Wednesday, August 19, 2015

Digitization vs Softwarization

Based on late evening conversations with Aneesh Dubey.


When enterprises talk about taking advantage of software, they often mean digitization and not softwarization.

Digitization is making the existing process digital. One gets some of the benefit of software - speed and agility but the underlying process is still the same.

Softwarization is coming up with an entirely new process enabled by software.

It is useful to look at a business process as an operating system. The capital resources are the substrate over which this BusinessOS runs. Both employees and customers are the users.

Digitization in this case is merely getting a faster processor.

Softwarization is getting a completely new algorithmic core.

Things that remain computationally complex with mere digitization become tractable and scalable with softwarization.

Google Maps and Amazon don't just digitize traditional businesses (map making and retail respectively). They softwarize it. It is not possible to do Google Maps or Amazon with pen and paper, even at a slower speed. It is possible to do corporate payroll with pen and paper at a slower pace.

Even when a corporation or a department therein is failing, it doesn't consider software as an exit strategy. They try to scale down the existing process with layoffs and cost cuts.

The industrial ethos, peaking with the Toyota way was 'Process over People'. The Silicon Valley hacker ethos is 'People over Process'. This is privileging skill over volume. Leveraging softwarization iteratively results in exponentially increasing surplus refinement which gives volume often for free. This is why Facebook has more revenue per employee than most businesses.

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