Internal Software: Why Build Internal Software?

The opinion that software will soon dominate and radically change every aspect of everyone's lives has become so commonplace, and repeated so frequently, that those of us in the tech industry treat it as a statement of fact. A less heralded but more concrete fact is that much of the productivity gains expected from the introduction of computer technologies have not been realized. As Tyler Cowen explains, "Labor productivity has been growing at an average of only 1.3 percent annually since the start of 2005, compared with 2.8 percent annually in the preceding 10 years." Software has increased productivity across the board for some industries, such as manufacturing, but for many other industries only certain companies have managed to capture the benefits. A study from 2003 showed that while Wal-Mart and Kmart both invested in IT, Wal-Mart did a better job of changing the rest of their business to work with the technology, and consequently saw "higher levels of productivity and market value".