Extending applications to support mobile employees will consume considerable resources
during the next few years. Given the extensive vendor hype surrounding mobile
(particularly wireless) applications and technology immaturity, IT organizations must
establish business value, control project risk, and ensure acceptable return on
investment. Global 2000 IT organizations must prioritize projects based on an
overall portfolio management approach to maximize overall spending.
Currently, 15%-20% of organizations have
some mobile projects underway. We expect this number to rise to 65% by 2005. During
2003/04, we believe pressure from business users will drive IT organizations to
migrate these applications to wireless connectivity – with a concomitant increase in
cost and complexity. Initially, applications will focus on high-transaction-value
business-to-employee (B2E) activities, migrating to business-to-business (B2B) in 2003
and to business-to-consumer (B2C) in 2004, as the cost of deployment lessens.
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Technical constraints to mobile application
development include slow networks, lack of coverage, immature devices, and a confusing
and largely undifferentiated market for mobile application servers. Software tools and
mobile application servers from top-tier Web application vendors will likely catch up to niche vendor offerings
in 2002/03, providing simpler and more seamless integration of mobile devices to
existing applications, and at lower overall cost. By 2005/06, we expect enterprise
application vendors (e.g., SAP, PeopleSoft, Oracle) to have fully mature mobile
options, which will limit the market for small mobile middleware vendors. Through
2003/04, given the technology risk and rapid rate of technological change, IT
organizations will need to look for rapid ROI from mobile investments (i.e., over
IT groups should segment mobile application
investments into five key categories:
- Core/Operational Expenses:
“Keeping the lights on.” Few mobile applications are truly a core expense except for
those in industries such as services, logistics, and delivery, where highly mobile
personnel must stay connected in real time or near real time. However, some
investments in mobile applications that replace existing business-critical systems
could be considered core (e.g., e-mail for mobile professionals). Replacing custom or
specialized wireless devices with off-the-shelf, rugged products during normal
replacement cycles should be considered a core expense. Key metrics for
core/operational expenses are cost savings over more traditional technology and a
better strategic fit with future plans.
- Non-Discretionary Enhancements:
Supporting organic growth. A non-discretionary project focuses on enhancing
core “run the business” processes and productivity. Mobile projects that replace paper
forms improve information accuracy, reduce latency, and eliminate duplicate processes
(e.g., customer site insurance applications). Metrics for non-discretionary
enhancements include an increased number of tasks completed per day (more
sales/service calls per day); reduced information latency (i.e., information gets into
the system immediately versus not being available for days); reduced inventory (better
real-time sales and delivery information); increased accuracy (e.g., elimination of
double-entry keying); and reduced age of accounts receivable (e.g., faster billing
information). E-mail access could be considered a non-discretionary enhancement in
certain industries (e.g., mobile sales/field force), though for most organizations it
is a discretionary investment.
Supporting basic business growth. Beyond the expenses for basic “keep the lights on”
functions, businesses must also invest in enhancements that facilitate business
growth. Mobile applications that provide enhancement of customer self-service,
line-busting (e.g., roaming check-in at airports), telemetry for remote diagnostics,
and real-time dispatch of jobs could be considered discretionary enhancements. Metrics
for ROI in this category might include the displacement of people (e.g., fewer call
center customer service representatives), an increase in productivity, faster response
to customer requests, elimination of duplicate process, greater customer loyalty, and
a merger of job tasks. In some cases, these expenditures might be driven as a
competitive response to market pressure. Mobile business intelligence applications to
support field-oriented management typically fall into the discretionary category.
Potential payback due to expense savings should occur over 12-18 months.
- Growth: Supporting
competitive differentiation to deepen market penetration. Growth/investment and
venture projects typically have longer term payoff (three to five years). Typical
metrics for investment-type projects include customer acquisition and increased
customer wallet share (the share of a customer’s business within the market) as well
as increased customer intimacy, switching costs, and market share. Payback for
investment spending is often through revenue or market share versus cost savings, and
should take place within 18-36 months. These projects typically involve customers in
either a B2B or a B2C environment.
- Venture: Supporting major
innovation to broaden reach into new markets. Implementations of telematics in the
automotive industry (i.e., wireless services, often location-based, delivered to
vehicles to provide improved comfort, safety, productivity, or mobility) have the
potential for significant revenue (by 2005/06). Wireless identification systems
already in use in some gasoline stations are also examples of venture applications
(e.g., Mobile/Exxon SpeedPass radio frequency identification tags). These types
of investments are aimed at expanding revenue opportunities beyond their traditional
markets. Pioneers in these wireless technologies have the potential for significant
rewards, but only if they control the risk inherent in exploration. Venture projects
must constrain risk by implementing disciplined project management and by testing
extensively and at regular intervals. Metrics for venture ROI include market share in
new markets, incremental revenue, improved customer attainment/loyalty, and reduced
customer churn. ROI will generally be measured over three or more years. Companies
must view such projects as ventures that are similar to a new company startup and
should manage these efforts according to a business plan established upfront. Many of
these programs are started as pilots with a select group of users (e.g., regional,
specific business unit, top 10% of customers), with the programs then being expanded
once the bugs are out and the business or market plan is fine-tuned.
After segmenting wireless projects
(including proposed projects) into the above categories, IT organizations must adjust
the overall portfolio to fit the business strategy. For example, a struggling company
in a poor economy may choose to severely limit or eliminate all but core and
non-discretionary projects. On the other hand, a company in a fast-growing industry
must have some growth/investment and venture projects, regardless of economic
conditions, if it is to meet future growth targets.
Business Impact: Organizations must adapt
project portfolios to business strategy and fund discretionary, investment/growth, and
venture projects based on growth expectation.
Bottom Line: Most Global 2000 companies
should focus on core and non-discretionary mobile projects with rapid payback (over
12-18 months). Venture and growth/investment projects (if any) should be viewed and
managed as part of a strategic effort to target company growth.