Where are the enterprise apps for the On-Demand Economy? Is On-Demand just a thing for Startups, or what? How the heck did that On-Demand Unicorn, Uber, start in 2009 with about $200,000 in seed money and reach a valuation of $60+ billion in less than a decade? If Uber traded publicly, it’d be in the world’s Top 200 companies by market value. It almost looks like thousands of large, respected businesses that have been around for decades are driving in the slow lane!
Can Enterprises Get in the Passing Lane?
Uber’s just one of many On-Demand companies that have gone big-time, despite starting out on a shoestring. So why can’t more established businesses and mid-sized enterprises get in on the same kind of action? Does the On-Demand Economy have something to offer for enterprises or not?
Simple answer? Yes, they can. Shortly, we will go into five cases for enterprise applications that are a fit for the On-Demand Economy. Everything that makes On-Demand good for startups makes it even better for enterprises. Many startups take years to find investors to finance development of an on-demand app, then scale up. Enterprise apps for the On-Demand Economy could plow through the same process in 3 to 6 months without breaking a sweat, financially or operationally.
To be fair, many large and fast-growing businesses thrive in the On-Demand economy. You may just not realize it. Amazon (1994), Netflix (1997), Airbnb (2008), Spotify (2008), Instacart (2012), and many others do. Unfortunately, many more do not. Borders and Sears, Blockbuster Video, Toys R Us, and many others failed to see what was coming up on them in their rear-view mirrors.
What does On-Demand mean for Enterprises?
On-Demand is the logical next step of the Internet’s evolution. The on-demand economy (also known as access economy or shared economy) is a business model in which companies fulfill consumer demand on the basis of immediate access to goods and services. In most, though not all cases, it attempts to make more efficient use of everyone’s unutilized assets (time, skills, equipment, real estate, etc), on scale. It is a “pay as you go” model favoring renting and contracting over owning and employing.
On-Demand is made possible by the popularity, affordability, and proliferation of mobile devices. They allow anyone to connect with and purchase anything and have it delivered to them wherever they might be. On-Demand brings your business to the customer. It delivers the epitome of customer convenience to an increasingly noisy, busy and competitive world.
“The on-demand hyper-growth is upon us… In the next 5 to 20 years most of the people will be able to get anything within a 5 to 60-minute window.”
– Gary Vaynerchuk – serial entrepreneur and popular Internet personality, ,
Some of the core commonalities of an On-Demand business involve:
- Making efficient use of your own or other’s unutilized assets via an economy of scale.
- Minimizing all forms of overhead (employees, real estate, equipment, insurance etc.) and sticking to the essentials of what is needed to grow your business.
- Expanding your reach geographically or increase revenue with more verticals.
- Calling upon “service providers” to “do what they already do.”
- Making it easy for others to participate in or benefit from your business with incentives for referrals, service or sales commissions, etc.
The On-Demand Economy is Great for Services!
On-Demand is best suited to service industries, which comprise roughly 80% of the US economy by GDP. However, there are also solid cases for manufacturers, particularly where IoT and On-Demand come together. After looking at On-Demand for enterprise apps for service industries, we’ll explore your options for getting in the fast lane. There are good cases for manufacturers, too!
List of Service Industries:
IT Service Management
|Service industry associations|
Case #1. Enterprise Apps for New or Expanded Markets
For most businesses, if you want to expand your market, you need more offices, storefronts, or other points of presence. That means hiring employees, buying equipment, insurance, utilities, etc. That all adds up. The cost of developing an App like Uber is in the same ballpark as opening and staffing one small office or storefront for 1 year.
However, your enterprise application for the On-Demand Economy could be used to manage and support business operations in 20, 200 or even 2,000 cities. By using your brand to connect customers to other suppliers whose services you trust, you can expand your market rapidly, without new buildings, trucks and techs. Even on the small end of the spectrum, that can completely sidestep $4+ million of capital requirements otherwise needed to support 20 small offices or storefronts in different cities. Those funds could instead be directed to finding and signing service providers and marketing to attract customers to keep them busy.
Case #2. Enterprise Apps for New Verticals
Adding a new vertical market is always an option for any enterprise business, whether product or service related. The easiest example: remember Amazon.com in 2000? They sold books. Then, one day, they said “Hey, how about if we sell Software? Electronic devices? Toys? Clothes? Shoes! Web Services….” It’s why most shoe stores also sell shoe-strings… and socks!
We’ve elaborated on this On-Demand variant in our One Stop Shops article. If you have enough money to invest in a mobile application, you already have an advantage over 90% of all US businesses. To wit, Google Play has about 3 million apps, but there are about 28 million small businesses in the United States.
Why, you ask, does Amazon use On-Demand? Amazon gets paid a commission on each and every item sold by over 2 million third-party sellers – responsible for 52% of their line item sales.
To succeed with the One-Stop Shop concept, you don’t need to be Amazon. You just need to comprehensively cover the verticals closely related to your business. If you sell cars, you can partner with insurance companies, automotive supply stores, accident lawyers, theft prevention services, car washes, and any number of other non-competing auto-related businesses. All will help boost your brand, lead to happier customers, and generate new business!
Case #3. Enterprise Apps – On-Demand with IoT
The Internet of Things presents a diverse and wide-ranging new frontier in the world of On-Demand. We’re talking about 20 billion IoT devices being in play by 2020, according to Gartner. That’s a lot of different types of devices. Amazon’s Alexa, Nest thermostats, QueueHop Smart Tags, and myriad health and fitness wearables — all are just the tip of the proverbial IoT iceberg. Rather than focus on how any of those 24 billion devices can work for Enterprise On-Demand, let’s look at one basic component that goes into all of them – Sensors.
IoT: Sensors and the On-Demand Economy
There are sensors for just about everything – temperature, proximity, pressure, water, gas, smoke, chemicals, motion detection, acceleration, etc. Their purpose is to detect and transmit relevant data.
Smoke detectors are perhaps the best example of “old-school” IoT. They can automatically notify you and the fire department that there may be a fire. Sensors can detect overheating and other indications that a device needs repair. That can lead to automatically scheduling a technician for a preventive maintenance checkup. Medical wearables give physicians remote monitoring capabilities, send reminders to patients to take their medicine, and offer more personalized care options.
Where IoT meets the On-Demand Economy, device manufacturers are largely in control – much more than in cases of Apps Like Uber. Enterprise service companies, on the other hand, are the logical choice as service providers. That’s a match made in heaven and really no different from the conventional norm.
The essence of IoT Sensors and On-Demand is “real-time awareness” of hundreds of thousands, even millions of devices. Sensors and data go hand in hand. Data is a huge topic unto itself and we will explore it in detail in the very near future.
Case #4. Enterprise Apps as White Label Applications
Where is there a “1 App – 1 Business” rule written that says only you can take advantage of any app that you build? Nowhere. It doesn’t exist. The app you build for your business can be endlessly relabeled and reproduced for use by other businesses. And you can monetize that.
There are lots of ways your, white label applications can be monetized, via royalties, licensing fees (almost like SaaS), or direct sales. Which is best for you depends on your own long-term business strategy, your app’s competitive value, and other related factors. If concerned about local competitors, you could still market your app to other companies like yours well outside your geographical region.
The advantage with white label royalties is that you are not dependent upon your own marketing budget and efforts. You are instead able to directly benefit from everyone else’s marketing efforts. Direct sales, licensing or SaaS are more conservative options.
White Label Makes You a Software Developer
By having a mobile application for your business — YOU HAVE A SOFTWARE PRODUCT! It can be sold, leased, or worked into any other kind of arrangement you might like. Offering your application on a White Label basis will likely require your oversight on two major issues.
First, companies will want their own branding – so their application will need some design work. If you know that you want to do White Label at the start, this can be factored into the original design for easy, low-cost client customization.
Second, nearly all applications require backend support. Today, that will most likely involve Cloud computing or Backend as a Service arrangement with the likes of Amazon Web Services, Microsoft’s Azure, or Google.
If you outsource your application’s development to Reinvently, we can manage all aspects of its continued development, White Label design and your client’s backend. You’ll want to include these costs, and possibly add a markup, on the direct sales, licensing or royalty rates you charge to your clients.
Case #5. Expanding into International Markets
Earlier, we mentioned there are 28 million businesses registered in the United States. There are also around 266 million U.S. mobile users – and that’s only 5% of the Global Mobile Market. According to Commerce.gov, about 410,000 of these businesses engage in international trade. It is common sense that the larger your business gets, the more likely it is you’ll engage internationally. The On-Demand Market makes it exponentially easier for a service-oriented business to engage internationally than any other conventional business format.
If you already have an application for your business, there’s a good chance that you will simply need to localize it for your intended market/s. Languages (and alphabets) vary in complexity, some are read right to left. Cultural and social dynamics may require substantial redesign. Generally speaking though, you will likely be looking at a localization cost of 20 to 60% (i.e. German vs. Chinese).
Where English is spoken by about 500 million people globally, consider:
- 200 million speak German
- 210 million speak Portuguese
- 500 million speak Hindi
- 1 billion speak Mandarin Chinese
A solid due-diligence effort is required for any market you might want to explore. Engaging internationally has many strategic and tactical advantages for service-related businesses that we’ll have to examine separately. There’s a lot of hoopla in the news about international trade. The major PR issues only refer to US companies that manufacture abroad and import their products back into the US. For service-related companies, that’s not an issue.
Let’s Talk About On-Demand for Your Enterprise
Our Reinvently Insights blog has an entire section devoted to On-Demand Apps and the On-Demand Economy. The articles cover almost every angle of On-Demand, what makes it work, mistakes that have been made, and lots and lots of examples. Maybe you’re beyond the point of reading about On-Demand and would like to talk with someone? We’d love to hear from you, listen to your idea and discuss your options!
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