Why Software Companies Should have a Clear Competitive Advantage

Enterprises can benefit greatly from framing their position in the market with a unique advantage rather than just adopting what is already in the market and by constantly revisiting their strategy to ensure that they are still fresh and relevant in the market.

What if your software company could achieve what Starbucks did in the space of global coffeehouses? Despite the ubiquity of coffee shops, Starbucks has built a successful empire for itself where ‘coffee’ has come to become synonymous with ‘Starbucks’. Starbucks employed a multi-fold competitive advantage by:

• Providing a quality product
• Creating a personalized experience for customers
• Creating a favorable ambience by setting the right decor
• Training their baristas rigorously to have thorough knowledge of their products
• Providing superior customer service

Successful businesses perform a thorough, detailed competitive analysis by studying analyst reports, reference books, personal networks, commercially available data sources, government sources, annual reports and industry associations of both existing and emerging competitors in the market. They aim to understand their unique value proposition, business strategies and strengths and see how best their product can fill an existing gap. Following the research, they identify opportunities in major concerns that are faced by customers and have yet to be addressed in a meaningful way.

While a competitive advantage should feature the usual aspects such as unique customer benefits, profitability, consistency, high quality product performance and superior customer service, software businesses should also focus on innovating constantly. Successful software companies identify and create a competitive advantage that is built to last by focusing on the entire organizational biosphere
consisting of human capital, culture, skills, partner, buyer and supplier.

Whatsapp is a perfect example of a messaging service that, despite having at least 50 competitors, still manages to be a $19 billion business, that has taken the Smartphone world by storm. They achieved this by creating a simple, fun, fast and innovative messaging service, with the key word being innovation.

ISVs should focus on the current landscape and meeting the demands of today while also planning ahead and preparing for tomorrow because innovation is one of the most crucial aspects of a sustainable competitive advantage. Software product companies should also keep in mind the increasing transition of companies from on-premise implementations to cloud-based solutions and gauge how best they can extend their customer value offering into the future. They should embrace constant innovation to create products that hit the bull’s eye while also being future-proof as much as possible so that they can secure their success for a very long time.