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SAP is Building its Mobile App Ecosystem - Fast

SAP is Building its Mobile App Ecosystem - Fast

Summary: SAP is ahead of its targets for both building its own mobile apps and getting its partners to do the same.

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Hey developers - what seems like a more financially-rewarding bet: A) Building an iPhone consumer app that will, if you are lucky, generate the average of 20 cents per paid and free download?* Or B) building an enterprise app for the iPhone aimed at a hugely profitable industry (think oil and gas, or banking) with millions of employees where the going rate could be $10 per app or more?

I'm hoping you said B). For while the glamour and the upside may be in trying to emulate the success of Angry Birds (which, despite its fame, has probably only made about $75 million), the consumer market remains a brutal, winner-takes-all heirarchy, with tens of thousands of apps making negligible dollars.

By contrast, there is plenty of gold to be mined in the area of enterprise development. Take my parent company, SAP: it reaps $18 billion a year in server applications.

With "mobile becoming the new desktop," to steal a phrase from co-CEO Bill McDermott, it's obvious that billions of dollars of that enterprise spending will shift over to mobile apps.

Take Boston Scientific. The medical device maker is plans to support 100 apps by the end of this year.

SAP is already aiming for a slice of this pie. It plans to build lots of its own apps (50 by the end of this year) via the Mobile Business Unit under Sybase.

But it doesn't want to hog it, either. Its inviting partners to clamber aboard the Sybase Unwired Platform (the development middleware required by SAP).

As Sybase CEO John Chen said yesterday, SAP/Sybase only expect to eventually build one-tenth of all mobile SAP apps, and relying on partners to supply the rest.

SAP has a program called the Unwired 100. Its goal: have 100 apps built by partners both big and small or other divisions of SAP (Consulting, for example) by the end of 2011, according to Nathan Henderson, principal for SAP's Mobility Center of Excellence based in Scottsdale, Az.

SAP is already well on its way: huge mobile partners that already building on top of SUP include IBM, Accenture, Deloitte, CSC, Infosys, Wipro, Tata, and Cap Gemini, said Henderson.

But SAP is also eager to attract small ISVs on the industry and customer front lines, he said.

Unwired 100 only debuted at the beginning of this year. But it's already at 32 apps, hitting a third of its goal (22 of them were on display at SAPPHIRE NOW). Henderson is confident about reaching 100 apps by the end of September.

How do potential partners get involved? Henderson said they should first sign up with SAP's Partner group, and secondly, sign up for training. "It doesn't matter if you're an XCode expert; you need to learn SUP," he said.

At that point, SAP is willing to work closely with ISVs, including acting as reseller to its customers (and taking a cut of revenue), Henderson said.

But what about the risk that SAP could end up building its own app that competes with an ISV?

It's the same risk that ISVs who build for Windows have long faced (Microsoft being a huge applications maker, too: Office, SharePoint, Exchange, etc.)

Chen acknowledges the issue.

"The onus is on us not to intrude into their space too much," he said, adding "I haven't seen ISVs that are not willing to work with us."

Take Slalom Consulting, a management consulting firm. At SAPPHIRE NOW, the company showed off a time expense app built for BlackBerries.

Tiago Das, a managing director for Slalom Consulting, says the opportunities in the SAP ecosystem outweigh the risks.

Or as SAP's Henderson says: "You have an unlimited runway as long as keep innovating ahead of us."

It might not be as difficult as it may sound. Because of its size, SAP is more likely to build horizontal apps, and build them more slowly than a focused ISV.

That may not satisfy enterprises, who will be pickier about mobile apps than they have been with applications.

"They won't be happy with an 80% fit, as they might be with server apps, they'll want 95% fit," he said.

That leaves plenty of opportunity for the small ISV or even individual developer.

---------------

* I calculated consumer iPhone revenue by taking Distimo's projection of $2.91 billion in gross 2011 revenue at the Apple App Store, taking out the 30% cut for Apple (which leaves about $2 billion), and then dividing it by the 10.3 billion projected downloads this year.

Topics: ÜberTech, Telcos, Smartphones, SAP, Mobility, iPhone, Hardware, CXO, Banking, Apps, Apple

Eric Lai

About Eric Lai

I have tracked technology for more than 15 years, as an award-winning journalist and now as in-house thought leader on the mobile enterprise for SAP. Follow me here at ÜberMobile as well as my even less-filtered musings on Twitter @ericylai

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