Tailored mobile data services for corporates have a key role to play, but is perceived market opportunity out of synch with actual investment reality? Tim Devine, Head of M-commerce at PA Consulting believes so.
To date, much of the attention on 3G services has focused on consumer applications such as wireless Walkman, video clips and real-time football results, and whether the anticipated take-up will be sufficient to underwrite the cost of the licences. Inevitably in time, these will become a major part of our increasing mobile personal lifestyles. However, these applications distract attention from a potentially more profitable area of service provision - that of the business world.
With this in mind, PA Consulting took the opportunity to gather the opinions of delegates at the recent 3GSM World Congress. It decided to carry out a brief on-the-hoof survey to establish the level of current and anticipated take-up of advanced business-specific mobile data services.
From the research, PA's conclusion is that the corporate market for tailored mobile data services is indeed perceived to be a key source of revenue for the telecoms industry in the future. However, the more surprising factor is that, at present, the industry does not seem to be adequately focused on this large and potentially profitable segment. Indeed, operators appear to have delayed their service investment - perhaps due to the inherent complexity of the systems infrastructure of corporates.
For these reasons, PA believes that this vital aspect of mobile communications should be higher up the industry's list of priorities.
The key findings of the survey
Survey respondents were a representative cross-section of the industry value chain present at the leading mobile annual congress in February this year. Eight per cent were operators or MVNOs, 13 per cent service/content providers, 27 per cent network or hardware vendors and 31 per cent software vendors. PA's team of researchers recorded responses directly on to a PDA, which were then relayed back to a central file for daily analysis.
The short questionnaire looked at which type of business users would prevail, the stage of service development, the drivers behind service take-up and which distribution channels to market through. PA defines mobile data business services as defined resources accessed from a mobile device that help an employee to carry out job-related tasks more effectively and efficiently than previously.
Business users are expected to dominate future revenue base
In response to the question: 'How much of your turnover do you expect to come from mobile data business services in the future?' over half the respondents (58 per cent) claim that they expected 'all', 'significant' or 'some' proportion of their future revenues to come from business mobile data services. This indicates that mobile data business services are underpinning significant numbers in many industry business plans. A surprisingly large number (38 per cent), however, indicate 'none' or do not know - see Table 1.
Segment mismatch
The survey also reveals, however, a potential issue of segment and solution mismatch. Around 56 per cent of the sample believe that the greatest percentage take-up of mobile services in the business segments will be in the corporate market, as opposed to the SME, SOHO and sole trader segments. This is much as might be expected, given the first question. But when the question was then asked: 'Which of these same segments will your company be developing solutions for?' the offerings in the pipeline were clearly focused on the SME (44 per cent) and SOHO (38 per cent) markets - see Tables 2 and 3.
This indicates a significant discrepancy between the expected take-up and available packages, as corporate applications account for less than 20 per cent of the available offerings. Perhaps what this is pointing to is that development of specific applications is only part of the answer when it comes to providing a service to corporates. From the work that PA has done with operators and pioneering clients, a key component is the ability to link into traditional functional systems and, using a messaging hub, supply data out to a mobile device such as a ruggedized PDA. This extension of the enterprise entails highly efficient integration with a multi-platform corporate IT architecture, while accommodating the complexities of business transaction and payment processes.
Lack of clear focus on vertical segment benefits perhaps points to 'muddied' thinking.
Respondents identified a range of vertical sectors to which they are planning to provide products or services. These range from 16 per cent transport; 12 per cent retail; five per cent manufacturing; seven per cent utilities; five per cent construction; one per cent health. Around 49 per cent indicate that they expect to develop and supply services to all of the sectors described. Clearly, the industry view is that no one single commercial sector appears to be intrinsically more receptive to mobile than any other - with the possible exception of transport. From PA's work in the past year, it sees very clear pointers and requirements coming from particular industry groupings - from companies that are actively seeking to lever the commercial advantages of GPRS and 3G in their day-to-day workings. So PA's opinion is that this 'broad-brush' approach to vertical segmentation masks a lack of real insight into industry-specific needs.
Service development curve
So if the industry believes there is a market, how advanced is it in actually developing mobile data business services? The survey indicates that 45 per cent are either at launch stage or are already running a full business mobile data service. A further 29 per cent are in development, 22 per cent are further behind and have not yet started.
This seems somewhat perplexing when measured against existing usage. Of all respondents, 45 per cent do not currently use any form of mobile business data services in their own companies, compared to 39 per cent who do. Again, PA's work in the industry leads it to question this remarkably high response, as it knows of very few companies worldwide that have actually launched and regularly use mobile services.
Package design and features are critical for customer attraction
Turning to the issue of the composition and features of enterprise packages, we were interested to find out what are perceived to be the most important factors driving the take-up of the mobile data business services. Tailored service packages are ranked the most important by 50 per cent, in comparison to financial or ease of use considerations. Attractive mobile data tariffs account for 43 per cent of responses, specialised mobile devices (34 per cent), and improved network performance (26 per cent). This points to a need to pay significant attention to the relevance and functionality of these integrated solution packages in their design and test stages. User research to understand the types of services required will be essential.
Service factors for customer retention
In assessing which service categories have the greatest appeal by market segment, respondents identified the inherent differences in the main segments. For the corporate segment, the value is perceived to lie in access to an organisation's intranet (25 per cent), back-office systems and servers (23 per cent), vertical applications, as well as messaging and personal information management (both at 18 per cent) - see Table 4.
The SME market, on the other hand, is more likely to value messaging and personal information management (27 per cent), intranet access (27 per cent) and vertical applications (16 per cent). Access to specific packaged applications (such as SAP) and travel and business information are rated relatively low by comparison, at around seven per cent - see Table 5.
Distribution channels
PA's final question looked at the most important channels to market in order to deliver offerings in the mobile business services market. Own sales teams (60 per cent) and traditional channel partners (52 per cent) predominate as the key routes to market, but an interesting third option is systems integrators (31 per cent).
This substantiates previous findings, in that there is an increasing recognition of the role of systems integrators to enable mobile access to, and delivery of, multiple layers of information within a corporate infrastructure. Retail outlets, indirect sales channels and direct to mobile are not seen at all as important channels.
How should we interpret these responses?
As indicated above, the key finding from this short survey is that tailored mobile data services certainly have a key role to play in generating significant revenues and to some extent, providing a 3G lifeline for vendors and operators. However, what it also points to is a fundamental mismatch between perceived market opportunity and actual service/product investment.
How can this discrepancy be explained? PA suspects that this mismatch is based on the complexity of the systems integration aspects of providing real-time management information from corporate silos to sophisticated users on the move. Obviously, the average corporate application is indeed more complex than a similar consumer service or transaction (from the multiple operating platforms, coding, access, etc) and therefore, requires a greater degree of coordination, security, data protection and fault-free delivery. Application development alone is not sufficient to ensure a successful or indeed profitable corporate service offering. But ultimately, it is these services that provide a high level of added-value. These are the services that companies will be prepared to pay for - some at premium pricing - and so are worth persevering with.
Success therefore, will require an ability to understand all aspects of the implementation - chiefly integration capability, but also thorough understanding of the core business processes in that particular sector. Transaction processes for a regional utility, for example, are not likely to be that similar to those of an integrated healthcare provider. For these reasons, PA believes that the role of systems integrators will become more significant in the industry value chain, in facilitating the critical linkages between airtime providers, data, terminals and service delivery.
Another key point is that targeted marketing and improved customer care were not thought to be that important in terms of customer attraction, which PA found surprising. Was this because these are not considered necessary or that customer care does not need to be improved? Again, PA's experience shows that the quality of the user experience will be critical, particularly for the demanding corporate user accustomed to fast backup systems and fault-free real-time data retrieval. As 3G networks are likely to be prone to congestion, particularly in the delivery of high-rate services in dense urban areas, delivery of consistently high quality streamlining and download will be important regardless of network behaviour.
Should these solutions be technology-led or business led? PA believes that the realisation of these services should be driven from business planning right through the design of the integration route map and interaction with the operator network, and on to managed rollout.
Looking forward to the future
Business mobile data is undoubtedly significant with far-reaching implications for the whole of the wireless industry. It affects 2.5 and 3G operators, key channel partners and device vendors; the latter also need to consider the particular handset design, keypad functionality and price attractiveness.
PA has been actively working with a number of clients to explore the potential business productivity improvements that can be developed for the B2B market, particularly in the utilities and healthcare sectors. One such demonstrator at the recent Congress illustrated a day in the relatively unglamorous life of a field engineer managing a variety of routine and non-routine tasks. It showed how, with the aid of specialist applications delivered to a ruggedized PDA, the engineer could save the company time and money through a time-efficient juggling of schedules, as well as improving interaction with the customer.
PA believes that in the future these kinds of services will be particularly interesting for sectors that operate with a sizeable mobile workforce, serve a geographically dispersed customer base, and where field force management is dependent on physical assets such as depots. B2B services will be of greatest relevance in industries such as utilities, healthcare and pharmaceutical, security and transport.
Table 1 How much of your turnover do you expect to come from mobile services in the future? (single answer)
Table 2 Thinking of the business market, which of the following segments do you think will have greatest percentage take-up of mobile services? (single answer)
Table 3 And for which of these same segments will your company be developing solutions?
Table 4 Which service category do you think has the greatest appeal in the corporate business market? (single answer)
Table 5 Which service category do you think has the greatest appeal to the SME market? (single answer)
