work for different regions, different languages, different devices and different internet connection speeds.

The other global mindset is towards coworkers and those that you work with. With flexibility becoming important for the next generation of workers, it is important to cater to those who work from multiple locations or remotely. You may work with people (partners, suppliers, customers) who you’ll never meet in person. The future of work will be global, remote and borderless.

Outsourcing

The outsourcing market is growing every year worldwide, where businesses in almost every field, like finance, health care and e-learning software development are hiring fullstack developers. Not only are there opportunities for smaller U.S. businesses to become contractors to larger companies, corporations have a global talent pool from which to source highly educated and skilled software developers.

The use of apps

Software and IT companies will be early adopters of apps and the benefits they provide and some will be way ahead of any trend.

CONTRIBUTOR: DAVID STEGMEIER

David has over 20 years of commercial banking and finance experience and brings a deep understanding of credit analysis, operations and IT proficiency. He works closely with family-owned companies and businesses who are in the restaurant, hospitality, retail and technology industries. He also assists customers with in-city residential development projects.