NE X T S T E P S

What Business Executives are Learning about
Software Development and How it is Helping Achieve KPIs

A Frost & Sullivan White Paper
www.frost.com
In Collaboration with CA Technologies

50 Years of Growth, Innovation and Leadership

Frost & Sullivan

Executive Summary............................................................................................ 3
Survey Description....................................................................................................... 3

Business Leaders Focus on Software Development to Drive Results........... 5
The Evolving Role of Business Executives ...................................................... 6
Software is Key to Achieving KPIs.............................................................................. 7

Why Modern Application Architecture Development
is Critical to Success........................................................................................... 10
Modern Application Architectures Improve Integration.......................................... 11
Modern Development Practices Mitigate Software Challenges ............................... 14

Conclusion and Recommendations ................................................................. 15

TABLE OF CONTENTS

What Business Executives are Learning about
Software Development and How it is Helping Achieve KPIs

EXECUTIVE SUMMARY
A recent Frost & Sullivan survey commissioned by CA Technologies revealed that business executives around theworld are taking an active role in decisions about software development and acquisition.
The study examined how modern application architecture components and development practices relate to key
performance indicators (KPIs) and found numerous benefits. Organizations with more mature programs are:• Eight times more likely to declare that applications are very good at supporting the achievement ofbusiness KPIs;• Seven times more likely to say their apps are completely integrated to enable functionality, data
sharing, authentication, and security; and• Able to achieve two times’ higher profit growth.
But challenges exist. Modern application architectures are introducing new risks, and the pressure to release new
applications is affecting app quality and security. Business executives see agile, DevOps, and DevSecOps practices
as the path forward to mitigate these risks.
• Three out of four executives interviewed believe DevOps practices help them get new apps to market
faster and improve the quality and security of their applications.
• Four out of five think agile practices are helping them build what customers really need and improvecustomer satisfaction.
• Four out of five see continuous app security testing and DevSecOps as critical to the implementation ofa modern application architecture.
This white paper provides practical advice on how to harness the benefits of modern application development togenerate powerful insights, accelerate time to market, and take advantage of software to achieve KPIs.

Survey Description
The Frost & Sullivan-CA Technologies study was a global survey of IT and business executives designed to better
understand the state of software applications and the related development principles and practices. In-depth
interviews supplemented the survey. We only surveyed top management with specific application knowledge
in large organizations, such as those with annual revenue of at least $1 billion in the case of US companies. Thiswas done to make the results all the more compelling because large organizations have traditionally been slower
to adapt and more conservative in their approach to digital technology application. About 62% of the businessexecutives who participated were C-level executives, vice presidents, or directors. The remaining participants weresenior managers or managers.

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3What Business Executives are Learning about
Software Development and How it is Helping Achieve KPIs

Exhibit 1: Respondent Seniority by Line of BusinessLine of Business% Director or Above

IT

60%

Availibility of applications

Product and Customer Experience64%

Product/service development

Sales and Marketing

58%

Revenue

Finance, Legal and Risk

69%

Company level proﬁt

Human Resources

71%

Talent acquisition

Customer Service and Support

46%

Service, support cost

Base: All respondents (n=1,087)
S5. Which of the following job titles best represents your position
within your organization? One answer only.

4

Most Important
Performance Indicator

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Base: All industries except Public Sector (n=934)
Q3. Please rank the following performance indicatorsin rank order from the most important to the least important.

What Business Executives are Learning about
Software Development and How it is Helping Achieve KPIs

BUSINESS LEADERS FOCUS ON SOFTWARE DEVELOPMENT TO DRIVERESULTS
One of the survey’s most surprising findings was that more than a quarter of applications (28%) were developed
in-house by a specific department outside of the IT organization. External vendors provided about a third and inhouse IT departments provide the rest, as shown in Exhibit 2.

Exhibit 2: Application Development by Source

34%

39%

External vendors

In house:
IT Department28%

In house:
Own department

Base: All lines of business except IT (n=768)
Q12. What percent of the applications your departmentuses or provides to your clients are developed in the following ways?

This recent shift has brought about many positive changes for businesses. Departments have become lessdependent on a central IT team for application development, and business executives are better suited to develop
or acquire software that will enable them to meet their goals and have begun relying on modern applicationarchitectures to build the right functionality, quality, and security to get it to market faster.
The lack of competition between large organizations’ IT departments and the functional groups they support
suggests that shadow IT is a thing of the past and that chief information officers are assuming a strategic role ofseeking harmony.
The survey found that two-thirds of large organizations plan to increase their software acquisition and development
budgets, as shown in Exhibit 3. These increases are higher than the IT budget growth in general and reflect thatapplication development no longer has to compete for a share of a central IT budget. Business executives can fundtheir own priority initiatives.

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5What Business Executives are Learning about
Software Development and How it is Helping Achieve KPIs

Exhibit 3: Expected Change to the Software Acquisition and Development Budget(Next 12 Months) by Organizations’ Year-Over-Year Profit Growth
Decrease

Remainthe same

Increase

10%
25%

16%

73%

78%

3-10% proﬁt growthn=442

11% proﬁt growth or more
n=388

51%

40%

Up to 2% proﬁt growthn=93

Base: All companies, except Public Sector (n=923)
Q38. In the next 12 months, will your department increase, decrease or leave unchanged the budget allocated to software acquisition and development?

THE EVOLVING ROLE OF BUSINESS EXECUTIVES
In some companies, business executives see themselves as relatively self-sufficient in software development,
although they still acknowledge the value of getting the IT department’s support for changes to sharedinfrastructure/resources.
Business executives and IT directors are equally likely to be influencers and decision-makers in application
development and acquisition. This is a positive change: while the IT department is still the most likely initiator oforganization-wide IT infrastructure development, if, for example, the customer service department wanted a single
customer view of orders and complaints, it is able to more naturally be an initiator.

6

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What Business Executives are Learning about
Software Development and How it is Helping Achieve KPIs

Software is Key to Achieving KPIs
Considering that each department is trying to achieve different KPIs, as shown in Exhibit 4, it is impressive that
more than eight in ten business executives consistently rank software as critical to achieving their goals.

Exhibit 4: KPIs Crucial to Business Functions
IT

Product andCustomerExperience

Sales andMarketing

Finance, Legal,
and Risk

Human
Resources

Customer Service
and Support

Availability of
applications

Product/service
development

Revenue

Company levelprofitTalent acquisition

Service,support cost

Overall cycle times

Quality

Sales performance

Cash/liquidity
management

Talentdevelopment

Efficiency andquality of customer
experience delivery

Critical application
responsivenessProduct/service
management

Lead generating
efficiency

Cash flow
generation

Talent satisfaction
and retention

Type of postsale customer
interaction

Base: All industries except Public Sector (n=934)
Q3. Please rank the following performance indicators in rank order from the most important to the least important.

An impressive 84% of executives say their success depends on modernizing application development and delivery.
While on the surface they are satisfied with their current software applications, this indicates that they are awarethat more opportunities and challenges lie ahead and that they will need to keep up.
Frost & Sullivan defines a mature organization as one that has widely adopted many modern application architecturecomponents (e.g., application programming interfaces (APIs), microservices, containers) and practices (DevOps,
agile, security). According to this definition, 27% of organizations are mature, as shown in Exhibit 5.

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7What Business Executives are Learning about
Software Development and How it is Helping Achieve KPIs

Exhibit 5: Modern Application Development Levels
Use of Modern Application Development Components
APIs
Microservices
Containers
DevOpsApp Security
Agile Practices

Modern Application Development Maturity Level

52%
46%
49%
50%
58%
50%
43%
84%
78%
79%
79%
85%
81%
79%

APIs
Microservices
Containers
DevOpsApp Security
Agile Practices

97%
98%
97%
99%
98%
98%
98%

APIs
Microservices
Containers
DevOpsApp Security
Agile Practices

34%

Relatively Low

39%

Medium27%

High

Base: All respondents (n=1,087)
Q16. How familiar are you with the following terms with regards to developing and deploying applications?
*Classification based on questions Q17-Q23.

The finding that applications support the achievement of business objectives is not surprising in itself, but thestrength of the correlation between mature organizations and the support of applications in achieving KPIs isremarkable, as shown in Exhibit 6.

Exhibit 6: Higher Achievement of Core KPIs by Executives Relies on Modern Application
Development Practices

25%
39%

Good

74%

53%
50%

Very Good

9%
Relatively Low App
Architecture Advancementn = 370

Mediumn = 423Highn = 294

Base: All respondents (n=1,087)
Q5. How would you rate your software applications in supporting the achievement of your department’s performance indicators?

8

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What Business Executives are Learning about
Software Development and How it is Helping Achieve KPIs

Perhaps the most important finding of this study is that mature organizations with high adoption rates of modern
architecture components grow twice as fast as those with relatively low maturity, as shown in Exhibit 7. While this
could mean either that they grow faster because of their modern application development practice or that they
invest in modern application development practices because they grow faster, the positive correlation is striking.

Exhibit 7: Profit Growth YoY 2016–2017
+18%

+13%
+9%

1x

1.5x

2X

Relatively Low App
Architecture Advancementn = 370

Mediumn = 423Highn = 294

Base: All companies (n=1,087)
Q37. How did your organization’s profit change in 2017 compared to 2016?

Application development must not simply be delegated to the IT department and forgotten; it can lay thefoundation for the agility and flexibility needed to endure in the hypercompetitive, real-time business space. The
more advanced an organization is in regard to modern application development, the more likely it is to have acompetitive advantage.

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9What Business Executives are Learning about
Software Development and How it is Helping Achieve KPIs

WHY MODERN APPLICATION ARCHITECTURE DEVELOPMENT ISCRITICAL TO SUCCESS
Modern application architectures increase the connectivity, scalability, and security levels of any digital business,allowing convenient access to billions of users across different networks and devices and delivering a much morevaluable experience to customers, partners, suppliers, and employees. Business executives agree that modern
application architectures provide an easier path for software development while generating powerful insights andaccelerating time to market, as shown in Exhibit 8.

Exhibit 8: Modern Application Development Success Factors

APIs help us get to market
faster with new apps

80%

81%

APIs are helping us connect apps
and data to get better insights

Microservices help us get tomarket faster with new apps

79%

80%

Microservices enable us to deploy
apps independently of one another78%

Containers make it easier to quickly
build apps more consistently
and with lower costs

Containers help us get tomarket faster with new apps

77%

Base: All lines of business except IT (n=768)
Q17-Q19. How much do you agree or disagree with the following statement?

Software stacks have evolved into monolithic applications that are difficult to access, lock away insightful customer
and product data, and create barriers to digital transformation. They inhibit the development of mobile, cloud,or Internet of Things apps, and they are expensive to set up and maintain—especially for organizations using
experimentation to innovate. This is why architectures that combine APIs, microservices, and containers with acoherent digital strategy are crucial to success in today’s business environment.

“With APIs, we have been able to develop very rich applications without needing much
documentation. APIs are self-explanatory, so even a business person can go and create anapplication using the APIs. As a whole, our engagement with customers is much better,processes are much more streamlined, and we are making fewer mistakes.”
Director, product management and customer experience, leading US bank10

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What Business Executives are Learning about
Software Development and How it is Helping Achieve KPIs

APIs, microservices, and containers are the key to business agility:• They break down silos and open data, providing reusable interfaces to accelerate development andconnectivity to billions of devices and people.
• They provide omnichannel experiences by connecting data across platforms, systems of record,business units, and locations to deliver compelling experiences across the web, mobile devices, and theInternet of Things.
• They extend digital reach by enabling ecosystems of developers, partners, suppliers, and customers toquickly integrate and transact.
• They provide an integration mechanism to more scalably connect new technologies, such as artificial
intelligence, predictive analytics, voice, and image recognition, to existing platforms.
• They drive developer innovation by accelerating experimentation and iterations at a much lower cost to
the business, creating an agile and more resilient environment.

“Microservices provide the ability to update a portion of the technology stack without having
to take the whole system down. We might take the systems down two to three times a year,
typically when we have the least amount of calls, but having the ability to fix one area of theapplication and not to take the whole thing down definitely has its benefits.”
Director, customer service and support, US retailer

Modern Application Architectures Improve Integration
Modern application architectures support a key theme among business and IT executives: the ability to integrate
or connect applications and data. The digital projects of business functions and central IT departments may bedifferent in their goals, but they frequently have one thing in common: they aim to enhance integration. This is not
surprising, because connectivity across business functions delivers comprehensive insights. The survey findings
emphasize the criticality of integration in that all business functions have at least two integration-related projects
in their top three digital initiatives.
There is a clear correlation between an organization’s modern application development maturity and the importanceit attaches to integration. The majority of IT departments in mature organizations perceive the connection of businesssystems using APIs and enterprise platforms for all business units as absolutely crucial. However, IT departments
in organizations with medium or relatively low maturity are far more concerned with the modernization of theoverall IT infrastructure.
Mature organizations’ integration advantage is astonishing: 84% consider their software applications to becompletely integrated in terms of functionality, data sharing, authentication, and security. Only 12% of organizations
with relatively low development maturity enjoy the same level of integration, as shown in Exhibit 9.

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11What Business Executives are Learning about
Software Development and How it is Helping Achieve KPIs

Exhibit 9: Level of Application Integration by Modern Application Development Level

16%

40%

Somewhat
integrated

84%

58%
51%

Completely
integrated

12%
Relatively Low App
Architecture Advancementn = 370

Mediumn = 423Highn = 294

Base: All companies (n=1,087)
Q7. Would you consider the software applications your department uses or provides to be well integrated in terms of functionality, data
sharing, authentication and security? Would you say that your software applications are...?

BUSINESS-CRITICAL APPLICATIONS AND MODERN APPLICATIONARCHITECTURES PRESENT NEW CHALLENGES
While business executives are generally satisfied with software application functionality and release speed,
the latter comes at a price. More than two-thirds of survey respondents feel that the pressure to release new
applications or application updates quickly is negatively affecting quality and security, as shown in Exhibit 10.

Exhibit 10: Speed of Releasing New Applications and Updates and the Consequences on Quality and Security

We are releasing new apps or
updates fast enough tosatisfy the demands of the market

The pressure to release new apps
or app updates quickly is negatively
affecting quality and security

79%

69%

Base: All respondents aware of app components (n=1,087)
Q9. How much do you agree or disagree with the following statement?

12

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What Business Executives are Learning about
Software Development and How it is Helping Achieve KPIs

Organizations that experience rapid profit and revenue growth are particularly likely to strongly agree with thenegative effects of pressure for speed on quality and security. The top reasons why applications have negatively
affected KPIs are security flaws or vulnerabilities (54% of respondents), insufficient testing that has led to quality
or performance issues (52%), and software applications lacking features that customers need (48%).
Alarmingly, only IT departments (not a single business function) recognize cybersecurity as a key challenge. This
underscores that business executives perceive challenges intuitively as what is visible to them and affects day-today operations. Security tends to be more of a latent challenge—something that is off the radar unless an adverse
event, such as a security breach, occurs.

Exhibit 11: Cybersecurity a Top Challenge for Organizations by Business Function

35%
16%
IT
n=319

Business Executives
n=768
Base: All respondents (n=1087)
Q1. What are the three main challenges your organization is currently facing?

While the benefits of leveraging a modern application architecture are clear, there also are new challenges.
Even when organizations have reached maturity, digital success is not ensured. New platforms may provide theconnectivity, scalability, and agility needed for success, but they also add new layers of complexity. In fact, 90% of
high-development organizations say it is challenging to manage and monitor APIs, microservices, and containers
and that APIs and microservices are adding new risks to the organization. As the research shows, reliance on amodern application architecture can significantly improve business performance, but this also magnifies the impactof any problems. For instance:• Organizations must seamlessly and repeatably update, test, and deploy microservices and APIs across
any cloud or on-premises environment to ensure development speed while maintaining availability forthe billions of connections that rely on APIs.
• Security and regulatory compliance are major concerns because data is exposed through new
microservices front-ended by APIs. Exposed data must be protected while user and app access control
must be frictionless.
• Because APIs are widely deployed across large organizations, support for a high volume of transactions
and connections is a must to meet the demands of apps, developers, and strategic partners.
• The sheer number and combinations of APIs and microservices can overwhelm integration, monitoring,
and analytics processes. New approaches and technologies are needed to manage this scale.

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13What Business Executives are Learning about
Software Development and How it is Helping Achieve KPIs

Modern Development Practices Mitigate Software Challenges
While modern application architectures can yield impressive results, the survey found a correlation between
those who were widely harnessing architecture components and those who have embraced agile, DevOps, and
DevSecOps practices.
The agile methodology is a framework for best practices, integration, interoperability, and streamlining thesoftware development process. It can be used to bridge the divide between network and IT practices, personnel,
and technologies and eliminate the silos that inhibit smooth business operation.

“[Agile] has [sped] up the delivery cycle in terms of [being] much more focused oncomponent-wise development, bringing [applications] to market [and] bringing them to alive environment. [...] It certainly changed [the way] of thinking.”
Director, product management and customer experience, UK financial services organization
IT professionals and business executives overwhelmingly agree that their organizations would benefit from agile
practices in delivering customer-centric applications that improve user satisfaction. For more than two-thirds of ITand business executives, agile practices are a critical element in implementing a modern application architecture.
Four out of five respondents think that agile practices are helping them build what customers really need andimprove customer satisfaction.
DevOps is designed to provide a similar solution for the divide that exists between software development andoperation. However, DevOps harnesses techniques that are not yet found in agile practices. DevOps uses acontinuous integration and continuous deployment process that shortens the development life cycle and, more
importantly, ensures that integration, performance, and compatibility are maintained as new software releases andcapabilities are developed.

“Everybody is on the same page […] so when you go live you are not spending time on
training because the [word is] already out.”
Director, customer service and support, US retail/eCommerce organization
These approaches are essential independently but are perhaps better when integrated into all three operations
environments: network, IT, and development. However, even that is not enough to ensure maximum operational
efficiency and flexibility. Networks, applications, and software development are at increasing risk of malicious
attacks. Eight out of ten executives view continuous application security testing and DevSecOps as critical elements
in implementing a modern application architecture.

“DevSecOps has improved the process and security, improved time to market,
and [reduced] bugs in production.”
Director, product management and customer experience, US financial services organization

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What Business Executives are Learning about
Software Development and How it is Helping Achieve KPIs

CONCLUSION AND RECOMMENDATIONS
The ancient Greek philosophy that “there is nothing permanent except change” carries more weight than ever in
the increasingly digital economy. As flexibility and adaptability become key to the success of all organizations,modern application architecture makes software fit for these higher expectations.
The acceptance of modern application architectures helps organizations keep up with change and lays thefoundation for more flexible and agile software to be a competitive advantage and driver of organizational success.
Microservices and APIs are the next steps in delivering a truly modern application architecture—one that allows
monolithic, legacy applications to be broken into more flexible units that are easier to manage and scale. To ensure
success in digital transformation, business leaders must:
1. Be sure to collaborate with IT early and often. Make sure IT executives understand short- and long-term
digital business requirements and why a modern application architecture is critical to success.
2. Provide specific KPIs to ensure that platform development is oriented to meeting integration, app
development, insight, and experience goals.
3. Have a seat at the table when it comes to assessing technology or vendor selection to ensure that businessgoals are met.
4. Choose technology that can support large-scale API throughput and management, has strong security,and offers a broad enough portfolio to take into account the practices that are required for success and thesoftware development tooling needed to ensure agility far into the future.

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