Software is the business

Applying a software-factory approach will help your company innovate faster and with confidence

Every successful enterprise is now a software company, reinventing and creating new business models with digital products and services. In this new landscape, the winners consistently deliver innovation and effortless experiences.

Software companies need to deliver continual innovation and consistently great experiences. As enterprises follow suit, many organizations are adopting new technology stacks and organizational structures, designed to help them deliver and iterate on software quickly while maintaining quality and performance. That’s why the software development lifecycle is one of the most critical workflows of digital transformation.

All technology organizations seek to continuously improve their software delivery, from planning through development, operations, and service management. The goal is to innovate faster with confidence, and that means maintaining governance, security, and cost control.

Historically, software organizations were divided up by functional silos, including PMO, Development, and Operations. The software development lifecycle was based on monolithic architectures and waterfall dev processes. These days, that way of building software collides with the architecture of modern applications.

[Chris Bedi: Employees need race cars, not stagecoaches]

Modern apps are built on distributed architectures that comprise a complex mesh of discrete, interdependent services. While these architectures are necessary to deliver today’s innovation at scale, the greater complexity makes moving fast and with confidence increasingly difficult.

Whether you are planning, developing, deploying, or operating your application, the steps along this continuum are becoming more interconnected. The modern software lifecycle has little forgiveness for complexity, swivel chairing, and manual intervention.

We need a new approach, suited to the fluidity of Agile, DevOps culture, and distributed architectures. Technology teams are looking for ways to connect all their functions so they can work more nimbly as they build modern software.

What good looks like: Toyota Financial Services

Toyota Financial Services (TFS) is the financing arm of the global carmaker. TFS offers a range of financial services to Toyota and Lexus customers, including financing and leasing products along with vehicle and payment protection plans.

Under the leadership of CIO Vipin Gupta, the TFS team is transforming the auto finance business using agile decision-making, novel IT engineering methods, and an innovative, multitenant enterprise architecture.

The modern software lifecycle has little forgiveness for complexity, swivel chairing, and manual intervention.

In 2019, TFS introduced a groundbreaking mobility-as-a-service platform, based on a new IT operating model that has greatly accelerated time to market for new financial services. That enabled TFS to create a private-label finance business that it marketed beyond Toyota and Lexus to Mazda and other automotive brands.

The results have been startling. For example, TFS deployed a financial services solution for Mazda in just seven months, built from the ground up on a brand-new platform.

How did TFS do it? It took the lean manufacturing principles of autonomation (jidoka—automation with a human touch) and continuous improvement (kaizen) from the hallowed Toyota Production System. TFS executives combined these principles with agile software development methods to create a unique playbook that delivers rapid business value with reduced waste.

[Kaizen 2.0: Rethinking a core Japanese business concept for the digital age]

“It is foundational to our new way of working and enables us to build software like we build cars,” says David Paine, the domain information officer for systems of IT at TFS.

To deliver and operate high-quality, modern software with confidence, the TFS Digital Operations team extracts critical, real-time insights across broad, distributed service architectures and datasets. Whenever they detect a problem, it’s vital to identify the root cause quickly.

To achieve this level of observability, TFS applies automation at every stage of production, from building to testing and delivering software. At the build stage, for example, TFS performs automated security scanning and testing throughout the development lifecycle to identify vulnerabilities and other gaps in quality. During testing, AI-based monitoring tools help teams quickly identify the root causes of software defects.

“We’re starting to leverage those same capabilities to automate operational response to minimize or eliminate impacts to our business,” Paine says.

TFS is now organized into digital product factories. In a traditional product manufacturing facility, the product moves through an assembly line. In TFS’s digital factories, new business capabilities, which the team calls “user stories,” move through a digital assembly line. Currently, much of this assembly line consists of semi-automated workflow. “Our goal is to apply autonomation to every aspect of this digital factory assembly line workflow, just like our car assembly plants,” Paine says.

Going forward, much of that autonomation will be powered by digital IT workflows running on the Now Platform. As with industrial automation in a Toyota factory, the goal of the TFS Digital Software Factories is to free up software product teams from repetitive tasks so they can focus on the higher-value tasks in design and delivery of the products.

This new way of working extends across all functions of TFS. It involves close collaboration between IT and business leaders, formalized in a decision-making process called “two in the box.” The goal, Paine says, is to ensure that “each software release is founded in the business value we deliver.”

How to build faster

The foundation of an efficient software factory like TFS is a workflow platform that defines, drives, and automates the steps that many people in different groups take to deliver software with confidence. Capturing and executing these steps through software is fundamental to making them inspectable, repeatable, and scalable, so they can execute effectively and be constantly improved.

These workflows need to be driven by deep, comprehensive insights about the steps being executed and what they’re delivering, all the way to the person using the application. These insights provide the sensing and feedback mechanisms that give stakeholders visibility into the current state. AI and machine learning extend this visibility into the future, helping identify potential future problems and hot spots.

As with a manufacturing process in the physical world, the workflows that deliver software innovation must be codified and repeatable. If they live only in people’s heads and on scraps of paper, there will be hiccups, broken handoffs, and bugs. What’s more, you won’t have the clarity needed to diagnose issues and continuously improve.

From insight to action

ServiceNow’s Now Platform powers technology organizations in the modern enterprise. We have been working tirelessly to create the digital enterprise fabric that helps technologists run software factories by connecting the people, processes, and technology that deliver applications, ensuring teams can innovate quickly and confidently.

The workflows that deliver software innovation must be codified and repeatable.

These capabilities become increasingly important as companies look to reinvent the development lifecycle so they can deliver software experiences faster than ever. By connecting all their software toolchain and the teams collaborating on a product, technology teams can build modern software more nimbly.

Modern software delivery combines granular, cloud-native software architectures with team-based precision. Dev teams are agile and deliver independently to enable innovation velocity.

The new way of working creates many interdependencies between hundreds, if not thousands, of services. This creates enormous complexity involved in pinpointing the source of issues.

Keeping track of all this complexity is a major technical challenge. In recent years, the software industry has adopted the control theory term “observability” to describe real-time, context-rich understanding of how modern apps are operating and being used.

Workflow it

To change things for the better, insight requires action. Once you observe you must act, so connectivity to workflow is necessary to drive quick action. The Now Platform is a system of action that uses intelligent digital workflows to drive exactly the right response across the organization. Workflows connect insights to the appropriate actions and resolutions, allowing teams to move fast without breaking things.

In this new world, the key stakeholders aren’t just the two-pizza-box teams building and running the applications. Instead, the entire technology organization plays a role. And in the modern enterprise, it’s no longer just the technologists who are stakeholders. It’s also the support team that responds to customers, the sales team that ensures their needs are met, the customer success team that makes sure customers get value, and so on. They all play a role in making software work for the customer.

To be a successful company in the modern age, you need a digital enterprise fabric that connects your software factory so you can innovate confidently. And you need to connect those workflows to everyone in the organization who is part of the customer value chain, so they can workflow together.