Low-Code and No-Code (LCNC) platforms are bridging the gap between the high demand for software engineering skills and the lack of supply.
Article written by Filippo Vezzani, member of Liuc Finance & Investment Club.
Introduction
In the last years several industries are becoming increasingly more digital and for this reason the demand for former software engineer, in the coming period, will always be greater. However, currently, only 0.5% of the world’s population knows how to code. This mismatch between demand and supply, over the years, has led to the creation of the Low-Code and No-Code platforms. LCNC companies are bridging the lack of supply, democratizing the code’s knowledge: through them any one of us can handle several basic digital processes without help from IT office.
First of all, to understand the LCNC market, is important distinguish between Low-Code and No-Code platforms:
Low-Code: this first type of platforms still requires or allows some amount of coding-knowledge and effort. Instead of using complex programming languages the user can employ visual interfaces and drag-and-drop virtual object. Low-Code development platforms often provide excellent system integration adaptability.
No-Code: this second type of platforms removes any kind of coding; the user can build applications by dragging and dropping file and pre-built components in a very friendly visual interface. No-Code platforms frequently fall short about system integration adaptability.
Cost - Benefit Analysis
In terms of cost - benefit analysis LCNC platforms are certainly very attractive. According to The Wall Street Journal “Low-Code development can be 50% to 90% faster than a more traditional sequential approach, which generally involves detailed requirements specification prior to design and then design completion prior to development”. In addition to this, LCNC software can generate important cost savings for different types of companies: through them there is less need of additional developers. Finally, it is important to consider how product created through LCNC platform “allows us to spin up an app more quickly, making it less painful to throw away if our assumptions were wrong; we can build spikes to test our assumptions at a lower time investment”.
On the other hand, LCNC products are usually less customizable and oriented compared to a full code product, they could have a restricted scalability and in large companies they could provide different types of security problems. At the moment Low-Code and No-Code platforms are used for various types of tasks, for instance to create simple apps/website/portals, to solve complex workflows, to automate some business processes and to improve the costumer experience.
Demand
Realizing the potential of this type of software we could try to analyze his market and his growth prospects. The terms Low-Code and No-Code was coined for the first time in 2014 by Forrester Research, an important research and advisory company based in Cambridge.
Forrest was trying to find out and analyze a new type of development platforms emerged for customer-facing applications and realized how a new market was arising. In this decade many things have changed, currently LCNC market is growing fast and, despite that, there are various reasonable reasons to believe that this market still has a large potential of growth.
According to the latest forecast from Gartner, an important technological research and consulting firm based in Stamford, “the worldwide market for low-code development technologies is projected to total $26.9 billion in 2023, with an increase of 19.6% from 2022”. Furthermore, the forecast try to break down the LCNC market in seven more specific segments: Low-Code Application Platforms, Business Process Automation, Multi Experience Development Platforms, Robotic Process Automation, Integration Platform as a Service, Citizen Automation Development Platforms and Other Low-Code Development.
According to Gartner Low-code Application Platforms are projected to be the largest component of the low-code development technology market, growing 25% to reach nearly $10 billion in 2023. Specifically Gartner defines as Low-Code Application Platforms a no-code application platform that only requires text entry for formulae or simple expressions (the LCAP market, therefore, includes no-code platforms).
While Low-code Application Platforms is the largest market segment, also according to Gartner, Citizen Automation Development Platforms is projected to grow at the fastest pace, with a 30.2% growth forecast for 2023. Specifically Gartner defines as Citizen Automation Development Platforms software that could help the user to automate the workflows, to build web-based forms, to bridge data and contents across multiple software-as-a-service applications and to create reports/data visualizations in a very simplified way. Are therefore classified as CADP those platforms that don’t demand at the user any type of specialist skills.
Supply
According to Unigram Labs, a team of research advisors, in the past years, 44 LCNC companies have received more than $10 million of funding and 20 of them are unicorns worth over $158 billion in aggregate enterprise value. In total, LCNC industry has received an enormous amount of funding (approximately $7.5 billion). There are several important players, from different industries, that are trying to invest in this interesting high-growth companies.
For instance, in 2021, Goldman Sachs has injected $90 million into Low-Code software maker “WSO2”, said the 16-year-old company provides “mission-critical services” for businesses across industries. Two years before, Salesforce has completed the acquisition of Tableau (an American interactive data visualization software company focused on business intelligence) for $15.7 billion in an all-stock deal. At the time, in 2021, the acquisition of Tableau was the largest acquisition by Salesforce since its foundation.
Also Google, in 2020, has completed the acquisition of Looker Studio (now formerly Google Data Studio), an important LCNC company, for $2.6 billion. The latter is a company very similar to Tableau, it is an online tool for converting data into customizable informative reports and dashboards.
Finally, different LCNC companies in the last years have gone public with very important and advertised IPO, such as HubSpot (current market cap of almost $17 billion), UiPath (current market cap of almost $8 billion) or ServiceNow (current market cap of almost $92 billion). The latter, in 2018, was named world's most innovative company by Forbes.
Conclusion
Gartner predicts that by 2026, developers outside formal IT departments will account for at least 80% of the user base for low-code development tools, up from 60% in 2021. 451 Research and FileMaker, in a survey of more than 500 North American companies, have found out how nearly 60% of all custom apps are now built outside the IT department and of those 30% are built by employees with either limited or no technical development skills.
These data are useful to define how much LCNC platforms will be important in the future.
In conclusion, we can affirm that LCNC platforms are certainly valuable for the companies because they could use them to increase their productivity and, on the other hand, they are valuable also in an investment standpoint: LCNC companies offer the opportunity of accessing an untapped market/user base.
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