For all the hullabaloo over new business models and dotcom startups, the benefits of the fixed-line Internet have accrued mostly to existing firms that reinvented themselves around it, rather than new firms that started from scratch. By adopting e-mail, intranets, extranets, customer-relationship management (CRM) and enterprise-resource planning (ERP) systems, large firms have made huge investments in Internet technology. It is now a relatively simple step, say proponents of the mobile Internet, to extend all of these systems to mobile devices, so that employees can access the information they need from anywhere.
Mobile devices, says Martin Dunsby of Deloitte Consulting, enable workers on the front line to get at data in the back office. “The value is not from cutting the cable,” he says, “it’s from the process change that’s enabled by the technology.” He gives the example of time-and-expense tracking, in which consultants enter the amount of time spent working on a particular project into a handheld device. This may not be any quicker for them than filling in a paper timesheet, but it means that the data can be sent back to head office straight away and an invoice issued, rather than the information being keyed into the accounting system at head office several days later. Similarly, when visiting a client, a salesman can use a wireless handheld device to call up the latest inventory levels, technical support histories and so on.
It may sound mundane, but given the sorts of corporate information systems that many firms, particularly in America, have already implemented, it is a logical next step. This means, says Mr Dunsby, that in the next three years most of the action on the mobile Internet will be in the corporate market. Adoption will be fastest in America: a survey by Zona Research found that 66% of American firms are planning to deploy mobile Internet technology within the next three years, if they have not done so already.
Business use of the mobile Internet also escapes the chicken-and-egg problem of aligning services with available hardware: a firm that wants to provide its workforce with wireless access can specify the entire system from top to bottom, from handsets to software to network provider. Existing technology, in the form of 2.5G and Wi-Fi networks, is already good enough to make this possible today: there is no need to wait for 3G. And there is a growing range of handheld computers, Internet-capable phones and intermediate devices to choose from.
The Wireless Workforce
At present, adoption of mobile Internet technology makes more sense in some industries than others. Not surprisingly, it holds particular appeal for firms with mobile workforces. The early adopters, says Joan Herbig of XcelleNet, a firm that provides remote management software for corporate handheld devices, are the same users that first adopted laptops in the 1990s: sales forces in financial services, health care and pharmaceuticals, field workers for utilities and so on.
Surely most mobile workers already have laptops? Yes, but wireless handheld devices have a number of advantages. Laptops have complicated operating system software, plus a whole lot of additional software loaded on top, whereas handheld computers or phones are much simpler machines, with almost nothing to go wrong. This means that support costs are lower by a factor of at least five. When Goldman Sachs employees were given BlackBerry e-mail pagers developed by Research in Motion, a Canadian wireless firm, their use of laptops fell by 45%. A fifth of BlackBerry users stopped using their laptops altogether.
The BlackBerry looks like a glorified pager. It has a small keyboard and an always-on wireless data connection, and allows users to send and receive e-mail on the move as though they were sitting in front of their desktop PCs. It is the first of a new breed of devices taking up the space between handheld computers and mobile phones. Its proponents claim that it makes employees more responsive, because they can reply to messages at any time. It can also make them more productive, because they can catch up with their e-mail on the move rather than back at the office; a BlackBerry, unlike a laptop, can be used in a taxi. According to figures from Boston Consulting, the BlackBerry costs $900 per user per year. For an employee earning $100,000 a year, the system pays for itself even if it saves only five minutes a day.
In addition to savings in support costs and improvements in productivity, handhelds have other advantages over laptops, says Richard Owen of AvantGo, a firm whose software links handhelds to corporate information systems. Handhelds are less obtrusive (salespeople, he says, hate having to boot up laptops in front of customers), and “you look like you’re on top of things”. Using a laptop simply to fill in on-screen forms and gather data is overkill, so salespeople are often reluctant to use laptops to collect data in the field, says Mr Owen. One of AvantGo’s clients, Alcatel, a telecoms-equipment maker, reported a fivefold increase in the amount of data sent back from the field by sales representatives after introducing handhelds.
But mobile Internet technology may also hold attractions for firms without large roving workforces. Research carried out on behalf of BT Cellnet, a British mobile operator, found that employees spend an average of two hours a day away from their desks, and return to a backlog of e-mail that takes 45 minutes to deal with. “Once upon a time, people sat in an office from nine to five, and that was the boundary of their world,” says Chris Matthiasson of BT Cellnet. “Now everyone in an organisation is a mobile worker.” He cites trends such as the growth of flexible and off-site working, teleworking, longer commuting times, and the fact that large companies tend to be geographically spread, which requires employees to travel more than they used to. Mobile devices, he suggests, allow the best use to be made of travelling time, and of time between meetings. Wireless technology, he implies, can offer an immediate productivity gain, no matter what business you are in.
Going wireless need not be a huge investment. Most firms already have e-mail systems in place, and numerous wireless-technology firms have popped up to help firms extend these to wireless devices with the minimum of fuss. The BlackBerry system, for example, can be set up in a few hours; it simply involves installing an extra box that establishes a secure link between the wireless operator’s systems and the client company’s e-mail server. The wireless services of Seven, a Silicon Valley wireless startup, do not require firms to install any new hardware at all. Instead, Seven’s software resides in the network operator’s systems; it queries the client firm’s systems across the Internet, then reformats the resulting data to make them suitable for display on a phone.
Suck It and See
Firms that wish to go wireless, therefore, need not buy fancy new equipment, but can simply pay a network operator to provide wireless access as a subscription service. Seven’s corporate e-mail system, for example, is typically resold by network operators for £3 ($4.40) per user per month; other applications cost extra. There are, of course, transport charges on top, and employees must have suitable handsets. But since wireless access is a service, not a product, it is relatively easy for firms to try it out. Tim Dunne of Nextel, a business-oriented American wireless operator, says most firms start off by using Nextel’s 2.5G network to access e-mail using WAP phones, and then move on to wireless-enabling their other e-business applications. Nextel recently introduced a Motorola handset capable of running small pieces, or “applets”, of software written in Java. This makes far more complex applications possible, because it allows firms to write their own software to run on the handset if they choose.
Foot in the Door
So the technology is available, but the wireless industry still has work to do in convincing firms to adopt it. “Wireless people get obsessed with networks, carriers and so on, which is like airlines thinking about planes, not passengers,” says Mr Owen. “The industry has been very poor at explaining why any of this is worth doing, rather than just being interesting technology.” The BlackBerry has succeeded, says Mr Owen, because it is easy to explain what it does, and why it is useful. To get a foot in the door, he jokes, the mobile Internet needs a clever-sounding theory to justify it, such as “total cost of ownership” (which encouraged firms to centralise their computing systems) or “just-in-time ordering” (which encouraged them to adopt fancy inventory-management systems.
At the same time, there is the danger of overhyping the technology, as happened with WAP. “People have to understand that wireless applications are not web applications. It’s completely different,” says Bill Nguyen of Seven. Call up your e-mail on a PC, he explains, and you can list dozens of messages at once, sort them and manipulate them in various ways. Not so on a handset. This means, says Denise Leahy of OracleMobile, that the software that pipes information to the handset needs to be smarter: to figure out which e-mails are important, perhaps given the time of day, the user’s calendar, and even the user’s location. On the way to a meeting that is suddenly cancelled, for example, a user will probably want to e-mail the other people who were due to attend; so when a new mail is created, their names can appear at the top of the address-book list.
Although the mobile Internet is currently being sold as a means of improving productivity and reducing support costs, the widespread deployment of wireless technology is likely to have far more wide-ranging effects. According to Joe Manget of Boston Consulting, the use of wireless will go through three distinct stages. The first, which is currently under way, involves extending existing systems and processes to mobile devices to achieve productivity gains. For example, Nissan, a Japanese car maker, found that giving its salesmen wireless access to up-to-the-minute inventory and pricing information reduced the average number of visits required to close a sale from five to three and allowed a 40% cut in back-office staff. McKesson HBOC, America’s largest drug wholesaler, has introduced wireless devices to track inventory and shipments. The company spent $52m on 1,300 handheld computers and on equipping its distribution centres with wireless-network coverage. Warehouse workers use the technology to monitor inventory, and to record and check the contents of each shipment, thus eliminating the need to count inventory by hand and reducing errors. McKesson has already saved more than the cost of installation, having achieved an 8% productivity gain and an 80% fall in the number of incorrect shipments.
The next stage, says Mr Manget, will involve the transformation of existing business models using wireless technology. At Svenska Cellulosa Aktiebolaget, a Swedish pulp and paper company, foremen use a wireless system to send instructions to loggers in the field, specifying which trees to cut and in what order. This enables the company to co-ordinate harvesting decisions with inventory and transport requirements and match those decisions to market needs. But the transformation of business processes is not without risks; the mobile Internet, like the fixed-line Internet before it, is likely to disrupt existing power structures and decision-making processes within organisations, as frontline workers gain access to corporate information they never had before. In the final stage, entirely new business models will emerge that would not have been possible without wireless.
One development Mr Manget notes with particular interest is the rise of machine-to-machine, or “M2M”, communications. In Japan, for example, NTT DoCoMo has got together with vending-machine manufacturers and soft-drink companies to equip vending machines with wireless capability. The new machines not only accept payments from wireless devices but also use wireless technology to transmit information on inventory levels and maintenance problems. Drinks companies use the data captured to improve distribution and product selection, and to reduce the number of out-of-stock items, which has increased profits per machine by as much as 70%.
Let Machine Talk to Machine
Similarly, Toshiba is using wireless technology for remote monitoring of photocopiers, so that technicians can be dispatched as soon as there are signs of a problem. This reduces servicing costs and, since machines are out of action less often, increases usage and revenues. Caterpillar, a construction-machinery maker, is also using wireless technology to ensure that its machines are kept running smoothly; this has reduced downtime by 66%, and has resulted in a 60% reduction in maintenance costs, since worn parts can be replaced before they fail and cause damage to other components. In the long term, this approach may well be extended to all kinds of machines, including cars and household appliances; on the mobile Internet, machines might eventually outnumber people.
Such futuristic visions aside, the mobile Internet clearly has much to offer companies here and now. Corporate enthusiasm for the technology may even kick-start interest in new services in the consumer market, says Mr Nguyen; after all, employees are consumers too. Give an employee a PC, and he is connected to the Internet when he is at his desk; but give him a mobile device, and he is connected anywhere, any time. One of the mobile Internet’s knock-on effects could be that the distinction between work and leisure will become increasingly blurred.
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