As pressure increases to develop and deliver new innovative software products and services in shorter cycle times, and as business environments become more volatile, many software-intensive enterprises experience problems, such as:

• Team members may not be operating very effectively and are not molded into high-performance teams.   There is vast difference between highly motivated and effective individuals and teams, and those sort of doing their work as a 9-to-5 job.
  
  
• It takes too long and/or costs too much to bring out new software products, solutions and services to market; and by the time such products and services reach the market, either the market has changed or the competition is already well entrenched.

• As the enterprise is weighed down by its own overly rigid processes (or suffers from a lack of well-defined processes), it may lose the window of opportunity caused by the loss in its innovative edge and competitive advantage.

• Quality of processes (both customer-visible external processes as well as internal processes) as well as quality of artifacts and end products is poor.

• Even when processes are re-engineered or improved, after showing some initial gains, the improved quality of their results may not sustain.  You may have tried various process improvement initiatives (such as Business process re-engineering, Total Quality Management, Six Sigma, ISO-9000, CMMI maturity level certification), and they may have shown some initial improvements, but sooner or later enthusiasm decreased; problems resurfaced or stubbornly persisted.

Figure 1 shows four major types of work carried out by software-intensive enterprises.  Not every enterprise may work in all four areas in equal proportion; some may emphasize one or two areas far more than the remaining areas.

• Structured Projects: Work carried out with structured projects, such as:  software product design and development, software product management, market research, proposal development for software solutions, annual budget preparation, strategy review and development.

• Innovation: Work representing path-breaking, status-quo changing innovation, such as: basic research; innovation in software products and services, internal processes, business models, etc.

• Production and Operations: Work requiring highly structured and repeatable processes, such as:  Data center management for hosted software as service, order processing and fulfillment, customer support and call center management, IT service management.

• Interactions and Collaboration:  Work requiring interactions and collaboration among stakeholders, both inside and outside the enterprise, such as: software design reviews, customer contract negotiations, decision making, problem solving, knowledge transfer, mentoring of new employees.

Figure 1: Four major types of work in software-intensive enterprises  

Many software-intensive enterprises face challenges and issues in addressing one or more of these four types of work areas.    Your enterprise may be strong in one or two work areas, but deficient in other areas.  You may have experienced a tendency to apply the same or similar processes that have succeeded in one area of work to force fit those processes to all other areas of work.  For example, if Six Sigma methods show good results in certain business processes or data center management, they are forced fit into your research and innovative processes, which is now stifling innovation. 

Further compounding the challenges described above, global business environment is becoming more volatile and less predictable.  Witness some examples of severe volatility and unpredictability experienced in the global economy recently:

• Near-collapse of financial systems in developed countries:  credit crunch, bank failures, government bailouts
• Currency exchange rate fluctuations and pressure on US dollar
• Volatility in commodity markets: energy, metals, raw materials, food, etc.
• Global warming and climate change
• Terrorism, pandemics, wars, belligerent regimes
• Looming trade wars and escalating protectionism
• Unpredictable consumer reactions, perceptions and tastes
• Sudden technological changes and alternatives

As customers of software products companies and clients of software solutions companies face increasing volatility and uncertainty in their business, it is bound to have a cascading impact on software products and solutions companies.  Here are some examples:

• As banks and insurance companies face increasing regulations and government scrutiny (after their recent bailouts), they will have to change their enterprise software systems to cope with new regulations and compliance rules.  Mergers and acquisitions further accelerate the demand for new software systems.
• As new and rapidly changing mobile smart phone platforms proliferate, there is a boom for rapid development and delivery of smart mobile phone applications.  Unpredictable changes in consumer demand and taste are creating pressure to deliver rapid changes to mobile applications.
  
• Rapid currency rate fluctuations between US dollar and Indian rupee has increased the challenge for Indian IT service companies to dynamically manage their human resource costs.
• World-wide push for sustainable development is creating markets for carbon permits and offsets, which in turn, is creating demand for software systems to manage their records and transactions, and compliance with changing laws and regulations. 
  

The section on Agile Software Movement elaborates on the growing momentum agile software development movement and unique challenges posed by it.

The section on Solutions to Challenges presents general solutions to meet these software industry challenges.

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