Kurt Marko

Contributing Editor


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The Business Case For Going Mobile

InformationWeek recently completed its second annual mobile application development survey and the results were surprising. The reported level of custom mobile app development didn't change, with the share already having deployed native mobile apps up a mere two points, while those with browser apps optimized for mobile platforms actually dropped by two points. When asked why they aren't building mobile apps, 48% of the almost 700 survey participants cited a lack of business need, up 14 points from last year's poll.

The response is a head scratcher given the almost daily barrage of news about how mobile devices and apps are upsetting established business models, transforming or destroying old firms, creating new ones, and fundamentally changing the way people communicate, shop, bank, get news and information and entertain themselves.

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Of course, organizations shouldn't be stampeded into mobile, reacting to headlines about competitors or responding to vendor hype, but there are plenty of good reasons why "mobilizing" your developer corps makes competitive business sense. Since it's often easier to teach by example, we'll share some notable cases of how going mobile has rapidly produced significant benefits and boosted the bottom line for companies, both large and small.

Starbucks

Starbucks' aggressive use of mobile technology helped fuel a blockbuster quarter for the ubiquitous coffee retailer. The company recently reported that total revenue increased by 13% in the third quarter, while same store sales in the United States--its most developed and saturated market--grew by a remarkable 9% due to a 7% increase in store traffic. The Starbucks mobile app, which is available for both iOS and Android on the App Store and Google Play, respectively, drives an increasing amount of sales while simultaneously engendering customer loyalty. During Starbucks' latest earnings conference call, Chief Digital Officer Adam Brotman, said 10% of all transactions in its U.S. stores are made with a phone. "Mobile devices have become an increasingly important part of the customer experience at Starbucks as the fastest and easiest way to pay in our stores," he said.

Putting this in perspective, Starbucks operates about 13,000 U.S. stores, which generated almost $2.8 billion in revenue for the June 2013 quarter. At 10%, that's $280 in million mobile transactions or almost $250 per day per store. As CEO Howard Schultz said later in the call, the mobile app allows Starbucks to handle periods of peak customer demand much better.

[Adapting enterprise applications to the mobile world can be difficult, but mobile-backend-as-a-sService promises to help. Read how in "Are Backend Cloud Services The Key to Enterprise Mobile Apps?]

Given the broad adoption of Starbucks' mobile app, which consistently ranks as the most downloaded food and drink app in the United State, with an estimated 5.3 million global downloads, customers seem to notice. Later in the earnings call, Schultz reiterated mobile's importance, saying it's growing at unbelievable rates and creating speed of service and efficiency, while "also satisfying our customers in ways that they have not been satisfied before."

eBay and Facebook

eBay is another company that has made significant investments in mobile clients with impressive results, citing mobile technology as the primary contributor to its growth. According to eBay's latest Q2 earnings report, 30% of its new customers were acquired via mobile technology, with mobile transaction volume up 91%. Its PayPal division handled nearly $14 billion in mobile payment volume in 2012, more than tripling the volume from 2011, and eBay expects its mobile payment volume to exceed $20 billion this year, up from $13 billion last year.

Similarly, in Facebook's recent blowout quarterly report, mobile ads--enabled by the continual refinement of its mobile apps--accounted for more than 40% of total revenue, up an astounding 76% from the prior quarter. In a recent interview with CNBC, Dan Rose, Facebook's VP of partnerships, said the company had talked internally about the need to become a mobile company. " That was the big strategic push for us. We've always had a mobile product; Facebook works better on your mobile device. We needed to become a mobile company, and that's what we've been focused on," he told CNBC.

Such is the opportunity of mobile: the chance to increase a multibillion dollar business by 10% in a single year, and improve customer loyalty and frequency through an app that connects them to your business and provides a mechanism to streamline purchasing. Mobile offers the opportunity to engage with customers, employees and business partners anytime, anywhere, at their convenience, not yours. Who wouldn't like that?

SMBs

But mobile success stories aren't confined to the Fortune 500. Hank's Plumbing is a small business in Calgary and featured as a case study by Flowfinity, a developer of mobile app and forms development software. Across the company, Hank's managers figure they save at least 19 hours per week by replacing paper forms with mobile apps and dispatch processes. Not only has mobilizing its workforce enabled the firm to increase a plumber's billable hours each week, helping the bottom line, the apps also reduce response times from same day to under two hours.

Now, the business can track every service event and make sure it charges for it, something it couldn't do very easily before, according to Michael Edworthy, the firm's operations manager. Plus, Hank's revenues are up 25%, he said.

In my next post, I'll examine ways to develop mobile development expertise.

Kurt Marko is an IT pro with broad experience, from chip design to IT systems.


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