There's a very open secret in the world of web-based software: Things change. Fast. That means that anytime is a good time for a startup to jump in. Just be prepared to be nimble. Continuously.
The proliferation of smartphones and tablets has made it important for companies to empower their employees to be mobile. Meanwhile, in the office, things are also changing as more companies opt for "BYOD" (Bring Your Own Device) policies, see more employees working remotely, and move away from data centers to cloud-based software-as-a-service. And did we mention the rise of wearable devices, not to mention the "Internet of Things"? Put it all together and custom software companies have had a lot to be excited about, which is why the industry made Inc.'s 2014 list of the best industries for starting a business.
"Spend any time at a hackathon, and you'll run into teams working on connecting [wearable devices] to the web in new and interesting ways," says Jeffrey Hammond, a vice president and analyst at tech researcher Forrester. "It's an extension of the work already going on with mobile."
Burley Kawasaki, senior vice president of platform at Kony, Inc. agrees. "There's so much innovation happening around mobility in different areas," he says. "From wearables to cars to home automation to TV. And it's not just vendor hype. We have a number of customers who want us to support a broader array of devices."
Kony was founded in 2007, around the time mobile really took off in the U.S. The company develops tools that allow companies to make their own custom apps--differentiating itself from other vendors that work more like traditional agencies that lock up individual clients and work on their specific app. Kony is the second-fastest growing software company on the Inc. 5000 and sells its technology primarily to large global companies.
While Kony's clients tend to build their own custom apps using its technology, most companies, even large companies, don't build apps in-house. Forrester's Hammond estimates that fewer than 40 percent of enterprise companies have the talent on-staff needed to make functioning apps, let alone the design chops to make apps that are actually appealing.
That creates plenty of opportunity for new entrants, and also for veteran companies to pivot to where the action is. Illinois-based AmericanEagle.com (no relation to the clothier) has been developing software and, more recently, websites for its customers since 1978.
Company founder Tony Svanascini regards mobile app development as a logical extension of the custom software development his company has been doing since Day One. Svanascini's company now offers apps to clients both small and large. While AmericanEagle.com makes some customer-facing apps, Svanascini says he sees the most demand in intra-company tools that give employees quick on-the-go access to sales, inventory, and other data.
The emphasis on mobile technology even manifests itself in companies' names. Take SevenTablets, launched in 2012, which was founded by Kishore Khandavalli. His other company, iTech, is a more full-service IT firm, but he spun out SevenTablets as a separate venture because, he says, he needed a name that better signaled mobile readiness.
Opportunities and Obstacles
What makes this field ripe for would-be entrants is, simply, a lack of talent. That poses a challenge for would-be entrepreneurs, in that they have a wealth of opportunity to simply join an existing company, so the question is whether you can (and want to) harness your technical skills to your own startup or get a day job with an existing mobile-apps provider.
A related question is, should you launch your own business, whether you'll be able to find the talent you need to grow. On the plus side, Svanascini says colleges have upped their game of late, with recent graduates pretty well-versed in mobile development. Khandavalli, meanwhile, says he's been training iTech employees (there are more than 650 of them) in mobile and transferring them to SevenTablets once they prove ready.
Another challenge is to create a work environment in a B2B space that is as stimulating as consumer-facing companies (think Facebook and Google). Promising grads may not find the prospect of developing apps that help a given company solve a specific challenge as exciting as they do being part of the next tech or social media revolution.
And, of course, you'll need to find out just what your corporate customers want. The players in the industry offered some insights. Productivity, collaboration, and data management services probably represent the low-hanging fruit, Svandascini says.
Beyond that, you should think less in terms of developing standalone apps and more along the lines of continuously helping clients refine their mobile strategies. Khandavalli says that fewer than 30 percent of enterprise companies have fleshed out a mobile strategy, and often think of an app as just a modified version of their website. The truth, he says, is that an enterprise-level company with complex operations might need as many as 20 different mobile apps to meet the needs of different segments of its employee and customer bases.
The biggest challenge for startups, however, may be to figure out how to meet the market's needs today while somehow keeping one eye trained on the fast-changing tech landscape, which will certainly create entirely new opportunities tomorrow.