The Industry Handbook: Software Industry

Software differs from hardware as the set of rules that allow services to run on the physical device. The software industry actually represents only a small part of the overall computer programming activity that takes place, in terms of software exchanged between software producers and software consumers. Many software created internally for very specific uses are never sold outside the company. Since the industry began in the 1950s, it has seen a number of revolutionary changes, ranging from simple punch card programming services offered to the few companies that owned computers in 1955, to revolutionary trends such as software as as a service (SaaS), device programming for the Internet of Things (IoT), and the acceptance of open source alternatives by large enterprises.

Software sectors

The software industry can be divided into four main categories: programming services, system services, open source and SaaS. The following describes the categories of business software used in the industry.

Programming services – this sector has historically been the largest sector and includes names such as Microsoft Corporation (MSFT), Automatic Data Processing, Inc. (ADP), Oracle Corporation (ORCL) and SDC Technologies, Inc. These companies often have were the first to provide solutions to the needs of companies to analyze data, store and organize data or provide programs to operate machines.

System services – although programming was the largest software industry in the early history of computing, system services grew rapidly in the 1960s and 1970s, then exploded in the 1980s with the rise of personal computers (PCs) and the need for an all-encompassing operating system such as Microsoft’s original disk operating system (DOS) which was released in 1981.

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Open Source – programming or software engineering has become a high demand profession with the growth of the internet, cloud systems and companies willing to venture more willingly into open source environments such as the Linux operating system. Open source refers to a code base that has been created and is free to acquire. However, most companies require changes to be made to the code bases to meet their needs. Another open source codebase is the Android operating system.

Software as a service – with the rise of cloud computing and the shift of most businesses, large and small, to the cloud, SaaS has become more popular than system software for specific business needs. This software is kept on the creators’ servers, and customers access the software through the Internet, also known as the cloud. All upgrades, fixes, and issues are handled on the creator side with a subscription-based model for the customer.

The SaaS industry is expected to experience continued growth over the next decade, representing a CAGR of nearly 11% by 2025. By the end of 2026, enterprises will increase “public cloud spend” by more than 45% and integrate at least one component of cloud computing into their information technology (IT) infrastructures, such as infrastructure as a service (IaaS), platform as a service (PaaS) or business process as a service (BPaaS).

Market share for SaaS

SaaS vendors compete for market share by trying to provide the most services within their offerings to meet as many situations as possible. Zoho’s suite of applications or Oracle’s software modules are prime examples of how software vendors expand into massive modular systems where companies can plug in the components needed for their situation. The model is attractive to businesses of all sizes because a business only has to pay for the modules, such as programs and applications, that it needs to run its business, and most of these SaaS products are almost instantly scalable if the business needs to grow.

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future of the industry

With the advent of the Internet and cloud computing, the computer software industry has dramatically changed the way businesses interact with, develop and use software. Software used to be a purchased, installed, and maintained commodity.

A growing software trend is hyperautomation, which enables businesses to quickly identify, control and automate as many processes as possible.” A 2021 report predicts that hyperautomation will reduce operational costs by at least 30% , when combined with designed business processes.In 2020, hyperautomation technology generated more than $480 billion and is expected to reach nearly $600 billion by the end of 2022.