Right now, today, and for the foreseeable future, software is defining business. The way in which successful businesses provide services and connect with customers is through apps, websites and APIs backed by sophisticated algorithms and analytics. Profit margins are defined by how efficient the apps are, and market growth is a function of highly personalised user experiences. This is evidenced by the growing ‘app economy’ which is disrupting sectors across the board: retail, finance, education, health, government and manufacturing.
Consumers are connected and demanding 24/7 access to services. Your customer’s first point of contact, and in many cases their only point of contact, will be via your apps rather than through personal contact. While we can thank Apple for the proliferation and general understanding of what an ‘app’ is, the definition is undergoing a transformation. Apps now encompass any software a user (or any other piece of software) may interact with. No longer constrained to just smart phones, websites are now apps that can be served on a variety of devices, as are traditional desktop applications and services provided via API’s (Application Programming Interface) over the Internet.
Never before have consumers been able to self-service needs to such a wide extent. Access to the world’s knowledge and businesses offering a staggering array of services is a few clicks away and consumer demand for apps has never been greater. This is evidenced by the announcement from Apple that the IOS app economy has created nearly 4 million developer jobs worldwide.
Business leaders must be savvy to this trend and understand the future it paints. According to CA Technologies President and General Manager for APJ, Kenneth Arredondo, “Only the strongest and most innovative companies will survive in today’s increasingly digital world”. He suggests that organisations must focus on matching the pace of innovation with the pace of disruption and capitalise on the opportunities to transform and grow during challenging times. As Marc Andreessen predicted in 2011 in his famous ‘Why Software is Eating the World’ article, innovations often emerge in the moments when it looks like everything has been changed and we’ve reached a new normal.
The message is clear: demand for app delivered services is rising, and businesses need to adapt or risk obsolescence.
Why apps are so important
Software is infinitely flexible and it’s an inherent part of our everyday lives. Our cars, coffee machines, credit cards and the expanding Internet of Things are all controlled by software. Growth is exponential – as the number of connected devices increase, the number of devices with which to connect increases, providing ever expanding opportunity. The speed and efficiency with which data can be exchanged by software is analogous to the difference between sending a text message and posting a handwritten letter.
Apps are the emerging face of business because:
- They greatly reduce friction, increasing your capacity and allowing you to focus on other initiatives
- Apps promote automation of repeatable, testable processes
- An app can be crafted to provide a tailored user experience
- They build customer and brand loyalty
- Apps allow you to quickly and cheaply test and react to changing market conditions
- Apps have reach: they are open for business 24/7, in any country.
The biggest keyword here is friction. For example, people will spend more when purchasing with a credit card over cash because the use of a credit card reduces friction; by separating the purchase from the cost, which has been delayed. Because of this, we foresee an upswing in credit usage with the introduction of NFC based payment options such as Android, Samsung and Apple Pay. Apps have the ability to perform the same function as the credit card in this example – they reduce friction between the consumer and supplier, resulting in increased usage, or purchases.
For existing products and services, apps provide massive opportunity for increased efficiency through automation. Recently, Kiandra was engaged by a large multi-disciplinary engineering company to undertake a complete IT transformation, starting with taking their aging but extensive customer-facing solution to a platform that:
- Allows them to scale nationally by moving towards an API driven platform, connecting disparate systems behind a single programmable interface
- Provides continuity of service by handling poor or occasional connectivity.
- Leverages a responsive design to work where evidence shows their customers increasingly are – on mobile and tablet devices
- Provides public APIs to facilitate B2B automation, increasing customer engagement and tie in
- This investment has greatly reduced the manual effort required to process work, resulting in a faster turnaround for customers, reduced costs and increased capacity and market reach – all significant competitive advantages.
Apps provide an immersive user experience. A beautiful example of this is the Typeform home page. Through the use fullscreen background videos and minimal web pages, Typeform engages the user, relates to the ‘human’ element and demonstrates the software. In the 15 seconds it takes to view this, Typeform have articulated their brand, connected with the user and demonstrated value in how engaging their product is, and what it can do for you. When viewed against traditional marketing activities like radio, TV and print, Typeform’s approach and ability to convert you to a customer is far superior and certainly more far reaching.
It would appear that the fundamental attraction for users to apps is that apps are self-centric. The app is there to serve you, on your schedule, in a way that works for you. Apps appeal to the inner child in us who loves to be delighted and engaged, which goes a long way to explain the frustration we feel towards poorly designed or buggy software. Apps connect directly with users on a personal level and like any relationship, should be treated with mutual respect.
Innovative Products and Services
Apps provide ground for new and innovative products and services. This is a result of affordable and portable technology, ubiquitous connectivity provided by cellular, wireless and fixed broadband, and location awareness.
New sales channels, market opportunities and ways to monetise intellectual property are frequent additions to the app landscape. Recently, we worked on a project for a large financial services company with a massive amount of intellectual property in their complex financial modelling and historical data. Having established a market exists, we were able to create a new revenue stream by wrapping their financial services up in an API and selling access to second tier providers. A second benefit was that the API could be used internally, ensuring consistency across teams – as it seemed individual teams had been creating their own spreadsheets, each which functioned differently.
Customer Trust and Brand Loyalty
Apps build trust, brand loyalty and an unprecedented ability to personalise. Personalisation is a fine line to walk between creepy and useful, especially in a post-Snowden world where consumers are becoming more privacy conscious and less tolerant of ad tracking networks in their everyday browsing. Our personal rule of thumb is this:
Delight me with a recommendation or incentive based on information I’ve explicitly given you – my browsing and purchase history on your site, and we’re good. Track me outside of your domain, and I’m no longer your customer.
It’s also important to be transparent, disclosing exactly what information is recorded, and giving customers an option to opt out, or have their information removed. Online ecommerce platform Shopify’s feature for allowing a ‘guest checkout’, without first having to create an account is an excellent example of providing customers a choice relating to having their purchases tracked.
Who’s Investing in Custom Development
At Kiandra, we engage with companies across a number of industry verticals and find our customers have a number of elements in common. It starts at the executive level with a clear business goal and a strategic directive to use software products and digital solutions to reduce effort, automate processes, provide timely information and drive profits.
We’re seeing a large amount of interest in B2B companies looking to automate through the development of consumable APIs. Providing an option for B2B customers to directly integrate in-house systems with their supplier is an attractive proposition on both ends. The supplier creates dependency through entanglement and the consumer gains access to the raw information and is able to integrate it directly into their business process and systems – often greatly reducing manual effort in the process.
The Engineering Industry
Engineering has a large number of complex problems that are time consuming to solve and critical in nature. Engineering companies are recognising that automation tools and software can do a large amount of the ‘grunt work’, which is improving overall accuracy and helping reduce timelines in large project schedules.
Education is currently being revolutionised through software and app development, with courses being delivered online via edX, Khan Academy and iTunes U. Education institutions have adopted learning management systems for delivering course work, connecting teachers and students, and accepting work submissions. There are also education apps for people of all ages.
Government has always been keen to adopt technologies that save money. Peak bodies are embracing apps as a way to cost effectively develop and deploy standards and processes across their member organisations.
There are three key factors that result in myriad opportunities for Government right now:
- Cloud providers Amazon Web Services, Microsoft Azure and Rackspace all have data centres on Australian soil, addressing the most often quoted barriers of latency and data sovereignty. Access to commodity compute and storage resources, security, logging and auditing is fundamental to supplying to Government and as a Cloud concern, these aspects are all standardised and supplied out of the box.
- We’re seeing more Government departments embracing Agile methodologies. Agile focuses on delivering business value based on prioritised needs. A significant aspect of Agile is about forging client relationships and developing trust through customer collaboration.
- Governments collect massive amount of data with which they have limited resources to leverage. Appification or enhancing Government services with their own information (check out data.gov.au) is a great opportunity.
The federal government’s launch of a Digital Service Standard is an encouraging indicator that opens the door for state and local government to embrace the digital app economy.
Financial service providers are also investing in custom development. As discussed earlier, we’re seeing monetisation of intellectual property through the creation of subscription based APIs. We’re also seeing a large amount of self-service consumer facing apps – automated, small loans being the most common. Finance companies typically have well defined processes and a ton of paperwork. Digitisation of the data collection and evaluation processes is a major opportunity for increasing business agility, insight through data analysis and reducing manual effort.
Regardless of sector, any company that has the following concerns would benefit from investing in application development:
- Getting the right information into the hands of users in a timely fashion.
- Automating a process, or the collection of information.
- Having complex problems solved.
- Improving customer service.
- Having more resources working on their core business, rather expending effort on repetitive tasks that have little value.
Barriers to Investing in Apps
The top five obstacles to investing in application development include:
- Budget constraints
- Security concerns
- Lack of resources
- Lack of knowledge and/or skills
- Lack of executive management understanding benefits.
The reason budget constraints tops the list is that custom development can be expensive and the historical failure rate of IT projects does little to inspire confidence. Here’s a couple of tips on how to help approach the expense issue:
- Establish the monetary benefit of your goal first. You want to understand the cost/benefit as quickly as possible. If a mobile app initiative is worth an extra $500,000 in sales each year, then that informs your maximum viable budget.
- Reframe the project from being an ‘IT Project’ to a ‘Business Project’. The goal should always be to deliver business value. When establishing scope, it’s easy to get carried away with ‘cool to haves’. Measuring each feature against the business value gives you a control mechanism with which to cut scope, reducing the size of the budget you require.
- Start small and demonstrate value with a smaller project, building confidence to tackle larger initiatives.
- Application development is a capital investment. You’re investing in an asset that will add value to your business. Consider financing development like you would any other capital purchase.
- You will likely have monthly support, hosting and maintenance costs so include an operational budget as well. Like any other asset, software requires maintenance and upkeep to stop it from deteriorating.
- Measure return from derived value. I recently scoped a mobile application for a supplier of safety equipment. The application provided a number of quick calculators for determining the loads that the company’s equipment could bear. The purpose was not to make a profit from the app, but rather to put the equivalent of a branded slide rule in the pocket of every one of the company’s customers. From a marketing perspective, the derived value exceeded the cost of development.
There’s an average of 4 million data records lost or stolen every day, so it’s no wonder security is a major concern for many people. Opening one’s virtual doors increases the number of vectors available for attack, therefore it makes sense to:
- Include security testing as part of your application development process.
- Conduct regular security audits across your organisation.
- Keep security policies updated to reflect current recommended practices.
The best way to increase your in-house teams skills, knowledge and capacity is to bring in a supplier for a specific project, especially if you’re under resourced. Software development practices and technologies advance very quickly and it’s likely that, in order to stay relevant, you’ll need to be learning at least one new major technology every two years. Software development houses have to do this to stay competitive. Some of the most enjoyable projects we’ve worked on involved augmenting in-house development teams with hired project teams – which was a great way to cross train, modernise practices and ensured a shared knowledge base. The in-house team were confident in their ability to support the app once the project team had left.
The Costs of Not Investing in Custom Development
Unless you have a captive market, the biggest risk of not investing in application development is dwindling market share though the ability of competitors to deliver better and more cost effective services.
It’s no longer enough to just have a pretty website, businesses need to demonstrate value and innovation.
Tips on How to Select the Right Supplier
If you’re considering investing in application development and want to bring in a project team to assist, here are few tips to help select the right supplier. Before you start, establish the following:
- An outline of what the business problems are and what success would look like. Don’t worry about technology (unless you have specific constraints) or how you will achieve success yet.
- An estimated budget. If you don’t have this, engage your supplier to help you ascertain one and be prepared to pay for it. For an estimate to have any degree of relevance it will require discovery, data collection and knowledge transfer. Whether you go ahead with your project or not, this information has value and requires effort to achieve. Free quotes are great for curtains, and useless for knowledge work.
- Decision makers have scheduled availability to attend meetings with suppliers. You’re trusting a company with your business, judge their value and competence in person.
Ask the questions ‘What would I get for my budget, and how would you achieve it? How would this differ if we had twice the budget, or half the budget?’ Remember, you’re establishing cost benefit, and with software, there is typically more than one way to skin a cat. Varying your budget allows you to understand the trade-offs and helps determine what the minimum viable product should look like before committing your entire budget.
The right supplier should engage with you on a business level. Application development is not commodity work that can be thrown over the fence. If you want a quality outcome, be prepared to invest your time and seek out suppliers who question ‘why’ as they’re demonstrating a willingness to understand your business drivers.
Finally, look for a supplier with established practices in a number of disciplines:
- User Experience (UX) Design
- Project Management
- Quality Assurance
Building a successful app is a team effort and having access to pool of talented and skilled professionals will be highly beneficial.