AI Will ‘Profoundly Impact’ Software Development
Given that artificial intelligence (AI) now dominates the VC landscape and is redefining the global employment picture, it should not be surprising to learn that AI is also reshaping software development, but that appears to be exactly what is happening. According to McKinsey & Company’s recently published “How an AI-enabled software product development life cycle will fuel innovation,” an increasing number of companies are now leveraging AI to fast-track customized software development, and, so far, the results appear to be game-changing.
“By integrating all forms of AI into the end-to-end software product development life cycle, companies can empower product managers (PMs), engineers, and their teams to spend more time on higher-value work and less on routine tasks,” says McKinsey.
Incorporating AI into their day-to-day operations may not qualify as news. As we reported last fall, many family offices now use AI to handle “mundane but critical tasks” necessary to their internal operations.
However, McKinsey finds that more and more organizations are using AI to hasten the development of external, “customer-centric” software. As a result, many of those organizations report seeing “improved product quality, [increased] customer adoption and … greater innovation.”
‘Five Major Changes’
McKinsey quotes a Chief Product Officer with cloud-communication company Twilio who suggests that bringing AI into the world of software development could be transformative:
As McKinsey maps out, legacy software development lifecycles depended heavily on “disparate customer data” gathered together via belated customer research, product usage reports and “fragmented” feedback from product managers, marketing staff and others.
AI-enabled software development, meanwhile, changes all that. According to McKinsey, the typical AI-driven software development lifecycle allows developers to access real-time customer data, which can then foster an accelerated timeline that addresses up-to-the-minute needs, ultimately resulting in a higher level of product quality.
Thanks to this faster turnaround, McKinsey predicts, five major changes in software product development could be in the offing — changes that will “profoundly impact speed, quality, value and overall innovation.”
Changes AI Will Bring to Software Development:
Products will come to market faster
Customers will realize value sooner
More “good ideas will see the light of day,”
Product managers will serve as “mini-CEOs’
Compliance and risk concerns can be baked directly into the software
To realize these gains, McKinsey advises, “companies will likely need to transform their approach across multiple dimensions.”
One major change will start with the hiring process. Companies will need to invest more in “AI talent and upskilling existing employees, particularly in R&D, to meet shifting labor demands.” Additionally, companies will need to “prioritize diverse data sources to inform product decisions and realign business planning around outcome-based, data-driven metrics that fuel a focus on user adoption and continuous product evolution.”
They will also need to invest in AI-enhanced tools and integrated platforms that can “streamline development, foster cross-functional collaboration, and accelerate time to market.”
But those initial investments alone will not be enough. As the report’s authors write: “Merely adopting AI tools isn’t enough to transform the software [product development lifecycle]. Companies will also want to explore “new ways of working,” which may call for retraining their teams to align with “new organizational structures, talent and capabilities, and tooling and platform shifts.” But, McKinsey says, for those organizations willing to make investments in talent, technology and new processes, they may benefit by seeing “higher-quality products reaching customers faster.”
Next Steps
AI is transforming every aspect of every industry in the world.
Read more about the future of artificial intelligence (as well as what’s in store for blockchain, quantum computing & more) in Big Ideas 2025, a new eBook from Avestix that looks at the latest advances in technology.
