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Getting your Slice of the App Pie

By Frank Hoberg, EVP Sales & Co-founder, Open-Xchange 

With the onset of Consumerization of IT and the adoption of bring your own device (BYOD) policies cropping up across the business world, the decision of what applications businesses use, even in larges enterprises,is moving away from CIOs and IT departments towards individual managers and end-users.

In SMBs this is even more obvious as those companies don’t usually have an internal IT department at all which places the decision solely in the hands of the individual. This self-accelerating trend is well documented by the rise of companies like Salesforce and Box and how they infiltrated the enterprise market.

In light of this, it is not surprising that all of the cloud service providers that I’ve had first hand contact with are having a challeging time with their attempts to sell all kinds of business applications to IT departments and admionstrators through cloud based app stores. The reason for this frequent failure is quite simple: users don’t go shopping for business apps in the service provider‘s cloud store.

There are a two major reasons for this. Firstly, end-users are simply not aware of these cloud stores – they’re just not on their radar. Secondly, end users have no billing relationship with the service providers – there is no incentive for them to consolidate or bundle payments as they are unlikely to be the one paying the bill to the service provider in the first place.

There is some good news for the service providers, however. IT departments, SMB owners and admins do have a billing relationship with service providers because they buy other services from them, but presently they simply do not look to them to buy Apps from them.

There is a simple, yet compelling solution for this problem: turn business critical software into a smart storefront. Software vendors can place app purchasing at the heart of business critical software such as email, scheduling, file sharing and document management where users and not the IT adminstrators spend multiple hours each day at work. Users can choose to trial these applications and services and if they find these to aid productivity, they have the ability to directly purchase from inside an application they are already using.

These purchases can be made with a single click, with no need to enter credit card details, raise a PO with their finance department or any of the other inhibitors that can slow down business decisions.

One way that we like to explain this process is to use the example of the supermaket. Just as your supermarket provides you with essential goods such as milk, bread and fruit at a competitive price, by providing users with the key applications they need to get their work done through a single interface on all devices they are already at a one-stop-shop. While people are in the supermarket to pick up the basics, they often fill up their shopping cart with a lot of other high-margin products such as wine, sweets, toys and cosmetics also.

The same can work through in-application selling: while users take advantage of the application‘s basic functions, service providers can bring other products and services to users‘ attention, which they can try out and order with a single click.

To make this model work for service providers, the software itself needs to offer some core capabilities. For example, a web desktop with flexible open architecture for up-selling and cross-selling can provide a suitable platform, as well as extended customisable features that provide tight integration with existing infrastructure and billing systems. With this in place, the single click purchase experience becomes a possibility for users. This also gives service providers the freedom to promote branded and third party trials, as well as pay-per-use services.

For service providers, this is a challenging time. Desktops and mobile devices come pre-installed with proprietary and freemium schemes to pull customers away. Claiming larger slices of the mobile-app economy, over-the-top providers are creating walled gardens to lock people in. This doesn’t have to be the case, and if service providers can change their approach then they can begin to reclaim more of that pie.

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David Dungay

Editor - Comms Business Magazine
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