Hordes of companies are remaking how they do business to stay relevant in a technology-driven world. But hiring great software engineers who can pull off a digital transformation or artificial intelligence project is hard.
Enter a growing legion of "citizen developers," empowered by companies like Microsoft, Google, Amazon, Salesforce and ServiceNow.
These ordinary business people create apps using software that technology companies call low-code or no-code software development tools. To use these tools, all you need is a web browser.
Software engineers usually write lines of code filled with ones and zeros to create programs. Now, low-code and no-code development platforms enable nontechnical folks such as salespeople or accountants to build apps. They use visual, drag-and-drop user interfaces and reusable, prebuilt components.
"Software development can be a team sport," said Marcus Torres, general manager and vice president of the App Engine business at workflow management software firm ServiceNow. "The way culture is changing you can bring together people from lines of businesses, people who have been successful building apps, break down silos and create grassroots communities within an organization."
While low-code/no-code tools have been around about 20 years in some form, usage is exploding as technology improves and the supply of software engineers falls short of demand.
Software stocks, hard hit in the bear market, could get a boost from the trend in the next business upturn.
Bringing Digital Transformation To The Masses
By 2025, 70% of new applications developed by enterprises will use low-code or no-code technologies, research firm Gartner says. That's up from less than 25% in 2020.
What's more, low-code and no-code development tools can speed up adoption of artificial intelligence software that makes predictions or recommendations.
Much of corporate America is still experimenting with AI technology, said a recent Accenture study. Only 12% of large companies are using AI tools at a level that gives them a competitive edge, Accenture says.
Analysts say no-code and low-code development suites will make it easier for companies and tech novices to build apps embedding AI.
With or without artificial intelligence, low-code and no-code development suites are changing how companies pursue digital transformation, says John Kucera, senior vice president of project management at Salesforce.
"What I've heard from our customers and CIOs (chief information officers) is that they have more demand to build applications and automations than we have people," Kucera said.
He added: "What's changed is both the technology and the willingness of customers to give more power to citizen developers within a line of business. CIOs want to enable that as long as there's governance and visibility so citizen developers can move quickly with oversight. They do want to limit the blast radius if something goes wrong."
What Is Digital Transformation?
Founded in 1999, Salesforce pioneered the concept of letting companies access software apps on the internet using web browsers instead of applications running on local hardware. Now, with low-code/no-code tools, those companies can quickly build custom apps in the internet cloud.
Companies in the financial service, health care and retail industries are among the biggest users of low-code and no-code tools. So are government agencies.
Many are pursuing "digital transformation," a buzzword that describes a wide range of projects. With software, companies are automating business processes and converting paperwork into electronic records.
With low-code tools, a financial services firm might register new customers or collect sales data for analysis. A health care company could manage appointment scheduling or automate patient record-keeping.
Some digital transformation projects, such as customer-facing chatbots on websites, use artificial intelligence.
Technology companies have launched improved low-code application development templates, says Gartner analyst Jason Wong.
"The tools have gotten easier to use and more powerful to build applications compared to the previous generation, which were much more on-premise or for one department and not easily shared across an enterprise," he said.
In addition, low-code tools enable companies to speed up efforts to digitize business systems.
Tech Companies Make Low-Code Push
"The pandemic really opened the eyes of enterprises to low code," Wong said. "It was really forced on them because of business disruptions. They had no choice but to use low-code tools to build new digital capabilities because traditional development took too long."
As digital transformation takes hold, many software companies are investing in low-code/no-code capabilities. They include cloud computing giants Amazon Web Services, part of Amazon.com, Microsoft and Alphabet's Google.
Wong says most big software companies now need a low-code offering. Some obtain low-code software tools through acquisitions. SAP bought AppGyver while Google purchased AppSheet.
ServiceNow stepped up its low-code efforts around 2018.
"We've gone all-in on low code," said ServiceNow's App Engine business manager Torres. "In the last few years, we really pushed to go from being an unknown entity in this market to being a full-blown leader."
ServiceNow released low-code tools called App Engine Studio in 2021. More recently, it rolled out citizen developer management tools.
Market Demand Draws Tech Companies
Research firm IDC forecasts the creation of 750 million new software applications between 2023 and 2025. It sees low-code/no-code tools playing a major role.
According to a KeyBanc Capital Markets report, no-code/low-code platforms "democratize the app development process by enabling a new class of nontechnical app creators."
Still, low-code/no-code software is a bit of a misnomer. There is, in fact, hidden code running behind a dashboard's graphical user interface.
Technology companies' development platforms generate underlying code by accessing a library of building blocks. The ready-made software building blocks supply programming logic and integrate data from a spreadsheet, for example, as needed. That facilitates digital transformation.
Low Code Or No Code?
What's the difference between low code and no code? In general, no code may be a better fit for small businesses while low code plays a bigger role in large companies.
Technically, no code means not a line of code is required to build apps. But Salesforce and ServiceNow agree that no-code software projects are limited in scope. At ServiceNow, Torres says no-code projects eventually come to the edge of "a cliff" when they require more integration with more complex business software.
Low code provides a higher degree of customization than no-code tools, Gartner says.
Some public tech companies in the low-code/no-code software market include Appian, Smartsheet, Pegasystems, Monday.com and website developer Wix.
Meanwhile, venture capital is flowing to startup tech companies such as AirTable, OutSystems, Unqork, Caspio, Zapier and Thunkable. Salesforce is among AirTable's investors. Unqork raised more than $200 million in funding in late 2020 with a reported valuation of $2 billion. Germany's Siemens owns startup Mendix.
Artificial Intelligence, No-Code Startup Boom
CB Insights says venture capital is flowing to a global "no-code AI ecosystem." Startups are popping up in Silicon Valley, Berlin, Mumbai and other places.
Among them: DataRobot, Ushur, Signzy, Builder.ai and Accern. Why the wave of AI startups with low-code tools?
Data scientists are expensive to hire and in short supply.
"While it's not a magic pill that'll alleviate all barriers to AI adoption, it'll certainly make it easier for companies that are faced with a talent shortage in AI," Deepashri Varadharajan, a senior managing analyst at CB Insights, said in an email.
DataRobot integrates its AI tools with cloud computing data platforms. According to a Cowen report, 50% of Boston-based DataRobot users are software engineers and data scientists while the other 50% are line-of-business users. A $250 million funding round in 2021 gave DataRobot a $6 billion valuation.
Digital Transformation Empowers Employees
Well-funded data analytics startup Databricks acquired Germany-based startup 8080 Labs in October 2021.
A few months earlier, Databricks raised $1.6 billion in a funding round that gave it a $38 billion valuation at the time. The San Francisco-based company hasn't disclosed plans for an initial public offering. Its rivals include Snowflake.
"There is a talent shortage in data science and machine learning," Kasey Uhlenhuth, a Databricks senior product manager, said in an interview.
"That's why there's this emerging trend into low code/no code for creating machine learning models and doing analysis. Data-driven organizations want to empower their employees to make better decisions."
Machine learning, a type of AI, creates software algorithms that learn from training data.
Artificial Intelligence Tools
Meanwhile, Salesforce introduced its Einstein AI software platform in September 2016. The first Einstein AI software tools helped salespeople predict which deals are most likely to close based on a company's historical lead and account data.
In addition, Salesforce has integrated artificial intelligence tools into marketing, e-commerce and customer service offerings that foster digital transformation. During the pandemic, use of AI-driven chatbots (used to conduct online conversations) boomed.
On its first-quarter earnings call, Salesforce said its customers were generating more than 164 billion Einstein predictions per day, up from 100 billion a year earlier. The technology company has yet to disclose financial metrics on how much revenue the Einstein AI platform generates, directly or indirectly, for Salesforce stock.
Salesforce's Kucera expects AI to help citizen developers decide what tasks to automate within customer service and other departments. And Salesforce aims to help companies identify business and IT processes that are ripe for digital transformation with low-code tools.
Gartner calls the software service "hyperautomation." Kucera calls it a "low-code application platform."
In April, Salesforce introduced low-code development tools for its Slack platform. Salesforce acquired Slack, a provider of workplace collaboration tools, in 2021.
"Different types of automation and integration technologies are coming together to accelerate companies' ability to automate more complex business processes and do it with more people involved at a faster pace," Kucera said. "That's a trend I've heard customers talk about that we're really leaning into."
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
