Following the death of consumer 3G hype, the focus has shifted to mobile enterprise solutions. But while the revenue benefits of providing stockbrokers with mobile market data are compelling, return on investment is usually far harder to measure – and in the current climate, enterprises won’t invest unless they can see ROI. Tim Gower looks at how vendors can turn the potential into reality…
Many in the technology industry believe that mobile enterprise solutions will be the Next Big Thing, despite the poor uptake of consumer mobile data services in Europe and the US. For example, Meta Group believes 40-65% of companies will make their critical applications available wirelessly within the next three to four years.
But Datamonitor believes that more like 20% of medium and large Western European enterprises with more than 250 employees will have deployed mobile middleware by 2006. In the US, the figure will be around 22%.
It would be wise to treat the ambitious forecasts of growth in mobile enterprise solutions with caution. Basing a business plan on strong growth in the short-term could lead to particular trouble: the mobile enterprise solutions market looks set to remain relatively stagnant for the next year in the core markets of North America and Western Europe.
Interested, but not that interested
Thanks to the macroeconomic situation, a continued focus on eBusiness solutions and a general ‘wait and see’ attitude, mobile middleware spending is currently a low priority among enterprises.
That isn’t to say that companies are uninterested in mobile solutions – but it will take time for them to convert trials to full-scale deployments (especially as mobile applications have been renowned for the length of their trial periods in comparison to other IT applications).
Due to the optimism in the industry, several companies (old, established and new) have been developing mobile business offerings. Not all of them can succeed. So how can vendors stay ahead in a market that will not experience significant growth until 2003?
Find your niche…
Although the mobile middleware market is nascent, the opportunities vary clearly by geography. In the short term, focusing on the North American market will prove the most lucrative option. Despite trailing Western Europe in carrier-grade mobile technology, the US has taken a first-mover advantage in mobile middleware market share.
Uptake also varies strongly by sector; at present, financial services and manufacturing firms are the biggest users. Financial services institutions – especially investment banks – spent almost $80 million last year, on applications such as real-time equity information for traders on the floor.
Manufacturers use mobile solutions to improve their supply chain management, while professional services companies spend on applications such as mobile email and PIM in this sector. While other industries are also interested in mobile enterprise solutions, they have not moved far beyond the trial stage. Healthcare companies and utilities have not yet converted trials into full deployments.
The applications of mobile middleware differ wildly from sector to sector; it will be important for vendors to customize their technology sufficiently. Indeed, there should even be scope for firms to build their strength in a particular vertical niche.
…and then comes the hard part
Selling to any company, in any sector, is harder in the current business environment than during the boom times. Managers now base their IT investment decisions on the financial criteria of profits, costs and return on investment (ROI), and mobile solutions will be no different. Indeed, given that mobile technology is rarely mission-critical, it will be absolutely vital for vendors to focus on financial returns.
But how can you demonstrate returns to a potential customer? There are various important ways to overcome enterprises’ inhibitors. Demonstrating understanding of their specific business needs is obviously vital; this means using knowledge of vertical sectors to show – quantifiably – where mobile solutions can be profitably deployed.
At the same time, vendors are being compelled to extend their competencies beyond mobile middleware, to encompass applications and application management services. There is little point from an enterprise’s perspective in buying expensive high-end mobile technology from a supplier that cannot come up with anything to use it for.
The applications that most justify investment are likely to be those that fit with existing eBusiness systems. Mobile is basically another channel for eBusiness – so vendors that can bundle mobile with fixed eBusiness implementations will be at an advantage.
Application developers, operators, systems integrators and leading technology vendors are all targeting enterprises with mobile solutions. Players from different backgrounds have different core strengths, so from the customers’ perspective, there is a temptation to mix and match best-of-breed solutions. It will become increasingly hard for mobile middleware vendors to ‘own the customer’.
As a result, if vendors want to succeed, they have two options available. They can either develop partnerships with vendors that have different core strengths, to improve their competitive position – or they can merge with their rivals. Consolidation will be a major feature of the competitive landscape for some time.
After the trials, the rewards
It will be a tough haul to start with, but by 2006 the global market for mobile middleware should be worth $2.3 billion. The fastest growth will occur from the end of 2002 into 2003; by the end of next year, many enterprises will have moved from interest to full-scale deployments.
North America will remain the largest market: the US’ advantage in eBusiness implementation will drive investment in mobile solutions. In Europe, the UK, Germany and Scandinavia will stay at the forefront – but the long-term opportunities may be better in currently less advanced countries, such as France.
Despite its headstart in consumer mobile Internet solutions, Asia-Pacific will remain behind, amounting to just 13% of the market by 2006. The problem is that while consumer mobile Internet penetration rates are high, many enterprises have yet to implement effective fixed-wire data systems – never mind integrating them with the mobile channel.