Rise of the App Economy

Paulo Rosado, CEO, OutSystems

Apps have become such an essential part of our everyday lives, it is almost impossible to believe the mobile app market is still a very immature industry – especially where enterprises are concerned, says Paulo Rosado, chief executive of OutSystems.

While enterprises are just starting to scratch the surface of mobile, almost all of them grasp the enormous potential that it brings.

Business users are particularly intrigued with the prospect of having mobile serve as another revenue-generating channel. In a new survey undertaken by Opinion Matters, sponsored by OutSystems, more than 200 UK and US respondents were asked about the primary goal of their new mobile app initiatives. The top aim cited was to generate revenue (64 per cent).

As the planet increasingly plugs into mobile, a new generation of apps is changing how we consume media, how we do business and how we behave. The launch of the first iPhone and the creation of the first app ecosystems precipitated the gradual restructuring of the mobile value chain and a steady shift away from the traditional pillars of the mobile economy – telco services and mobile handsets – into the app economy.

Today this app economy represents the fastest growing area in the mobile value chain. For example, in 2012 the global app economy accounted for 18 per cent of the combined app services and handset market. Estimates suggest that by 2016 this contribution will rise to 33 per cent of the combined market, equivalent to half of the handset market, and the app economy is predicted to be worth $143 billion by 2016.

This explosive growth, however, is driving a deluge of mobile app requests and chief information officers are already struggling to keep up with demand for mobile apps. As pressure for mobile app developers grows, demand will outstrip supply and companies will increasingly face hiring challenges.

The app economy represents the fastest growing area in the mobile value chain

Just this month, City AM newspaper reported that demand for app developers is rising rapidly as firms invest in the app economy. The number of programming jobs in the IT sector rose by 11 per cent – or by 7,000 jobs – in the year to June, according to new figures released by accountants NoPalaver.

So where are the skills coming from? Our research showed that 63 per cent of respondents already had between 11 and 25 per cent open vacancies for developers as a percentage of their current team size. Of those surveyed, 29 per cent of companies had between 26 and 50 per cent open vacancies. Only a very small percentage (6 per cent) advised that they have no open vacancies due to a shortage of developer skills.

The other consideration is what will the knock-on effect be on salaries? Likewise, what impact will not hiring have on business if organisations can’t get these much needed resources hired?

According to our research, 85 per cent of those surveyed noted that they already have a mobile backlog of between one and 20 applications, with 50 per cent having a backlog of between ten and twenty apps. Growing backlogs will not only damage revenue opportunities, it will also impact competitive advantage, and stop organisations from meeting growing user and employee demand.

Clearly a number of issues are at play here. Fundamentally this is about getting the right skills on board, but few organisations have the mobile talent they need to deliver apps as fast as the enterprise demands.

There is an alternative: organisations can look again at how they deliver with the resources they already have by being smarter about how they can develop apps faster – how they can automate more processes and use technology to deliver highly functional customised software.