Research ResultsBy Gary Bolles | Posted 01-01-2002
Mobility 2002: Some Potholes Remain
Mobile applications have been "the next big thing" for several years now. The building of wireless networks, aggressive pricing of data services, and a rise in the use of handhelds and special-purpose e-mail devices have set the stage for large-scale rollouts. According to the 520 IT executives answering our latest survey, the use of mobile applications by both employees and customers has been on the rise, but the results are a mixed bag, suggesting that mobility isn't a near-term answer for every company.
The 57% of respondents with employee-focused offeringstypically dial-up e-mail access for Windows laptopsreported improvements in productivity and communication. About 76% said they were somewhat or highly satisfied with their mobile offerings for employees, but 60% found their mobility offerings only somewhat valuable, with ROI still not fully clear.
The 38% of CIOs whose companies provide or support mobile applications for their customers focus on e-mail, news and providing access to account information. But, like employee offerings, satisfaction with initiatives supporting mobile customers remains mixed. About 68% say their efforts are highly or somewhat valuable, but slightly more than half were in the latter category. Only one goal, more efficient logistics, was achieved by more than 50%, and a downturn in projected spending for 2002 shows concerns with such weak results.
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In some ways, the circus hasn't changed in 100 years: Elephants still lumber around the ring, trapeze artists fly overhead, and clowns tumble out of an impossibly small car.
In other ways, however, Ringling Bros. and Barnum & Bailey Circus is like any other modern business. When the last show of the day is over, crewmembers head back to their quarters, remove their makeup, plug in their laptops and check for e-mail. Business managers upload the day's ticket sales data and order more advertising if necessary, then download changes to contracts or travel plans from headquarters.
Supplying the connections can sometimes have Fred Wade, vice president and CIO of Feld Entertainment Inc., which owns the circus, feeling like the guy who rides the bicycle on the high wire. Dial-up is a clumsy solution for a business that travels 30,000 miles by train each year. Wade has pulled telephone cables into the campgrounds for dial-up, experimented with wireless and is planning to look into satellite hookupsbut so far nothing has satisfied him. "Unfortunately, a lot of vendors talk a good story," he says, "but there's a lot of marketing hype."
Wade adds that wireless technology in the U.S. "is about as good as a cell phonethe coverage isn't there yet. And the international side of the equation is a whole different world. They're on a different frequency." In the U.S., in fact, he shut down the wireless efforts for 2001 after his vendor went bankrupt. "We had 128k connectivity in 300 cities, supposedly. When it worked, you could get your e-mail and do videoconferencing and instant messaging all simultaneouslyjust like having an ISDN line. But when it didn't work ."
Early in 2002 he'll be testing a satellite hookup, with two-way transmission of data. "Instead of pulling landlines, I'd like to be like the military in Desert Storm: Put up a satellite connection, and run a wide-area network and local-area wireless."
Wade's experience reflects that of other executives we spoke with. "We would like to move to wireless, but half our sales guys spend a significant part of the day in rural areas, and the cellular service is sketchy," says Rick Pullen, IS manager at Centennial Foods, a wholesale food distribution company based in Calgary, Alberta. So, his firm's 50 sales people still rely on dial-up connections.
Even so, Pullen is among the 26 percent of our survey respondents who say their company has increased revenues by providing mobile technology to their employees. Centennial's salespeople borrow customer phone lines to dial up headquarters on their Windows laptops and enter orders, check inventories and review customer accounts.
"We are very pleased," Pullen says. "We sell more line items per invoice, and we have greater margins. The salespeople can see a customer's order history for the past 54 weeks, so they don't miss anything the customer might want. And they can see the margins on everything we offer, so they can offer higher-margin items to the customer. "
Other firms are finding success with wireless. Iain Gillott, founder of iGillott Research Inc. in Austin, Texas, a market strategy consultancy focused on the mobile and wireless industries, recently studied 35 Fortune 500 companies that experienced positive ROI on wireless programs. The most successful companies have kept their initiatives limited to one or two targeted applications, Gillott says, and they have leveraged applications and devices they already own.
"There has been a feeling that not many companies were doing anything with wireless, other than e-mail," Gillott says. "What we found is that there are a lot of people doing a lot of thingsthey're just not telling anyone about it. They consider it a competitive advantage."
E-mail is still the most common wireless application, says John Stehman, principal analyst at the Robert Frances Group Inc., an IT research firm based in Westport, Conn. What's being rolled out now, he says, are wireless field-service applicationsservice engineers getting their next trouble call via wireless, for exampleand sales-force automation applications. These projects are going forward even amid budget cutting, because they're not a big expense when compared with the resulting gains in productivity.
Stehman warns, however, that wireless isn't completely ready for anything that is time critical. "The wireless infrastructure we're using for data is no better than the one we're using for voice, and that one needs a lot of help." Some users, he says, have installed middleware to cover the gaps.
The biggest problem for technology executives, Stehman adds, is the confusion created by so-called "third generation" or 3G wireless services. "All the promises for faster speeds, better access, better coveragethey're promises, not fact. They will require significant infrastructure, significant investment, and they will be very hard to do." This next generation network is appearing in geographic pockets in the U.S. "Unless you're in those little areas, it doesn't do you much good," he says.
Still, the promise of wireless computing keeps most everyone interested. Five years from now, wireless devices will be like television sets today, Stehman says. You can take a TV set anywhere today and just plug it in. "That future device will have an intelligent radio card looking for all the signals out there and connect you to the strongest automatically, no matter which carrier owns it. You don't care who provides electric power today; that will happen for wireless in the future."
And some CIOs are thinking big. Lt. Michael Kozak, CIO and IT director of the Rochester (N.Y.) Police Department, plans a transformation in the way the department uses information to fight crime, starting with an initiative to equip some 300 officers on the road with wireless laptops. Instead of returning to headquarters to write up reports by hand, officers would prepare them electronically and file them from their squad cars.
The data from their reports will be analyzed to track crime statistics geographically, look for patterns, and forecast where and when future crimes might occur. Up-to-date data will be available in real time. "Let's say an officer has been off for two days," Kozak says. "He signs on and the computer recognizes he's been away, so it gives him an idea of what's been going on and flags safety issues."
Reflecting on what's coming in mobile computing, and particularly in wireless, Stehman of the Robert Frances Group says: "There will be some turmoil in 2002, but at the end of the day, it will get better."Terry A. Kirkpatrick
Conclusion 01: Employee Mobile Services
The most widely implemented mobile offering for employees is dial-up e-mail service for Windows laptops. But organizations are planning to branch out into new applications for their specific industries and to support remote wireless access for a variety of devices.
The most popular mobile application for employees by far is e-mail, with 97% providing mobile access. Applications accessing corporate databases and the corporate intranet come next, both at 70%. The least offered application is instant messaging, with only 40%.
More remote dial-up services for employees are offered for Windows laptops than any other platform, at 96%. In contrast, only 19% support Apple laptops. Palm OS and Windows CE handhelds are used by 22% and 19%, respectively. For remote wireless services, Internet-enabled mobile phones (phones that can access customer and other corporate data from remote servers), pagers and mobile e-mail devices are supported by 51%, 50% and 46%, respectively.
Future plans focus on customized industry-specific applications, at 46%. Except for e-mail, all other options, such as database and intranet access, range between 34% and 40% of respondents. CIOs also signaled strong intentions to support remote wireless offerings for Windows laptops (54%), mobile e-mail devices (53%) and Palm OS handhelds (51%).
Remote access from home is supported by three fourths of respondents. Larger companies pull this average up, with 82% supporting home access.
Conclusion 02: Benefits
There's news for those implementing mobility applications for employees: Results significantly exceeded expectations in areas such as employee productivity and improved communications. But quantifiable benefits such as increased revenues or reduced costs were tougher to find.
Hoped-for results for employee mobility offerings included increased employee productivity (69%), reduced costs (64%) and improved communications (60%). And companies were resoundingly successful with two of these: Productivity rose for 79%, and communications improved for 82%. But costs were reduced for only 40%.
About 54% of respondents hoped for a new business model or corporate strategy, but only 22% achieved it. Increased revenue was anticipated by 55%, but gained by only 26%. And increased speed to market was looked for by 45%, but reported by just 20%. Smaller companies assuming revenues would increase were disappointed. Fifty-nine percent had hoped for such a return, but only 22% realized it.
When it comes to assessing the value of their mobile offerings, IT execs are cautiously positive. Sixty percent say they're somewhat valuable, with ROI not yet fully proven. Add in those who chose "highly valuable, proven ROI," and the number jumps to 76%.
Organizations that don't offer mobile applications cite the major reason as unproven value and cost57% and 53%, respectivelythough complexity isn't much of an issue (10%).
Conclusion 03: Selection and Support
When it comes to decision-making about the selection, purchase and support of mobile devices, managers are clearly in the driver's seat. Only rarely do individual employees have much to say about the devices they use. Companies normally pick up the tab for monthly access fees.
Organizations are most likely to control the selection of Windows (91%), Apple (74%) and Unix laptops (83%). Pagers are also likely candidates for selection by the organization, at 81%. Users are most likely to choose their own Palm OS and Windows CE handheld devices44% and 41%, respectivelyas well as voice-only cell phones, 39% of the time.
Organizations are very likely to pay any monthly charges associated with mobile applications65% to 86% of the time, depending on the platform. They are even more likely to cover support costs, ranging from 75% for "other" computing handhelds, to 97% for Windows laptops.
Spending mobile initiatives is projected to remain relatively static. Seventy-two percent spent less than $500,000 on mobile offerings in the past 12 months, and 74% say they'll do the same in the next 12. Two thirds of smaller companies say they spent less than $100,000, while only one quarter of larger organizations spent that little.
Conclusion 04: Customer Mobile Services
Customer mobility offerings, used by 38% of respondents, are typically used to gain access to basic data, such as news or customer information. Windows laptops and handheld devices are popular, as are Internet-enabled mobile phones.
The most popular mobile customer service offerings were remote access to account or customer-specific information (69%) and mobile applications that meet industry-specific needs (42%). The least common are services to help customers shop while in stores, offered by only 11%, and pushing ads and/or product data to customers, at 17%.
When it comes to remote wireless access, 54% support Palm OS handhelds and Internet-enabled mobile phones, while 53% support Windows laptops. This support can range from designing Web sites that simply enable customers to quickly download information to developing software for a specific device. Larger companies were more likely than their smaller counterparts to support remote wireless services such as pagers (58% vs. 32%) and mobile e-mail devices (53% vs. 39%).
Conclusion 05: Customer Gains
Mobile offerings for customers are important to the companies we surveyed, with 65% reporting their efforts as somewhat or extremely important. Smaller and larger companies were similar in their attitudes. But expected gains from these services usually far outstripped actual results.
Companies have had somewhat high expectations for their customer mobility offerings, but expectations were not nearly as often realized, though some came close. Larger companies said they developed new business models or strategies 50% of the time, about what they'd anticipated. Fifty-eight percent of these companies reported goals for more efficient logistics; those goals were met at the same pace. But in several other areas, such as reducing customer acquisition costs and support costs, and increasing sales per customer, expectations and results were vastly different.
As a result, the jury's still out on the value of mobility offerings for customers. Only 17% said that their mobility services were highly valuable, with proven return on investment. Yet only 2% said their efforts had been a waste of time. Fully half of our respondents believe that ROI still isn't completely clear, with the remaining 30% saying their efforts weren't valuable yet, with ROI still hoped for.
Spending trends seem to map to these concerns. In the past year, 61% have spent at least $100,000 on their mobile offerings. That number falls to 40% for next year.
There's no question that mobile access is on the move, especially traditional offerings such as remote dial-up for Windows laptops. Mobility offerings are providing clear benefits in a few areas, such as improved communications and increased productivity for employees. But overall, the jury is still out for mobile applications, both for customers and employees. ROI is still assumed rather than demonstrated, and in some customer-focused areas, investment next year may actually be reduced. Organizations can still receive value from these offerings, but CIOs looking to experiment with such services should closely track return on investment, carefully manage expectations and keep spending tightly controlled.
How the survey was done: CIO Insight designed the mobility survey in partnership with Survey.com, a San Jose, Calif.-based supplier of custom online research services. CIOs, chief technology officers, and vice presidents of information technology and services from a number of sources, including third-party lists and other Ziff Davis Media publications, were invited to participate in the study by e-mail. The survey was then posted on a password-protected site, and 520 people responded between Nov. 8 and Nov. 13, 2001.