For every business plan I draft or review, I religiously follow my outline for my Strategy course from business school. This outline has bullet points that cover every required element to analyze a market, anticipate issues, and consolidate the right product strategy to outmaneuver and anticipate any potential opponent or problems. One bullet point, the Supplier, is a critical step. And it is a step that covers any industry, including the software development companies. And, from what I see, software development teams seem to ignore that part of its analysis at its peril.
For manufacturers, supply chain management is very critical to its operations. Many manufacturers have so many independent suppliers that when one fails, it has a significant impact on its marketing. When Japan suffered its Tsunami, Japanese car manufacturers could not market cars of certain colors, because one supplier’s paint manufacturing operation had closed down from the Tsunami. Recently, the airline industry has demanded that its down the line suppliers integrate so that it can hit its fast growing sales targets without delays. Integration helps in reducing one more risky step down the line. During my tenure at Xerox, the company gave me a tour of the manufacturing facilities and I noted how many parts goes into the production of a copier – and any part missing would undeniably slow down the assembly line. In manufacturing, one can easily identify the issues related to operations.
However, many software developers seem to think that they themselves are immune to supply chain management. And that is far from the truth.
In an era of mobile software product development, many independent companies develop software for smartphones and tablets. Every brand smartphone and tablet should be considered to be “suppliers.” Each brand will have different operating system that requires that a software application must match in order to be operational.
On the other hand, the hardware becomes part of the distribution network. If a software developer needs to market the product for mobiles, the only way that can occur if a potential customer can download it to the specific smartphone or tablet.
But let us assume that one supplier is not available and the software developers placed its bet on that supplier. Apple just won a battle with Samsung on the Korean’s company ability to market its Galaxy Tab 10.1. Apple won preliminary injunction against the Korean company . Now this ruling means that the product cannot be distributed in the U.S. without suffering considerable fines. Some software development companies relied on this product. Now that product distribution is no longer feasible.
Putting together a business plan has s specific purpose – detailing a product development and marketing roadmap. In the case of suppliers, one has to put together all types of suppliers currently out in the marketplace and think of alternative solutions when needed just in case the Samsung scenario occurs. Samsung is not the only tablet manufacturer out there. The other manufacturers are Apple, Dell, Sony, Asus, HP, and many other smaller players. So if the Samsung distribution fails, one can pursue others without delays in sales.
Another supplier for software developers should consider carefully is the Cloud storage suppliers. Amazon Cloud, a major player, comes to mind. But, again, what if that one falls through, however unlikely that could ever occur? Good business planning should include fall back plans for other Cloud storage systems.
I believe that every software developer should evaluate its supply chains, and plan for alternate resources. It may not be so obvious to think in this fashion, especially when software companies believe that they are immune to supply chain managment. It is important to analyze the worst case scenarios in the supply chain so that the company does not suffer catastrophic losses.