For 20 years, I have been passionate about my software industry career because it is highly innovative and profitable. I was also comforted by the fact that I thought of the industry as being "green." After all, software products are digital, there is no waste, and no pollutants spread into the biosphere.
Guided by Paul Hawkins's book Natural Capitalism, I finally realized that, in fact, the traditional development, delivery, and sales models in the software industry follow the same "take-make-waste" model as material-based industries.
Since the 19th century, industrial business models have existed to enable and accelerate delivery of material products. In the early 1980s, the software industry adopted the same models. As a result, our industry became a direct accomplice to creating two-million tons of e-waste, discarded computers and monitors, yearly in the United Statesa waste stream that transfers hundreds of "unsequesterable" toxic chemicals into our environment. Compound this with the dismal six-percent efficiency of the "take-make-waste" process that produces high technology products: It takes 33.3-million tons of materials, energy, and water to make the two-million tons of waste that we throw away each year. One quickly sees a toxic river running at a rate that is unsustainable, and even deadly.
Historically, the industry creates major new "versions" of software to try and drive license revenues that force customers to upgrade. The picture gets worse when we consider that 60 percent of the software features we build are rarely or never used. Additionally, 40 percent of the total budget of public software companies is used to sell and market these "necessary" upgrades.
But there is good news for our industry. Three innovations are taking shape that can drive the software industry to a sustainable model of green business and a stronger bottom line:
- Shifting value delivery from product to service.
- Participating in a closed-loop flow of materials, where waste is an input.
- Enhancing resource efficiency by a factor of four.
For the software industry, these green practices mean three fundamental changes:
- Delivering via Software-as-a-Service (SaaS).
- Developing with agile approaches.
- Selling through word-of-mouth and social networks.
At my company, Rally, we adjusted our thinking from products to software as services. Our focus is on decreasing complexity and waste while increasing user loyalty. This is easier on a SaaS platform where the typical customer start-up and maintenance efforts are removed. However, we have extreme customer expectations, including only 90 days from initial trial to close, provision, and prove the value of our subscription service, or risk nonrenewal. We also have increased quality and reliability pressure as a crash or defect in our system affects all of our users.
We have addressed the extreme customer expectations from SaaS and the difficulties of traditional plan-driven software development releases, which are typically large, long, and late, by using agile approaches. Traditional development approaches often mean missed customer expectations, poor quality, and complex solutions that over-shoot customer needs. With agile development, our cycle times are reduced from quarters to weeks, rapid adjustment to customer feedback happens regularly, we avoid building unnecessary features to drive upgrades, and testing is moved to the front of the cycle.
As we work to grow our business, it is unrealistic and unaffordable to "sell" to every customer. We encourage loyal customers to recommend our services to colleagues and friends, using word-of-mouth techniques on web-based social networks. This active engagement in open social networks is highly effective and efficient. Customers turn into your best sales people and create pull for your services instead of having to push them through traditional means.
Software agility lets teams successfully deliver SaaS and drive the continuous value, quality, and user loyalty needed to break the current toxic model and green the software industry. A green software industry will provide greater economic value and resource efficiency, subsequently lifting the high technology industry as a whole, through stable, reoccurring software service revenue streams. Ultimately, these stable revenue streams will facilitate the greening of hardware manufacturers as they are forced to move from a product to a service model, and finally close the loop on their "take-make-waste" practices. Apple's hardware take-back program is a good example of this change.
It's time to recognize that the software industry can help drive a green economy while simultaneously driving profits, because after all, going green is good business.