How bad is the underinvestment in industrial software

Software categories far less consequential and lucrative have received way more analyst, media, and investor attention than Turnaround digitalization. We hereby make this claim and then test it. Consider the following.  

• Collaborative work management 

• Contract lifecycle management 

• Digital experience monitoring 

• Document management 

• Marketing mix solutions  

• Marketing work management platform 

The markets have all been deemed important enough to merit a (much coveted) Magic Quadrant. These markets feature the enterprise software majors, the likes of IBM and Microsoft. They see venture funding in the tens of millions. Sometimes the founders are popular figures in the trade press. A few have even entered the mainstream media, and through it…popular culture. 

There’s no such equivalent in industrial software. 

Industrial software has vendors only insiders know about. They do great work – in obscurity. Private equity investment is the norm. Venture funding is rare. 

A closer look at the categories mentioned earlier in the article will reveal the following: 

• They are essentially slightly better ways of doing things white collar workers can already do with core productivity tools common to all modern white-collar work. The benefits are incremental. 

• The ROI of the software is somewhere between hard and impossible to measure. If a team currently manages its marketing collateral with ad hoc tools that are often cumbersome, and graduates to one purpose-built tool that makes collaborative digital work slightly easier, time is saved, and the quality of saved work presumably gets better. But how does one measure save time, and how does time thus saved translate to productive work elsewhere? How does one measure improved quality of output, where the output is routine marketing collateral? There are no clear answers to these questions.  

• No lives, limbs, or careers are lost over inadequate collaboration. That the level of collaboration is insufficient might be a challenge. But it is a challenge that’s infinitely distributed – across the entire workforce. Losses from suboptimal collaboration do not show up on anybody’s budget or KPI sheet.  

Of course, there are no regulatory requirements mandating more efficient collaborative white-collar work. No fines. No jail time.  

When a Turnaround at an oil refinery goes wrong, the losses are so big they turn up in SEC filings. The regulator worries about local spikes in gasoline prices. There’s of course the ever-present danger of injuries and fatalities. A refinery fire is front-page news everywhere.  

Yet the STO space has a handful of vendors, no Magic Quadrants, Forrester Waves, or equivalents. There’s no, as far as we can tell, venture funding either.  

Clearly, economics doesn’t explain it.