Bloomberg News

The New Sexy (at Least to VCs): Mobile Business Apps

May 14, 2013

Mobile Business Apps

An attendee of Macworld/iWorld looks at some apps that allow users to create graphs and organize schedules. Photographer: Kimihiro Hoshino/AFP via Getty Images

Talk about low tech.

A year ago, employees at computer giant Hewlett-Packard Co. used to stuff 100-page contracts into FedEx envelopes and mail out thousands of them to customers, distributors and suppliers all over the world -- daily. The recipients would then rewrite a few lines and mail the documents back, kicking off weeks of back-and-forth negotiations and signatures, as well as enough paper to fill a recycling bin.

Today, all that shuttling of paperwork has been replaced by an app from startup DocuSign Inc., which allows people to digitally send, receive and sign documents on a phone, tablet or PC.

"Documents that used to take five to six weeks now take a couple of days," said John Hinshaw, executive vice president of technology and operations at HP. "We get revenue sooner. It speeds up the entire supply chain. It's probably the best ROI of any software buy we've done."

Yeah, we know. Business apps aren't sexy.

It's hard to compare them with the mass appeal of an Angry Birds or Pandora. But the app world is seeing a shift toward helping companies save time and money by creating tools for smartphones and tablets that make it easier to do things like sign contracts, track expenses and even rent construction equipment.

And that is making the otherwise dull world of enterprise software -- dare we say -- hot.

"Enterprise apps today are where the consumer apps were three-four years ago," said Rajeev Chand, managing director and head of research at Rutberg & Co. LLC, an investment bank.

  • Special Report: The Mobile Workforce

The number of business apps available is surging, along with the number of startups producing them. In the first quarter of this year, some 31 enterprise-app companies received venture-capital funding, up 63 percent from 19 in the year-ago quarter, according to Rutberg. The number of consumer-app-focused startups that received funding was still greater -- 96 -- but rose only 25 percent year over year.

Investors are increasingly enamored with enterprise apps for a simple reason: paying customers. As is often the case, the consumer market may have more users, but the business customers have more money.

"It's more predictable," said Matt Murphy, a general partner at Kleiner Perkins Caufield & Byers, which led a $47.5 million funding round in DocuSign last year. "The thing with consumer companies is you have these outliers with no defined revenue model like Instagram. With enterprise, you are scaling revenues -- and users."

The new business apps are also displacing many services, such as FedEx, that companies were paying for. At least one enterprise-app maker has found that its users prefer to be charged a fee instead of getting the software for free.

"Our enterprise customers don't appreciate a free product because they worry about service," said Lawrence Coburn, chief executive officer of DoubleDutch, which sells a mobile app that helps companies run events.

The startup charges companies $8 per attendee, or a minimum of $5,000, to let tradeshow goers view speaker schedules, fill out surveys and check in on social networks. DoubleDutch's revenues are growing by as much as 40 percent a quarter, Coburn said. The company counts Cisco Systems Inc., SAP AG and Lowe's Cos. Inc. among its customers.

Demand for third-party enterprise apps is also increasing because it saves companies the thousands of dollars it costs to build their own, said Phillip Redman, vice president of mobile and client computing at researcher Gartner Inc. Businesses can now direct their employees to Apple's App Store or Google Play to download ready-made programs such as Expensify and HT Professional Recorder for free or a small fee.

If the one-size-fits-all app doesn't suit a company's needs, Kony Solutions Inc. sells customizable versions. The startup provides up to 200 apps a year that can modified for managing sales contacts, employees and assets. Kony's revenue rose 600 percent in the past two years, said the company's chief executive officer, Raj Koneru.

The emergence of business apps coincides with the growing population of workers carrying smartphones. Nearly 80 percent of white-collar employees already use a mobile device for business purposes, according to a Cisco survey.

So if you're not already using a business app, get ready, especially if your job involves being outside the office. That includes salespeople, real estate agents, and even general contractors.

This month, a startup called Getable plans to offer a mobile app for renting equipment. Designed for construction crews with budgets of at least $50 million, the app collects multiple quotes, shows reviews and tracks vendors' response time.

"It gets them this equipment in a fraction of the time," said Tim Hyer, Getable's chief executive officer. "An hour saved can mean thousands of dollars" if construction workers don't have to wait around for that piece of equipment.

Thanks to apps, there goes the long coffee break.

To contact the reporter on this story: Olga Kharif at okharif@bloomberg.net


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