This week I learnt of the devastating news that Appster, a Melbourne-born app development business, had gone into administration. From a people prospective, on behalf of Mobile Mentor, I feel for all the affected staff. The mobile family is a small one in Australia and events like this have a wide impact on the mobile industry in general.
It easy for us to sit back and hypothesise on why this occurred, but ultimately this will be for the founders and the receivers to discuss behind closed doors. Was it the hedge on using Indian resources and the change in cost structure due to tax laws as publicised or was the issue a little deeper?
At Mobile Mentor we have 2 focal points that bring us back when we feel we are straying too far from our core. The first is a simple question. Is it enterprise mobility? The second is, does it produce long-term recurring revenue as part of a customer partnership?
Let me unpack these questions a little more.
What is enterprise mobility. These 2 words define who we are and what we do. At Mobile Mentor we focus on larger customers in the enterprise and government space who have a defined need for mobility. Not just portability but rather true mobility defined as the primary business objective operating out of the office, most of the time. If you think about an airline, 100% of their revenue is derived by flying planes. Last I checked you can’t do that indoors. A forest operator, check, can’t grow trees indoors. A construction company, yep, once again a highly mobile activity. So, with the size of the customer (enterprise and government) and the need of the customer, mobility transforming business process not just making a system portable, we have a clear market segment to focus our attention and, more importantly, our skills.
When I look at Appster’s website it appears this was a very broad stroke with customers coming from very embryonic start-ups with tight cash constraints and unknown future revenue prospects, to customers with large marketing budgets but potentially weak business cases for building a mobile app other than, hey wouldn’t it be cool if we had a mobile app. Beware the hype cycle. If the need is not there after the initial hype, the app will simply be relegated to the virtual pile of other apps that don’t receive investment to iterate, innovate and deliver on their initial use case. Very rarely does v1 of any software deliver.
The second point refers to longer term recurring revenue via partnering with customers driven around the outcomes sought. Without a clear and compelling ROI, were Appster’s customers stalling on future development and support contracts and as such not engaging in additional development or support agreements? To quote, ‘the downturn of work was sharp and significant’. This sounds like not enough recurring revenue from existing customers for additional development and support services were in place to weather the storm.
At Mobile Mentor we’ve learnt to not enter into app development engagements without an agreed support service in place. This is obviously somewhat easier with our focus on enterprise mobility. We know the end users and how many of them we are expecting to use the app for how long and how often. Support needs to include private app distribution to the target users (staff, contractors etc.) via the use of a Unified Endpoint Management (UEM) service, testing each release, a 24/7 support desk for end users to call with issue and an integration to the necessary security layers to make the app successful longer term.
We truly believe there is no such thing as a finished app and as such at a minimum all apps will need to be updated at least annually just to keep current with security and support for the latest OS. With every customer onboarded at Mobile Mentor our business gets a little bit stronger not weaker. With each support customer comes investment in additional support desk staff, security staff and app development support staff. It is very tempting to say yes to app development before getting a support agreement sorted out. In our experience this has always led us to a poor customer engagement and outcome, and has taken our business to a weaker commercial position and the customer to a sub-optimal future. A true lose-lose engagement.
Looking from the outside in it appears Appster’s revenue model was very narrow in its approach with no talk of managed services (hard to do for a consumer app), no security practice (once again hard to do for a consumer app), and no real focus on long term recurring revenue.
DevSecOps is the new cool buzzword of 2018 but when unpacked it is so much more. Mobile Mentor has been developing mobile apps for 7 years (Dev), securing mobile devices for 10 years (Sec) and operating a world class 24/7 mobile only service desk for 14 years (Ops). Can a mobile app be successful without a DevSecOps approach? In Appster’s case it appears not.