Software Development 5 Ways AI is Changing the Software Industry

From Dagmar Merger | Translated by AI 1 min Reading Time

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Machine learning is beginning to dictate the logic of operational IT systems and is sweeping old standards aside at record speed. Stephen Dover, who heads the Franklin Templeton Institute, recognizes five important changes resulting from this upheaval.

(Image: mositj—stock.adobe.com)(Image: mositj - stock.adobe.com)
(Image: mositj—stock.adobe.com)
(Image: mositj - stock.adobe.com)

Artificial intelligence is no longer a topic for the future; it is currently rapidly rewriting the rules of the enterprise software industry. Stephen Dover, Chief Market Strategist and Head of the Franklin Templeton Institute asset management company, identifies five key trends:

  1. AI is not shrinking the software economy; rather, it is reshaping the distribution of economic added value. Intelligence is increasingly being integrated into all work processes. This shifts the value away from models that are primarily based on the number of employees towards systems that are closer to the actual machine activities.
  2. The most important dividing line within the software industry is no longer between growth and value, but between user-based licenses and usage-based billing. Business models that are linked to human labor eventually reach their natural upper limits. AI-supported systems, on the other hand, can scale far beyond the capacity of the workforce.
  3. Falling software development costs do not eliminate scarcity—they merely redefine it. As the creation of software becomes easier and easier, the long-term competitive advantage is shifting towards platforms that orchestrate, control and secure increasingly complex digital environments.
  4. Pricing power increasingly reflects strategic position rather than mere product breadth. In an AI-driven economy, the most stable sales are generated by software solutions that shape concrete results and control workflows. Software solutions that merely provide tools for individual tasks deliver less stable sales.
  5. For investors, the software industry can no longer be viewed as a monolithic overall concept. The ability to differentiate is now becoming more important—in other words, understanding where AI increases economic leverage and where it undermines it.

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