For the Software and Platforms (S&P) Industry, growth has become a defining characteristic. But following a period of sustained hyper-growth and innovation, the industry is facing a new challenge—one that emphasizes the need for efficiency amid an ever-increasing competitive landscape. This shift marks a critical evolution in the sector's focus, underscoring the importance of streamlining operations to sustain growth and success.
Operations are being overhauled to boost growth
At this critical juncture, forward-thinking S&P leaders are seizing the opportunity to completely overhaul their operating models and develop essential capabilities, such as Generative AI, to maintain their leadership positions. In fact, 74% of C-suite execs believe they need to completely rethink their operating models to be more resilient. And with an anticipated compound annual growth rate of 11% from 2023 to 2026, a rate that is slower than the two previous three-year periods, which were 15% (2020-23) and 21% (2017-20), this emphasis on enhancing operational efficiency is crucial. Especially as these companies tackle both technological and organizational challenges, while also investing in capabilities that facilitate long-term growth.
74%
of C-suite execs believe they need to completely rethink their operating models to be more resilient.
The spotlight is on monetizing the attention economy
The growing critical challenges and transformative shifts occurring in monetizing attention is creating an urgent need for advertisers to adapt to a rapidly changing environment marked by the phasing out of third-party cookies, increased competition for consumer attention, and significant privacy changes. But 60% of US and UK advertisers are underprepared for the loss of third-party identifiers and 1 in 4 don't see the shortcomings in their current strategies. Businesses are tasked with building a more resilient and future-ready advertising model by leveraging first-party data, exploring new audience targeting solutions, and enhancing measurement capabilities. It has never been more imperative to evolve to maintain competitiveness and engage with audiences in a privacy-focused, digital-first world.
At this critical juncture, forward-thinking S&P leaders are seizing the opportunity to completely overhaul their operating models and develop essential capabilities, such as Generative AI, to maintain their leadership positions. In fact, 74% of C-suite execs believe they need to completely rethink their operating models to be more resilient. And with an anticipated compound annual growth rate of 11% from 2023 to 2026, a rate that is slower than the two previous three-year periods, which were 15% (2020-23) and 21% (2017-20), this emphasis on enhancing operational efficiency is crucial. Organizational challenges, while also investing in capabilities that facilitate long-term growth.
Most software and platforms businesses are not prepared for the future
60%
of US and UK advertisers are underprepared for the loss of third-party identifiers
1 in 4
of US and UK advertisers don’t see the shortcomings in their current strategies
A brewing trust crisis must be overcome to unlock growth
The small to medium-sized business (SMB) sector, a powerhouse responsible for up to 70% of the global GDP is ripe with growth opportunities. Yet, there's a wrinkle: nearly half of SMBs view their enterprise partners with a skeptical eye. Bridging this trust gap could boost SMB spending on products and services by 5-15%, underscoring the need for robust relationships and customized solutions to unlock the enormous potential of the SMB market.
Consumer preferences are shifting, so should business models
As consumer preferences dramatically shift towards digital and streaming services, legacy media companies find themselves at a crossroads. With big tech expected to grow their operating cash flow more than two times faster than legacy media companies (10.6% vs. 4.8%) during 2023-25, it has become necessary for these companies to venture beyond their comfort zones and explore new revenue streams and roles within the entertainment value chain. Embracing bold, innovative strategies is not just an option but a requisite for thriving in the rapidly evolving media landscape. This piece serves as a crucial wake-up call for media executives to rethink their business models and adapt to the new realities of the industry.
2X
Big tech is expected to grow their operating cash flow more than two times faster than legacy media companies (10.6% vs. 4.8% during 2023-5.
Risk strategies are becoming growth strategies
Prioritizing risk management is crucial for software and platform executives aiming to drive profitability and sustainable growth. The importance of addressing risk proactively to navigate the complex web of threats has intensified with disruptive technologies and regulatory scrutiny. Our 2024 Global Risk Study heightened this point where 49% of Software & Platform respondents say the impact of disruptive technology risks rose most since 2021. By implementing robust risk management strategies from the outset of product development, businesses can mitigate vulnerabilities, ensuring compliance and safeguarding against costly security breaches. Prioritizing risk management is not merely a defensive measure but a strategic imperative that fosters innovation, operational efficiency, and profitability in the software and platform sectors.
For S&P companies to continue thriving embracing this era of reinvention is not just an option but a necessity. The ability to adapt and innovate will define the future leaders in this dynamic sector.