The economics of developing apps has radically changed

The economics of developing apps has radically changed

Historically and still for many businesses, the economics of bespoke enterprise application development has been a story of scarcity. Because such apps are difficult, expensive, and time-consuming to produce, companies treat them as rare, precious resources.


These economics have impacted how enterprises plan and budget for bespoke development, as well as how they make build versus buy decisions. Clearly, if build is slow, expensive and difficult, the pendulum will swing to buy, even though the history of commercial enterprise apps is also fraught with expensive failures and time-consuming options.


Now, however, the economics of building custom applications have changed. Today, because of enterprise low-code platforms, bespoke development follows an economics of abundance.

Applications are not simply faster and easier to build with a enterprise low-code platform like OutSystems when compared to traditional, hand-coded bespoke development.


Because the economics have changed, enterprises must now re-evaluate the role app development plays in their organisations—not just tactically, but also strategically, as they seek to use software for the sustainable competitive advantage that is the long-term goal of digital transformation.



Time for a mind shift

With OutSystems enterprise low-code platform and a specialist like Experieco, organisations can build a much larger number of apps per year at a fraction of the cost compared to traditional development. The question then is: why? Why would an enterprise want to build so many apps?

The answer depends on the nature of the apps an organisation is likely to build. In fact, enterprise low-code impacts the balance between tactical and strategic applications.

When apps are expensive and time-consuming to build, then the focus should be on building the most strategic ones. When an organisation realises what can be achieved with enterprise low-code, in contrast, it’s now cost-effective to build a wide range of different types of apps, from the more strategic, mission-critical ones to the important but more tactical ones.

A tactical application focuses on delivering short-term value in the context of the day-to-day operations of the business. It removes the cobbled together unsupported skunk work initiatives, over-reliance on spreadsheets, email and manual processes. Many financial, human resources, and general-purpose data processing apps qualify as tactical. Internal, ‘business-to-employee’ (B2E) apps are generally tactical.

Tactical apps have rarely been the focus of bespoke development, as it has never made sense for enterprises to invest the time and money required. As a result, companies have long settled for COTS alternatives, even though they may not always be a good fit.

In contrast, strategic apps deliver on the competitive priorities of the organisation. Apps that increase market share, for example, are likely to be strategic. If an application drives revenue and also provides a competitive differentiator to the business, it’s likely to be strategic to the organisation. It’s no surprise, therefore, that customer-facing apps are likely to be more strategic than B2E ones.

As enterprises use enterprise low-code development, they typically find that it’s now cost-effective to build more tactical apps than before. However, the big win—for low-code app development as well as bespoke development generally—are the strategic apps.

Historically, strategic apps have always been a challenge for IT generally, as so much of the IT dollar has gone toward “keeping the lights on” and other tactical expenditures.

Today, with the rise of enterprise low-code (as well as DevOps), app dev can finally become a strategic enabler for the organisation at large. Just one problem: if you can build such apps, so can your competition.


Understanding the Digital Application Battlefield

As long as all the competitors in a particular market segment build their apps the old-fashioned way, then everyone is saddled with slow, expensive bespoke development, leading to an even playing field.

In the past, simply building a better app was the ticket to long-term strategic advantage. The classic example of this type of app is SABRE: American Airlines’ mainframe-based reservation system that dominated its industry for decades.

SABRE, however, represents the economics of scarcity. Today, the battle isn’t about who can build a better strategic application. Instead, the battle is over who can build better strategic apps faster.

Once one participant figures out how to accelerate their strategic app development, they will quickly gain a competitive advantage. That is, until the competition catches up. To remain the leader, then, the company will need to continually update its apps or roll out new ones to stay ahead.

Furthermore, the time frame of this competitive cycle is growing ever shorter. No longer can an enterprise roll out a SABRE-like app and hope to maintain its advantage for decades, or even years. Instead, competitive advantage is measured in months or even weeks in some industries.


Contact Experieco to find out how OutSystems can help transform your business. Email info@experieco.com or call +64 9 376 9547

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