By Dennis D. McDonald

For a manufacturing oriented company to transition to making money in the software market is a major accomplishment, as I discussed in Learning From General Electric’s Big Data Challenges. GE’s success has occurred after significant time and investment, as reported recently by Ben Kepes in Computerworld’s GE starts to make good on that 'software company' promise.

Companies like General Electric are better positioned than others to move from generating revenue based on manufacturing to generating revenue based on software. Some of the reasons for this are the following:

1. Demand exists for the company’s base product. This is important since a revenue stream from traditional products can cushion the transition to a revenue stream from software.
2. Competition exists for manufacturing the base product. This is important since current manufacturing competitors can form the basis for buying software.
3. Management inefficiencies exist in the marketplace. This is important since this your software can improve your own operations as well as those of your current competitors.
4. Specialized domain knowledge is required to be successful. This is important since the more specialized the market the more potential value there is for vendors serving that market.

Other top requirements for making the transition from manufacturing to software (in addition to “deep pockets” to cover the transition) are imagination and risk tolerance.

Customers must also be willing and able to move beyond a “not invented here” syndrome to using someone else's software to run their business -- even if that someone has been a competitor in the past.

Copyright (c) 2017 by Dennis D. McDonald. For more about Data Program Management go here. Contact Dennis by email at ddmcd@outlook.com or by phone at 703-402-7382. Check out his curated Managing Data collection on Google+.