Does anyone have a clue about mobile enterprise? Apple?

Does anyone have a clue about mobile enterprise? Apple?

Summary: There are real problems with building for a mobile market. Issues with Apple's business model explain why a massive rethink is needed.

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The last few months I've been observing quietly as enterprise vendors put their toe into the mobile waters. Of late, that trickle has become something of a steady stream. Workday, Infor and Sage have all announced mobile applications in the last week or so. It cannot be long before the pace at which mobile apps accelerates rapidly. Among buyers and developers alike, I get a sense of anticipation and - dare I say it - excitement about the potential. But...there are problems.

Mobile applications open up a new world in more ways than one. Today, many mobile apps are offering simple access to information for people who are not office bound. Some are doing a little more. But it's not like your ERP is on mobile. And that may not be the case for years to come. What could happen goes something like this:

Back office ERP, whether cloud based or on-premise becomes the commoditised infrastructure for handling tried and trusted, automated processes like sending invoices, receiving bills, bank account entry postings and payroll. That's already happening across the board in large, medium and small businesses.

The information that can be surfaced and here, cloud based BI vendors like GoodData are springing up like weeds, becomes the source of value. If that same information is surfaced in context - travel expense submission is one thought, over due account chasing by field sales and service is another - become tangibly valuable. An example from Lawson:

Lawson Mobile Employee, an extension of Lawson Employee and Manager Self Service, provides employees and managers access to select human resource (HR) information -- contact information, company directory, employee profile, pay checks, pay history, and benefits -- while they are away from their desktops. This helps organizations minimize the burden on traditional HR channels and saves employees time by providing critical information when they need it.

[my emphasis added]

Some developer organisations anticipate hundreds or thousands of mobile applications. Some believe that mobile applications in large enterprise will be built and deployed in pretty much the same way as desktop apps - behind what amounts to a cloud based firewall.

Whichever way you view these new classes of app you can be sure of one thing - enterprise applications and/or subsets of them will achieve far greater reach than ERP could ever dream.

Now to the business model. Today, many of those same apps are offered as freebies. No cost, nada. One vendor I spoke with shrugged and said they get their money from the main sale so why charge for small additional functionality? Sage is making a strong play on the fact its nascent mobile apps are licensed separately from the main app but are free. Lawson's offering noted above is free:

...to customers who have licensed and are paying maintenance for...Lawson Employee Manager Self-Service (Lawson Mobile Employee)

SAP, with its Sybase Unwired Platform seems to be anticipating charging for the platform but its strategy around pricing the apps is far from clear.

I believe that the notion of free mobile applications is insane.

That must sound nutty coming from someone who has relentlessly banged the buyer drum on these pages. Follow the logic and then judge.

Vendors should be using the opportunity to encourage developer ecosystems to build and create the myriad of apps that could add value. There is no end to the potential for highly tailored apps for different, nuanced purposes in vertical as well as horizontal markets. SAP sees the potential and has stated that it expects its ecosystem to build 80-90% of what will be available. On the basis of the current apps count upon which most people agree, that would amount to at least 300 apps if nothing else happened. It could be as many as 1,000 if rumors about the number SAP itself has in development are to be believed.

But if they are all free then how does the developer achieve an economic reward and especially if SAP is going to sell the platform anyway? For all other vendors that are offering 'free' - how will they create/develop/encourage an ecosystem if 'free' is the current baseline?

When viewed through that lens then it turns the current enterprise software business model on its head to one where consumption is the name of the game, tied to infinite flexibility, value delivered and elasticity. The core apps go into reduced maintenance mode because of their commodity status and the vendors pick up way more users on mobile. Even at cents and dollars for the apps, the vendors still have a healthy revenue stream because of the new reach. I've done the math - I am sure of this.

From the end user's perspective, it means they are assembling pieces of functionality they need rather than paying for a monolithic app where they only use 10% of what is available on a day to day basis.

So far, so good and if you look at the reporting around the Apple B2B AppStore you can surmise that Apple is getting there with the right kinds of tools that enterprise expects and a nascent model for volume pricing. Except there are major holes in that model.

According to a post by li'l ol' Xero:

Like every other iPhone app, we provided a way for people to signup from the app itself. However, Apple insisted we must use Apple’s in-app payments if we wanted people to signup from the app. Funny thing is, that’s not possible – their in-app payments can’t handle a subscription service like ours with upgrades, downgrades and volume discounts.

Beyond the billing mechanics, the pricing model for subscription software – 30% of lifetime revenue – is not an option. We can accept paying a one-off bounty for each signup, because that’s the value the app store delivers.

That blows a massive hole in any business model that relies on subscription pricing yet that is the one that makes the most sense for many of the current and future apps of the kind I have described based upon the need to deliver value and functional assembly. It is also the basis upon which the entire SaaS market works so there is a good fit into that model.

Some people think - as evidenced above - that mobile is just another interface so free is OK - but that in turn chokes any ecosystem. It means the developer ecosystems have little or nothing by way of incentive and all Apple sees is some dribbling revenue from developers prepared to pay to sign up.

Is Android/Blackberry any better? Apart from the 30% issue (the Apple tax) no - at least not as far as I can tell.

I believe this to be a major problem that every vested interest needs to hash out. Apple knows it has a strong following in the enterprise with iPad and I have seen many examples of analytics apps that add genuine value. They cannot remain free forever.

But what do you think?

If you're into video - there are more views here and here.

Topics: Browser, Apple, E-Commerce

Dennis Howlett

About Dennis Howlett

Dennis Howlett is a 40 year veteran in enterprise IT, working with companies large and small across many industries. He endeavors to inform buyers in a no-nonsense manner and spares no vendor that comes under his microscope.

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16 comments
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  • Where's the Business Value?

    I'm remined of the old Wendy's commercial, "Where's the Meat?". There's not much of a business case for delivering paychecks via mobile devices.

    Businesses are already paying for mobile apps that save hard dollars (e.g. Mobile time entry, proof of delivery & mobile CRM). Today they're connecting through third-party tools and apps. ERP customers will pay vendors (or their cloud competitors) that deliver those kinds of apps against legacy ERP solutions.
    @...
    • RE: Does anyone have a clue about mobile enterprise? Apple?

      @@JimLittlefield -sure, but the vendors and devs will have a hard time justifying that via an AppStore that wants a 30% tax on distro over the lifetime subscription
      dahowlett
    • RE: Does anyone have a clue about mobile enterprise? Apple?

      @@JimLittlefield It was "Where's The Beef?"
      slickjim
    • RE: Does anyone have a clue about mobile enterprise? Apple?

      @@JimLittlefield B2B Custom App developers need not pay 30% to Apple unless they want to use the VPP distribution model. The existing approach of contracting with companies directly for any type of license (per user, site license, work for hire) is fully supported by Apple with the Enterprise program. http://blog.apperian.com/2011/07/apple-vpp-and-custom-b2b-apps.html
      CimarronB
  • And here was me thinking

    That enterprises were allowed to install apps without going through the app store. Either, a) I'm horribly wrong and should be slapped around by Ed Bott or b) I might be right.

    Either way, the consequences are dire :P
    ego.sum.stig
    • RE: Does anyone have a clue about mobile enterprise? Apple?

      @ego.sum.stig@...,<br><br>You must be talking about the iOS Developer Enterprise Program. $300 a year, covers the entire organization.<br><br><a href="http://developer.apple.com/programs/ios/enterprise/" target="_blank" rel="nofollow">http://developer.apple.com/programs/ios/enterprise/</a><br><br>In fact the enterprise level does not allow you company to submit apps to the apps store, it only allows the company to do "In-House Distribution"
      YaBaby
      • RE: Does anyone have a clue about mobile enterprise? Apple?

        @YaBaby
        And if you need a bit of both?
        Not painting a good pic.... :(
        rhonin
  • Apple is not &quot;in business&quot;

    Apple is first and foremost in the *retail* business selling (large directly themselves) to the private consumer electronics/mobile communications market. Neither they or their business model are in any way suitable for companies wanting to sell to business customers. The degree of control that Apple require over access to their customer base is not suited to dealing with devs and others wishing to sell to the business sector nor is their pricing structure. If Apple want to be serious in the business/enterprise sector as different from bulk-selling iPads to individual businesses they are going to have to develop a business model that accommodates the needs of the enterprise sector. Currently their main focus is on selling "shinys" to retail customers.
    FrederickLeeson
    • RE: Does anyone have a clue about mobile enterprise? Apple?

      @FrederickLeeson - yes but...*they* opened up the B2B store so...
      dahowlett
      • RE: Does anyone have a clue about mobile enterprise? Apple?

        @dahowlett

        IMHO they have largely simply upscaled their retail model. I really think that they are going to have to rethink this one. Unless MS try to prevent side-loading on Win8 tablet devices when they become available (any attempt to do so would cause uproar and massive resistance amongst MS' business customers) there will be a whole market were enterprise sellers/producers will be talking *directly* to enterprise customers without the os "owner" (ie MS) being able to dictate the terms of the transaction. If you were a producer in the enterprise market which would you choose? (I pose this question without any assumptions/assertions about the relative merits of Win8 contra iOS in any other respect).
        FrederickLeeson
  • RE: Does anyone have a clue about mobile enterprise? Apple?

    I think everyone is overlooking the private app store that companies will setup to deliver these business apps. Either your vendor, because they will not want to pay Apple 30% or companies will start their own over the air app delivery. Thats what the company I was recently laid off from was in the process of doing, setting up a private app store with mobile management solutions.
    rickmother
  • Just another user interface for the same applications

    I not sure there is anything interesting about this at all...but let's just get on and do it by all means, not a big deal.
    jorwell
  • Apple can NEVER be trusted in the Enterprise world.... NEVER!!!

    They have made too many deliberate choices to completely screw over the enterprise market in the past, they just don't get it ever, ole steve just wants the consumer dollar and will do or say anything to get it. The video editing market was deliberately screwed twice by mac/apple.... they are unprofessional hacks.
    Reality Bites
  • RE: Does anyone have a clue about mobile enterprise? Apple?

    Well I have a clue Dennis, but the problem is as you touch on that predatory pricing really messes up markets. The web is still extremely subsidized by content providers, including vast numbers willing to pay developers, and we know who the primary beneficiaries are in that model. Attempting to extend that to mobile devices is hardly a surprise, although it is getting interesting with the recent patent troll battles now under investigation.<br><br>To illustrate your points with a recent actual case -- we were approved as a partner with a major mobile vendor, and I was seriously considering investing in a high value/high quality product, due to a range of issues that include lots of interest from their existing largest customers and those of competitors and a relatively low cost method of piercing very specific target markets.<br><br>I made the decision not to move forward due to several reasons that can be summed up as a very strong risk/reward scenario for the vendor and a very weak risk/reward ratio for us. The costs associated with the so-called partnership were frankly insulting for a shop with our track record, experience, and relationships. <br><br>The interesting flip side is that I have very high confidence that our decision not to move forward with the partnership and application was also far more damaging to their company than ours. Indeed it was quite probably a highly profitable decision for my small company, but very costly for them. Of course they have no way of being aware whether or not this is true, but that has no impact on reality other than making it more likely to make poor decisions.<br><br>Free is insane for everyone but those in the advertising business, which is a conflict that brings unacceptable risk and data sharing for most serious organizations in terms of running their own companies. Devices and applications can be consumerized in the enterprise quite efficiently, but business and revenue models cannot -- a great many app developers and young angels and VCs apparently haven't learned that expensive lesson yet. <br><br>I also agree that enterprise software vendors offering free apps is ass backwards -- it tells me that their primary products are more commoditized than perhaps even we are aware, when in fact the value in mobility is potentially new and of higher value. Insane indeed, and confused, but there is a lot of insane capital out there apparently, which compounds herding over cliffs. .02--MM
    markm7
  • RE: Does anyone have a clue about mobile enterprise? Apple?

    No mention of Microsoft, or did I miss it? I used my Windows Mobile 6.5 for work until I moved to a Windows Phone 7. Both fit in quite well.

    On my WP7, I can read and write Word and Excel documents, use One Note, use a mobile version of Outlook, and do a number of other work-related tasks.

    Being a developer, I can easily write programs for my WP7, debug them on my phone in real time, and put my apps in the Microsoft app store. The Microsoft app store is quite friendly to enterpise apps and protectling them from public access.

    If I want a mobile device that works seamlessly with my enterprise systems, then a WP7 and a Win7 tablet are the simplest and best solution.

    Or, if I want to waste my time fiddling with mobile equipment that may or may not work as well with my enterprise IT systems, I'll go Apple or Android.
    MSBassSinger
  • RE: Does anyone have a clue about mobile enterprise? Apple?

    Mobile enterprise will be needed within the next few years as smartphones develop even more. So many people have internet service on their phones and websites need to be compatibale with this. Although with this comes more security risks as people are now more mobile. We need to step up our security on websites.

    Fred
    <a href="http://www.kre8media.com/">professional employer organizations</a>
    jensongroves