Prior to January 2020, the world was moving progressively along towards what some describe as a digital-led engagement where customers finally get to dictate how they want to interact with their vendors.
Unfortunately, not everyone has the global resources to do everything themselves. Most organisations have a finite resource when it comes to skills and financial clout to afford innovative software to their specifications.
Digital transformation is creating an imperative for businesses to become more technology-oriented than they have ever been. J.P. Morgan’s CFO, Marianne Lake, has gone on record referring to the global bank as a technology company. A confession shared by Piyush Gupta, Group CEO of DBS Bank of Singapore.
Unlike, however, JP Morgan whose annual IT budget of US$9 billion dwarfs most everyone else, other companies would likely make strategic moves, including partnerships, to secure the IP and skills they need to stay competitive.
Upping the competitive edge
Enter Software OEM (original equipment manufacturing) – software technology which is bundled with specific software and either packaged with hardware or other software and sold commercially. With the growing adoption of application programming interface or API and the use of microservices, this definition, in recent years, is becoming an accepted strategy for businesses looking to further their digital ambitions.
Chris Zhang, research manager for Software at IDC Asia/Pacific, commented that Software OEM has been around for many years. In and of itself, he doesn't see Software OEM as an emerging trend in the drive of organisations to digitally transform. She does acknowledge that Software OEM provides "a quicker time to market (economy of speed is critical in today’s context) since the user does not have to re-invent the wheels."
They don’t have much of a choice anyway. It is more economical, and faster, to acquire software from those that have developed specific skills and IP, rather than build internally.
FutureCIO spoke to Nelson Petracek, chief technology officer with TIBCO Software, to look deeper into the OEM Software area.
He noted that the pandemic is accelerating the digital transformation initiatives of many. Organisations are more willing to incorporate collaborative applications via APIs, security solutions, cloud, and AI.
He cautioned, however, that current pandemic containment measures are having some dampening effects on projects and contracts, and people have had to find new ways to efficiently work remotely. The security of data and assets has also come to fore as people connect to work from personal networks.
Important incentives
Zhang acknowledges that Software OEM offers two important incentives for organisations: lower development cost and access to IP.
In this exclusive Petracek elaborates on the challenges organisations will continue to experience as they look to accelerate transformation efforts.
More importantly, he offers some practical guideposts for organisations wishing to adopt an OEM software strategy.
“Ultimately, implementing the OEM strategy can result in an increase in sales of existing products and services by increasing their value with improved capabilities—and delivering new solutions to customers and prospects faster,” he concluded.
Petracek suggests checking out TIBCO OEM Partnership portal to better appreciate how your organisation can tap the innovation that can be derived from Software OEM.
Asked the biggest challenge for Software OEM vendors, IDC's Zhang says enterprises are usually not cognizant of the brand (and its capabilities) and it does take considerable time and efforts to catch up with the more well-known enterprise software brands in the market.
