Disrupt pointers for start-ups in the app economy

By A. Asohan January 23, 2013

The app economy is happening and there are ‘white spaces’ that canny start-ups can exploit
Key learning: Don’t leave the UI and UX to an external agency – that’s 90% of your product!

Disrupt pointers for start-ups in the app economy
THE much-touted ‘app economy’ has a lot of ‘white spaces’ which canny start-ups and developers can explore while established companies and telecommunications companies (telcos) struggle, participants at the DNA-TeAM Disrupt session on Jan 22 were told.

“Every boardroom you go into, you will hear that mobile is part of their strategy,” said Naveen Mishra (pic, center), industry principal, ICT, Asia Pacific, at Frost & Sullivan. “Yet whole industries have been disrupted by applications like WhatsApp.”

“So many big companies have missed out on major trends that start-ups have successfully initiated,” he said at the panel discussion with the theme ‘Mobilize Your Business Model,’ part of a monthly series organized by Digital News Asia (DNA) and the Technopreneurs Association of Malaysia (TeAM).

Nimal Manuel (pic, right), principal at McKinsey & Co in Kuala Lumpur, said that white spaces start-ups and smaller companies may want to explore include enterprise social networking and enterprise mobility.

The latter includes examples like collaboration and communication as well as accessing corporate ERP (enterprise resource planning) applications via mobile devices, he said in the session moderated by DNA founder and chief executive officer Karamjit Singh.

“I serve many large clients who have to defend against start-ups disrupting their business,” Manuel admitted. “While many of these clients are looking into mobility, their first port-of-call are the telcos, but telcos have not been nimble enough to capture this segment.”

The third panelist, Celcom-Axiata chief innovation, online and digital officer Karan Henrik Ponnudurai (pic above, left), candidly admitted, “We’re a telecoms species in a software age.”

“Telcos themselves are facing the same set of dilemmas and challenges that other large enterprises are facing,” he said, adding that many large companies are beginning to realize that just having a great website does not constitute an online strategy.

Enterprise social networking can be used to optimize an organization’s own internal resources and its workforce to co-create products, forecast and monitor sales, generate sales leads and even derive customer insights, McKinsey’s Manuel said, adding however that few large companies provide apt solutions for this.

“Another area is multi-channel retail,” Manuel said, explaining that by McKinsey’s model, the sales lifecycle goes through a set of phases, from consideration (when the buyer considers whether and what he wants to buy), evaluation, experimentation or trying out, purchase, after-sales service and engagement, and finally, hopefully even advocacy.

“Very few products do the entire lifecycle,” he noted.

Advice for start-ups, others

Celcom-Axiata’s Karan said his company had learned some lessons very late in the game, and painfully.

“The ‘let’s just build it and they will come’ model does not work anymore,” he said. “You really have to go out and market your APIs (application programming interfaces). Don’t assume that just because you’re a multimillion-dollar company, that developers really want to work with you.”

“We set up an entire department just to do this,” he said, adding that the company had trained more than 500 developers over two years.

Karan also warned companies not to pretend they don’t need real software expertise within their organizations, noting the importance of documentation, testing and versioning of software and echoing the idea that every business is a software business.

“Don’t think you’ll get it right the first time either,” he said. “Don’t be afraid to start small – you can always grow but you can’t go the other way.

His pointers that would be especially apt for developers include:

Don’t try to fit in everything; keep it simple.

Don’t build anything you can’t afford to throw away.

Be a standards bigot. “All these standards-setting are worth a toss – just use whatever’s best,” he said. “Some standards bodies just want to make money consulting.”

Don’t leave the ‘pretty art’ to an external agency. “The user interface and user experience are 90% of your product,” Karan said. “Don’t leave that to an outsider, or you will lose control over how you interact with your customers. Build or develop an artistic sensibility if you have to.”

Understand your core base and determine how to get there.

Don’t be afraid to take on the big boys -- a point echoed by Frost & Sullivan’s Naveen.

Challenges abound

The three panelists noted there were some challenges. McKinsey’s Manuel admitted that the reality was that it is very hard for start-ups to sell to enterprises that would rather depend on their traditional vendors.

Last year, Steven Tai, head of Strategy & Marketing for Ericsson Malaysia & Sri Lanka, lamented with DNA that traveling to neighboring countries saw him enjoying a richer experience on his smart devices, attributing this to the stronger focus on quality in these countries.

“Telecommunications operators need to ensure that their networks are tablet- and smartphone-ready, delivering superior coverage, speed and reliability and able to handle the demands of continued strong mobile data growth,” Tai said.

The panelists at the Disrupt session were not so convinced that having a robust telecoms infrastructure was a critical factor in developing an app economy.

“The world’s largest e-economy is China, which has a less than robust telecoms infrastructure,” said Karan. “But telcos are beginning to realize that they need to get into the game.”

Frost & Sullivan’s Naveen said that operators had spent millions to build their 2G and 3G networks, and were now building their 4G networks, but noted that network utilization was still on the low side.

“Telcos have to think about how to fill this up,” he said. “Slowly and steadily, they are changing their mindsets and are moving down the value chain.”

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