Tips for Software Companies To Gain a Competitive Advantage in 2023
As we say goodbye to the ups and downs of 2022, tech companies will face new challenges and opportunities in 2023. Below are just some of the factors to watch for:
- Economic uncertainty and shrinking budgets: Most economists agree that uncertainty will characterize the economy in 2023, with continuing supply chain issues and a recession possible or even likely. According to a survey by Spiceworks Ziff Davis, 50% of companies are planning “precautionary measures” in case of an economic slowdown in 2023, and 44% expect their 2023 IT budgets to stay constant or decrease.
- The ongoing talent shortage: In November 2022, the U.S. unemployment rate for the technology industry was just 2%. The ongoing software and IT talent gap will continue into 2023, with employers particularly needing specialized skills such as cybersecurity.
- Machine learning and AI innovations: 2022 saw the arrival of revolutionary technologies in machine learning and artificial intelligence, and their impact will be felt in 2023 and beyond. Image synthesis models such as Stable Diffusion can produce realistic pictures given a text description, while large language models like ChatGPT can provide everything from birthday party ideas to programming tips.
In the wake of these disruptions, software companies should be aware of the technology industry outlook for 2023. This article will go over five of the biggest tips for software companies in 2023, so that you can continue to improve your business operations and enact digital transformation.
1. Do more with less budget
If your IT budget is stagnant or decreasing, you can still get the most out of it by making wise technology investments. Knowing how to accelerate your IT budget during economic uncertainty is an essential skill for IT leaders.
Make sure that you’re spending your budget on the most critical areas of your software development team. Come up with spending priorities based on their return on investment, and look for ways to lower costs, such as using off-the-shelf software or migrating to cloud computing. However, it’s important not to cut corners on product quality: high-quality software products will help drive customer loyalty, sales, acquisition opportunities, and even employee retention.
To ensure your software products remain high-quality, you can invest in global talent with top-tier offshoring services. Working with a software development partner will help you get products to market faster without the time and expense of internal hiring. Look for the common signs it’s time to invest in software development consulting.
2. Prioritize employee retention
The IT talent shortage is in full swing, so it’s more critical than ever for software companies to prioritize employee retention. With every departure, filling the gaps and replacing employees’ extensive internal and domain knowledge becomes more difficult.
“With this uncertain macroeconomic environment, the importance of retention has jumped dramatically,” says Brad Weekes, Managing Director at Software Equity Group. “The top private equity investors in the software space ranked gross retention as the number one priority, and it increased three times over last year in terms of level of importance.”
If you’re hiring internally, you should periodically evaluate your employee pay, benefits, and incentives to ensure that your company stays attractive in an increasingly competitive job market.
Businesses that work with offshore teams must ensure that their partners are experienced and have a plan to keep teams staffed in times of uncertainty. Software development partners with strong relationships in their offshoring country can better adapt to changing conditions and retain talent longer.
3. Invest in sustainable growth channels
Instead, organizations must have a clear vision and roadmap for their products that aligns with their target customers’ needs. This plan should guide business growth and inform strategic decision-making.
Developing a plan for sustainable growth is especially crucial for emerging technologies. Artificial intelligence and machine learning can offer a competitive advantage for software companies, making them more important than ever.
However, resist the urge to throw everything at the wall to see what sticks. Before making hasty investments, consider how these technologies will enhance the product and add value to your business.
4. Drive innovation, but don’t forget the fundamentals
In times of economic uncertainty, many of your competitors will retreat in an attempt to weather the storm. This provides the perfect opportunity for bolder companies to drive innovation and seize additional market share with new products and features.
Of course, this comes with a caveat: the product’s fundamentals must be solid and future-proof — thoroughly optimized, automated, and tested. Avoid emphasizing flash over substance, which will only lead to disappointed customers in the long run.
You can lower your risk with an MVP (minimum viable product) approach. By developing only the product’s core functionality, companies can get real-time feedback from their target audience about its features, performance, and usefulness before releasing the next iteration. This allows you to launch a finely tuned final product that you already know appeals to your user base — or at a minimum, “fail fast” without huge expenses.
5. Modernize, but minimize disruption
Times of economic uncertainty also provide the opportunity to ensure that your products will remain competitive in the long run. That means modernizing legacy business processes and management systems and working to eliminate technical debt.
Platform modernization is a huge task that can disrupt the customer experience and harm retention. You can develop MVPs for new products, but you can also use an MVP model for platform modernization. You can minimize risk and get valuable user feedback by creating a beta version of new systems before they’re deployed to production.
How KMS Can Help Software Companies Gain a Competitive Advantage in 2023
From disrupted supply chains to stagnant budgets, the 2023 outlook for software companies and the broader economy is mixed. Nevertheless, savvy business leaders can navigate these murky waters and emerge stronger by focusing on innovation and customer satisfaction.
Working with a partner like KMS Technology is an excellent way to get the most from your IT investments. KMS offers a full suite of services, from AI and machine learning to MVP development, to help gain software company competitive advantages. To learn more about how we can help in 2023 and beyond, get in touch with us today to schedule a project evaluation call.