Mobile Business (M-Business):The Race to Mobility

Professor Jason C.H. ChenSchool of Business Administration

Gonzaga UniversitySpokane, WA 99258

chen@jepson.gonzaga.edu

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i For Accountingv Information systems capture, organize,

analyze, and disseminate data and information throughout modern organizations

i For Financev Information systems turn financial world on

speed, volume, and accuracy of information flow

What’s in IT for Me?

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What’s in IT for Me? (continued …)

i For Marketingv The Internet and the World Wide Web have

opened an entirely new channel for marketing and provided much closer contact between the consumer and the supplier (CRM)

i For Production/Operations Managementv Every process in a product or service’s value

chain can be enhanced by the proper use of computer-based information systems

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What’s in IT for Me?

i For Human Resource Managementv Employees can handle much of their personal

business themselves, and the Internet makes a tremendous amount of information available to the job seeker

i For Management Information Systems (MIS)v The opportunities for those planning a career in MIS

grows as fast as the adoption of information technologies into organizations everywhere

MIS is an integral part of business operations, whereas, the database is the core component to improve and/or enhance the business operations.

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THE E-COMMERCE TIMELINE

i 1999v E-commerce on the Internet increases. Business- to-consumer

commerce reaches beyond early adopters. Business-to-business e-commerce achieves substantial volumes in certain companies.

i 2000v Initial signs of the explosion of business-to consumer e-commerce, to

continue the following two years.

i 2002v Consumer-to-business e-commerce is accepted and forces companies

overall - including those who are not IT-savvy-to offer e-commerce services.

i 2005v E-commerce is a natural part of our society, integrated into all facets

of day-to- day communications.

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Reasons for the explosion of e-commerce in 2000-2005

i Sufficiently improved infrastructure (commerce, communications)

i Deregulationi Integration of e-commerce into existing systemsi Generations X and Y enter the workforcei Merchants learn how to sell electronicallyi Inexpensive access devices availablei (USD 100–200)i New distribution companies in place

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eBusiness Key Concepts

i eBusinessv The overall strategy of how to automate old business

models with the aid of technology to maximize customer value and profits.

i eCommercev The process of buying and selling products and services

over digital media

i eCRM (eCustomer Relationship Management)v The process of building, sustaining, and improving

eBusiness relationships with existing and potential customers through digital media

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Mobile e-CommerceMobile e-Commerce can be defined as a value added service that enables end-users to conduct reliable, secure financial transactions that involve trade or payment. Mobile e-commerce services can be classified into categories such as banking, trading, reservations and ticketing, shopping, and games and gambling.

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Why m-Business?

i “So prepare to disconnect. Anything tethered, anything not responding faster than our fingertips, anything not online all the time will soon be ancient history.”

Upside Magazine, Feb. 2000

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Why Go Mobile?

i Mobilization promises significant and quick ROI, because it offers two strong value propositions:v getting more from current available information

and using that information to generate revenue, decrease per transaction costs, and

v improve professional and personal productivity.

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Mobile Benefits

i Anytime, anywhere access to information presents incredible opportunity for business.

i Mobilization v increases business volume,v improves customer relationships,v leverages existing infrastructure investments,

andv streamlines internal processes.

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Why m-Business?i To be a market leader, a company must successfully

navigate the tumultuous sea of technology to position itself for future prosperity.v As company leaders catch their breath form the Internet’s

storm, new clouds from on the horizon: wireless and broadband.

i While many companies have some notion as to how to address broadband, this is often not the case with wireless.v A company must not ignore its wireless strategy; it must

formulate a wireless course before the storm arrives.N

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Mobilization: Business Perspective

i Mobilization means breathing new life into a traditionally stationary and rigid enterprise -v it means leveraging and extending information and

functionality to and from your enterprise, enabling accelerated decision.

v It encompasses both the person and the machine, but is emphasis is extending business resources to all touch points within an organization.

i The right mobilization solution allows information and processes to be dynamically extended to both mobile and embedded devices

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The Adaptive Enterprise

i In the Adaptive Enterprise:v Technology adapts to how humans work -

pervasively, not invasively.v Collaboration is supported at all touch points within

the workflow.v Enterprise resources are extended securely to any

environment.v Distance and time cease to be barriers to productivity.v The mobile-enabled enterprise is able to accomplish

more in less time.

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Most Challenging Questions

i Is mobile business going to happen?i What form is it going to take and how do

we use the technology to continuously innovate and improve? M-business is not a business fad tied to a single method

or strategy, but rather the next step in the technology curve.

It is simply a way for improved customer interaction and new operational efficiencies.

It builds on all the investment in e-business.

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From “not-obvious” to “obvious”

i What is not obvious are:v how the current landscape of enterprise applications

will evolve and,v where the opportunities are in the near and long term,v what new value propositions will companies look to

create in their never-ending quest to become more competitive and customer-focused?

v How can companies further improve internal operations and employee processes.

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From “not-obvious” to “obvious” (cont.)

i It seems intuitively obvious that e-business is evolving from a tethered PC-centric model to a multi-device, multi-channel, and mobile person-centric model (m-business).

i How an organization mobilizes itself into constructive action will determine its ultimate success.

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Customer Priorities

i Historically, the emergency of new customer priorities and expectations resulted in new business opportunities and market structures.

i Changing customer priorities weaken existing industry structures often forcing change.

i Mobility will change customer interaction in unforeseen ways and place traditional profit and revenue models on uncertain ground and at potential risk.

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Structural Migration: Natural Marriage

i The emergence of the mobile Internet capable of of interconnecting numerous devices and multiple information webs represents a global megatrend.

i It represents a new phase in enabling the knowledge workers.

Internet

Wireless Technology

e-Business

M-Business

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Structural Migration: Natural Marriage

i The emergence of the mobile Internet capable of of interconnecting numerous devices and multiple information webs represents a global megatrend.

i It represents a new phase in enabling the knowledge workers.

M-Business

Internet

Wireless Technology

e-Business

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Structural Migration: Market Evolution

i Five key developments for IT industry to be broader and healthier:v huge advances in the infrastructurev advances in software,v abundant capital,v a more interested consumer,v the burgeoning demands of real-time business.

i Mobility means fully portable, real-time access to the same information resources and tools that, until recently, were accessible only from your desktop.

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1. System integration and 2 business reengineering - required a major internal retooling of the corporation-- auto industry, cost-cutting, restructuring, and reengineeringsince 1995, three major structural shifts in rapid succession: e-commerce, e-business, and m-business.The structural changes caused by these shifts are not restricted to the four walls of the enterprise but have impacted the boundaries of the enterprise.3)e-commerce has had tremendous impact on how companies interact with their customers4)e-business has had similar impact on the supplier and employee side5)m-business is too early to definitely say that will have even more impactM-business is unique since its effects are going to be evident at three levels:a)infrastructure and devices,b) applications and experiences,c) relationships and supply chains.

Figure 1

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M-Business

i Mobile applications will change the way we all live, play and do business.

i Evolution of business modelsv Phase 1 -- the user going to the computer’s location

(PC-centric)v Phase 2 -- the computer is wherever the user is (person-

centric)

i “Empowering people through great software anytime, anywhere, and device.”

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eBusiness Key Concepts

i eBusinessv The overall strategy of how to automate old business

models with the aid of technology to maximize customer value and profits.

i eCommercev The process of buying and selling products and services

over digital media such as Internet.

i eCRM (eCustomer Relationship Management)v The process of building, sustaining, and improving

eBusiness relationships with existing and potential customers through digital media

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From e-Business to m-Businessi e-Commerce and e-business applications envisioned and

developed assume fixed or stationary users with wired infrastructure.

i m-Commerce v refers to business (buying and selling) transactions conducted

over a wireless device such as a cell phone or PDA.

i m-Business v is the application infrastructure required to maintain business

relationships and sell information, services, and commodities by means of the mobile devices.

v a logical extension of e-business to address new customer channels and integration challenges. N

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information information technology

people

to serve each customer

Businesses must effectively use 3 key resources

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Database and its Implications

i MIS is integral to success of the business because it integrates the data and processes that constitute the essence of the business.

i The database is the core component to improve and/or enhance the MIS and business operations.

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Mobile Economy

i The mobile economy (m-economy) is both inevitable and imminent.

i Business are at the threshold of an innovation tidal wave offering unforeseen technical and process capabilities.

i The m-economy is facilitated by the convergence of Internet, e-business, and the wireless world where customers can go online anytime, anywhere, and using any device.

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The Meaning of Mobile

i Mobile but offlinev use the device to run self-contained programs

while not connected to the Internet.

i Mobile but online (called wireless)v real-time live Internet connection via satellite,

cellular, or radio transmittersi The user is able to work offline without the need for a live

connection.i M-business covers both online and offline scenarios.

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Mobile Business: The Quest for New Value

i Applying mobile access to computing creates bothv tremendous commercial opportunity andv complexity simultaneously.

i In the face of such as large-scale structural change, entrepreneurs, corporate managers, and investors alike must act quickly and proactively to design their strategies for addressing the complexities of real-time business

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Wireless (M-Business) Strategy

i “Wireless devices are becoming key enablers of mission-critical, e-Business applications. In the future, the question will not be whether a business professional has a mobile device but rather, how these devices and the applications that run on them help fulfill key aspects of an enterprise’s business strategy.”

Scott Weisss, Analyst, Hurwitz Group

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Wireless (M-Business) Strategy (cont.)

i To develop a wireless strategy, companies should take a comprehensive look at their entire value chain and look for opportunities to enhance customer value and streamline internal processes.

i To formulate wireless strategies, companies need to rethink v how value is created for customers andv how it is delivered.

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Wireless (M-Business) Strategy (cont.)i Wireless strategy’s guidelines for early entrants into

wireless are:v Take a broad view of wireless across your entire organization -

from customers to employees to internal processes.v Use wireless as an enterprise tool, not merely as a service for end

customers.v Don’t wait for technical standards to be defined. Wireless is not

about technology; it is about finding new ways to define value for customers and internal users.

v Take a portfolio approach in creating multiple offerings across different customer segments.

v Don’t be afraid of falling short of early expectations - this is part of the learning curve.

v Don’t worry about return on investment. Yet.N

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M-Business Strategyi In define their m-business strategy, the key first step

for each of these players is to assess where the most value is created and captured.v Entrepreneur - the greatest value is created during the

innovation phase by being first to market with new value propositions

v v Investors - value is created I both phases

new market leaders (e.g., the next Cisco)new value leaders (e.g., the next Schwab)

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Computing Industry Evolution

i Four major shifts in the computing industry, fromv the mainframe tov the minicomputer, tov the PC, now tov the handheld

i the change fromv centralized tov decentralized, now tov networked computing

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PC Industry Evolutioni In the PC industry’s early

yearsv value was placed on

hardware/infrastructure products and services

i thenv to enabling technologies

such as operating systems, and software and services for managing the interactive environment

i ultimatelyv to programming, content,

and aggregation.

i The PC industry transformation can be measured by three factors:v the rate of change in

product development,v process creation, andv organization renewal

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E-Commerce Industry Evolutioni In the e-Commerce early years

v value was placed on network infrastructure and dial-up access products and services (Cisco, US Robotics)

i then, v building on the network developments, the industry’s access

providers (AOL) experienced significant growth.

i Software enablersv such as browser providers (Netscape, OpenMarket)

i e-Commerce enablers search engine and security offerings such as Yahoo and Verisignv it prepared the foundation for the Internet applications, content,

and programming

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Learning from e-Commerce Fruit Flies

i The m-economy is evolving in a very similar way to the e-commerce wave.

i While the m-economy is exciting, not all promises will come to pass.

i In recent years, the mobile Internet has lifted expectations way too high, while reality has lagged considerably.

i The rise and fall of the e-commerce revolution is a caution against too quickly denouncing the old and thoughtlessly embracing the new.

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Pitfalls m-Business should Avoid

i Speed killsv companies were always planning for the next round of

financing.v A recipe for disaster

i fashion and glamour don’t make a businessv creating a sustainable business takes a lot more than

funding

i diffusion of innovation takes timev involves some degree of social, economic, company,

and individual dislocation

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Seven Main Business Areas for Emerging Companies

i 1. Network Infrastructurev companies providing the hardware, fiber networks, wireless

communications towers, and satellite networks to enable the convergence of telecommunications and IP networks.

i 2. Accessv companies selling dial-up and/or dedicated network

connections to provide mobile access to Web services.

i 3. Contentv companies providing everything you see when you go online.v Including both “portals and syndicators,” which organize,

aggregate, and provide access to content created by other companies.

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Seven Main Business Areas for Emerging Companies (cont.)

i 4. Commercev companies selling merchandise or information, or

facilitating the matching of buyers and sellers.

i 5. Softwarev companies selling software to facilitate inter- or intra-

enterprise communication and commercev including OS, security and applications software

customized by wireless world.

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Seven Main Business Areas for Emerging Companies (cont.)

i 6. Hardwarev companies selling hardware like handheld PCs or networking

equipment to facilitate mobile applications.v Including complementary markets, namely PCs, servers,

semiconductors, and telecommunications service equipment which will benefit indirectly a hardware company’s success

i 7. Applicationsv companies providing a wide variety of services necessary in

the online ecosystemv including hosting, application rental, transaction processing,

databases, consulting, design and implementation.

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BusinessAreas

Business Models

1. NetworkInfrastructure

Hardware sales or leasing to telecommunication companies. E.g.,Ericsson, Motorola, and Alcatel.

2. Access Monthly fees which are determined by the speed of the connectionand/or the volume of data flowering through it. E.g., Palm.Net, AT&TWireless

3. Content Advertising and subscription fees. E.g., Yahoo!, Infospace

4.Commerce

Resembles that of a retailer or auctioneer. Commerce companiesoperate in three arenas: C2C (eBay), B2C (Amazon.com), B2B(Grainger)

5. Software Software license fees, software maintenance fees, consulting services,and increasingly, software hosting and operation services. E.g.,Qualcomm, Microsoft

6. Hardware Selling hardware directly to users or network operators. E.g., Compaq,HP, and Sun Microsystems

7.Applications

Software license, “per click” transactions, time and materials, orsubscription fees. E.g., Aether, Air2Web, ad Mobilicity

Seven Main Business Areas and their Business (Revenue) Models

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Solution Phases for Mobile Businesses

i The seven main business areas will have to come together to create value for customers.

i Customer value creation will most likely occur in five solution phases based on continuous improvements in mobile technology.v 1. Messagingv 2. Info-connectivityv 3. Transactionsv 4. Transformationv 5. Infusion

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Solution Phases for Mobile Businesses (cont.)

i 1. Messagingv the ability to interact with others

i 2. Info-connectivityv the ability to access and retrieve information from the Web

(real-time)v at a minimum, wireless browsers should become

commonplace before this phase takes off.

i 3. Transactionv business transactions begin to take place via the mobile

channelv the customer is a different entity in the mobile business model.

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Solution Phases for Mobile Businesses (cont.)

i 4. Transformationv the interconnection of business processes both

internally and externally between organizations.

i 5. Infusionv the company absorbs mobility into its way of doing

businessv Infusion requires a shift from a culture in which

technology is merely occasionally present, to one in which technology is an accepted part of business.

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Internet

WirelessConnectivity

Leverage existing Web infrastructure investment

Extend the reach of their Web-based applications and content

to their mobile customers, employees, suppliers, and

business affiliates

Framework of Mobile Applications and Convergence

opportunity

Customers,Employees,Suppliers,

andBusiness affiliates

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Mobile Market

i Just like the the Internet infrastructure build-out, the mobile infrastructure build-out will be gradual.

i The market will be composed of companies that are addressing different problems:v Mobile Data Networks

How to increase coverage?How to increase wireless data bandwidth?How to increase capacity of existing networks?

v Mobile Internet InfrastructureHow to create new technology that enables the convergence of

telecommunications and IP networks?

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Mobile Market (cont.)

v Mobile Internet Infrastructure (conti.)What transmission protocols and content languages are

required to make this happen?

v Mobile Internet Service ProvidersHow to provide mobile connectivity to the masses?

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From Time-sharing to the Embedded Model

i One certainty about the PC’s future: It will become increasingly portable.

i The most successful appliance will be easy-to-use, task-oriented devices that leverage the benefits of Internet access to enhance their core functionality.

i Access providers will need to bundle and update relevant content or service with their appliance in an effort to attract and retain subscribers.

i Clearly, new are needed.business models

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M-Business: What Stage Are We In?i Business models for competing in

the m-economy are in the early stages of development.

i Reports criticized the mobile industry forv not having resolved issues of low

bandwidth,v differing communications and

equipment standards,v the presence of multiple carriers, andv a myriad of devices

all of which decrease the ability of service companies to present users with a satisfying experience.

i Building infrastructure takes time.

i The wired Internet industry had to address similar issues, includingv busy signalsv the World Wide Wait, andv insecure browser

technology.

i The issues the mobile industry faces are significant, but they are also normal growing pains for every technology.

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Technological Visions ...

i Technological visions often suffer from an enthusiasm that conveniently overlooks the practical reasons why they won’t actually happen as quickly as the promoters would like them to.

i To overcome this vision-to-reality mismatch, it is important to understand where the technology is in the diffusion curve - a kind of social change, defined as the porcess by which an innovation is adopted through certain channels over time.

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Phases of Technology Diffusion

i The technology diffusion curve has several key phases:v visionaryv missionaryv ordinaryv commodity,v maturity.

i The mobile technology will be anticipated to follow a similar pattern.

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Phases of Technology Diffusion (cont.)

i 1. Visionary phase - technology is a noveltyv it sounds great, but do not know what to do with it.v Entrepreneurs anticipate new opportunities and create value

propositions to address perceived gaps in the marketplace.v Few companies make money from technology, at least not initially.

i 2. Missionary phasev executives (IT managers, R&D geeks, and “radical” employees)

are the typical buyers of the new technology.v They see business value that other cannot.v They preach the vision to others in their company -- emerging

technology enable consumers to have ubiquitous access to whatever content and applications they want, where and when they want them. N

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Phases of Technology Diffusion (cont.)

i 3. Ordinary phasev mainstream users (e.g., consumers and corporate officers) begin to

see value in the technology.v due to increasing use of the devices, they are no longer novelties

or innovation but are becoming increasingly mainstream tools for conducting m-business.

v Previously isolated “islands of technology” will be connected providing users with an expanding stream of rich digital content.

v M-business increases its market penetration because it improves productivity while building on prior e-commerce investments.

v The m-commerce infrastructure is the logical extension of these previously installed technologies into new areas.

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Phases of Technology Diffusion (cont.)

i 4. Commodity marketsv are represented by technology such as PCs.v Increasingly, cell phones are categorized as a commodity

technology -- it is true on the voice side. v On the data side, many mobility applications are still in the

visionary phase.

i 5. Maturityv is represented by technology such as printers and fax machines.v It represents a market where little or no innovation is taking place.v Mature markets, such as long-distance telephone carriers, are

usually characterized by consolidation with a few players jockeying for market share.

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(1) ATTRACTTransactions don’t happen without first luring customers into an electronic marketplace. Web marketing services and technologies deliver targeted audiences to E-commerce sites. Some manage affiliate marketing programs, others serve targeted web advertising

(2) INFORMOnce customers arrives at a website, they need to be served relevant contents. Dozens of companies Develop tools that act as content mediators, allowing Commerce vendors to outsource content generation, Management, and delivery.

(4)TRANSACTAt the heart of the E-commerce transaction is a market-making platform to get buyer and seller to close the deal. Ever more sophisticated platforms for E-commerce-catalog, auction, exchange, and now barter models-are bringing multitudes of buyers and sellers together to transact.

(3) CUSTOMIZEMore and more, customers must configure and assemble combinations of components and options that do into a product, from PCs to tractors. Configuration engines now enable this self-service mix-and-match process by enhancing component databases with the digital logic and rules capable of ensuring that everything the customer wants can indeed be Ordered, assembled, fulfilled, and delivered.

(6) INTERACTOnce a transaction is complete, support begins. Customers need information, advice, problem resolution, and orders status updates. New customer-interaction platforms are emerging for call centers, live online customer service,order tracking, and other channels.

(7) DELIVERFulfillment and delivery systems take over once the goods have been paid for, and E-commerce vendors are increasingly turning to outsourced supply-chain management systems for order fulfillment and supply and demand forecasting.

(8) PERSONALIZEEach time customers click into an E-commerce Website, the site should learn something more about them. Personalizationtechnologies such as collaborative Filtering and data-miningcapture every bit of customer data, Analyzing patterns of behavior to ensure that the next interaction with the customer is a better one.

(5) PAYYour online buck stops here, goods and services must be paid for, Using credit, debit, or cash. The payment and financing functions of online transactions have opened doors for companies which develop realtime credit underwriting engines, or offer a payment server solution for credit and debit card transactions.

THE E-COMMERCE TRANSACTION CYCLE

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A Final Thoughti “Yesterday is not ours to recover, but tomorrow is ours to win

or lose.”

-- Lyndon B. Johnson

i With technology-enabled business models, strategic opportunities can shift like the wind, making timing crucial.v Many successful companies such as Microsoft and Sony are

transforming themselves while simultaneously creating a shared picture of the mobile future.

i When there is genuine vision, people excel, not because the vision statement tells them to, but because they believe in the cause.

Does your company have a vision of what it will be like to do business in a mobile economy?

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And Now and the Next ...

i As we have seen, there is significantly more that can be reaped from mobile communications than just conversation.

i Mobile technology has the ability to literally transform organizations and significantly increase overall enterprise productivity, adaptability, and responsiveness.

i The right mobile technology can substantially increase the value of an organization.

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Conclusion – the battle has begun

i Wireless portals have a much stronger business case than the old fixed-line portals:v revenue forecasts are much higherv stickiness much higher

i The mobile operators seems to be the obvious winners:v But, old stodgy organisations have often failed when

new fast-moving players grab the new marketv Wireless Internet is today as the fixed internet in 1995.

Start-ups today can be the new Amazons and Yahoos of 2005