IBM-Apple Deal: Mobile Enterprise Applications

On July 15 IBM and Apple announced an exclusive partnership.  There are several components to this partnership that have been addressed elsewhere (here and here) but of most interest was the commitment to develop 100 industry-specific mobile analytic applications for the enterprise.  As I had written, the broad adoption of smartphones and tablets by employees, customers and partners, combined with a BYOD strategy, is driving corporations to rethink their enterprise application strategies.  They are starting to mobilize existing applications and embrace a mobile-first approach for the new applications they are licensing or developing internally.  Analytics-based insight-generation applications represent a major category of these new applications. Recognizing this trend, I and many other venture investors, have been aggressively funding startups that develop mobile enterprise applications.

To better understand why IBM would create such an exclusive partnership with Apple one needs to separate the enterprise mobility strategies from the corresponding BYOD strategies.  It has been widely reported that shipments of Android devices has surpassed those of iOS devices.  This would imply that more employee-purchased devices would run on Android.  However, for a variety of reasons, (such as the single version of the iOS operating system compared to Android’s fragmentation, application manageability and security, etc.), mobile devices purchased by enterprises tend to be iOS-based.  Corporations in industries such as pharmaceutical, retail, financial services, transportation and logistics, hospitality and healthcare have been purchasing iOS devices aggressively.  Therefore, it makes sense for IBM to create this exclusive partnership with Apple under which to develop the set of 100 mobile applications.

This partnership brings together two capabilities important to the enterprise.  First, it is IBM’s industry-specific knowledge of mission-critical enterprise business processes and IT infrastructures with the corporation’s big data analysis prowess.  Many mobile enterprise applications will require different security and integration characteristics than consumer applications.  IBM is very familiar with these and can provide them in the new mobile applications that will be developed under this partnership.  Second, it is Apple’s mobile device and user experience know-how.  In doing so, the partnership has the potential of great immediate and long-term success by delivering a new generation of innovative mobile-first or mobile-only insight-generation enterprise applications.

Of course, IBM and Apple are not the only companies that have recognized the corporate need for mobile analytics and insight-generation applications.  Several startups such as RoamBI, TopOpps, RetailNext, HelpShift have aggressively been developing such applications using venture funding.  However, none of them could compete with IBM’s industry-specific knowledge of mission-critical enterprise business processes. It is too early to tell how the IBM/Apple partnership will evolve but it does not have to be competing with startups.  In addition to benefiting the two companies, it has the potential of also benefiting startups at the very least by raising enterprises’ awareness for mobile analytic applications.  But if IBM and Apple develop open mobile applications and infrastructures, then they will be able to also collaborate with relevant startups and create a rich application ecosystem with the potential to further accelerate the mobilization of the enterprise.

For the application development component of this partnership to prove successful for IBM, the corporation must:

  1. Actually write these 100 applications rather than focus only on providing services around iOS devices and managing enterprise mobile infrastructures.  Otherwise, Apple has the potential of becoming the bigger beneficiary of this partnership, as it will be able to further establish its enterprise credibility which to date has only been limited to hardware.
  2. Understand that mobile enterprise applications are completely different than the enterprise applications that have been developed over the past 10 years.  Today’s mobile applications are lean, single-function, API-driven, provide elegant user experiences and are offered under novel distribution, i.e., app stores, and business models, e.g., freemium.  IBM will have to overcome the challenge of having to embed a complex industry-specific business process into an application model that favors simplicity.
  3. Accept that user experience is as important as analytics and reports.  Over the past 10 years IBM made significant investments in big data analytics.  It has acquired several companies, developed a strong analytic services group, and a partner large ecosystem.  Bringing its analytics prowess to mobile applications through the right user experience will be a new challenge for the company.  Startups are working hard to understand and respond to this challenge.
  4. Deliver mobile enterprise applications that demonstrate value quickly.  Mobile enterprise applications are simpler and have different interaction patterns than desktop enterprise applications.  If users don’t get “hooked” on them quickly, they will not use them in the long term.  The mobile consumer application usage patterns should serve as a guide.  IBM’s application developers must undergo a culture change, adopting a “fail fast” approach, and iterate quickly to try to get each application right or abandon it in favor of another application that holds higher promise.  In other words, maybe ultimately the partnership won’t produce 100 applications as it is embarking to do.  However, even creating 5-10 great mobile enterprise applications will be a big win for both IBM and Apple.
  5. Recognize that the new enterprise customer is the business unit and not the CIO, even if the CIO is bound to benefit from the partnership as well.

IBM and Apple tried partnering in the past.  Those partnerships had mixed results.  Today’s enterprise mobility needs in general and those of applications in particular bring these companies together once again in a partnership that has high potential for both, but also carries high risks.

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