More Than Just Fun and Games, Apps Drive U.S. Economic Growth

M. Eric Johnson is a professor at the Tuck School of Business at Dartmouth College. He directs Tuck's Center for Digital Strategies

Digital applications or "apps"—those little bits of software that turn your mobile phone or tablet into a must-have device—are poised for another growth explosion. The first round of app activity was all about the consumer. This was the case for the 25 billion app downloads that Apple trumpeted this week. If you include the bustling Android Market, there are one million (mostly) consumer apps out there—everything from games to restaurant reviews—which has created quite a vibrant app economy. Besides fueling the growth of exciting IPOs like Zynga, Facebook, and Yelp, apps and the ecosystem they support have also created jobs. TechNet analyst Michael Mandel estimates that the app economy represents over 450,000 jobs in the United States—all created since 2007 when Apple introduced the iPhone.

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Now a second wave of apps is building—this time for businesses. You won't find these apps on the most-downloaded lists. In fact, you won't find many of them in either the Android Market or the Apple Store.

At a Chief Information Officer Roundtable that the Tuck Center for Digital Strategies hosted this month, we examined apps from a wide range of companies including Brown-Forman, IBM, and Eastman Chemical. Some, like the Chef Ref app from food-service provider Sysco, are widely available in the Apple Store. Chef Ref contains thousands of recipes from chefs across the nation, and while it's targeted at restaurant operators, consumers can also tap into these culinary ideas by simply downloading it for free. Others, like Eaton Corp's PowerSource app, are strictly for business and available exclusively for employees and trade partners. Far more than a catalog, PowerSource bundles information on 200,000 hydraulic products into an iPad app that allows users to see complete specifications and even 3D models. From helping factory workers improve safety to tracking large-scale projects, these business apps focus tightly on specific tasks where mobility adds significant value.

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Beyond entertaining us in airports, these business apps will drive productivity gains within the U.S. economy and transform the enterprise software industry. Already, enterprise software players like Salesforce and SAP are feverishly working to unlock treasure troves of corporate data and facilitate the collaboration we have come to love in Facebook.

Roundtable participant Dion Hinchcliffe of the Dachis Group forecasts that within two years many firms will have hundreds of internal apps and thousands designed for external users. If that materializes, the Global 1000 alone will create another million apps. Let's hear it for round two!

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