Mobile Enterprise Applications. Enterprise Solution

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1 Mobile Enterprise Applications and the Arch Wireless Enterprise Solution October 2002 Frost & Sullivan takes no responsibility for any incorrect information supplied to us by manufacturers or users. Quantitative market information is based primarily on interviews and therefore is subject to fluctuation. Copyright 2002 Frost & Sullivan

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3 INTRODUCTION High levels of business interest in a wide range of mobile data services, coupled with advances in network technologies, have cultivated the development of wireless enterprise applications and created a multifaceted assortment of players, service concepts, and business models. The next generation mobile enterprise opportunity involves the extension of a company s core data and applications to mobile executives, sales personnel and field technicians via Interactive Messaging Devices, Personal Digital Assistants (PDAs), and Smartphones. The capability to mobilize an enterprise s mission-critical application portfolio, with limited risk and reasonable costs, is now a viable corporate strategy to increase efficiency, cut operating costs, and maximize return on investment. The demand for wireless data services by corporate customers is expected to increase dramatically in coming years. Although there is no broad killer application for enterprise, the growing demand for remote access to core company data and applications is likely to drive adoption. Success will be measured by the ability to seamlessly link the back office to mobile devices so executives, sales personnel, and field force employees have real-time access to customized, mission-critical data and applications. It will be the responsibility of network operators to not only effectively market, sell, and service mobile data solutions to their installed base of corporate customers, but also to identify new distribution channels, with the assistance of value-added resellers (VARs) Mobile enterprise applications have already begun to penetrate a variety of industries in North America and are expected to soon gain wider acceptance in previously untapped sectors. Frost & Sullivan believes that verticals such as Financial Services and Health Care will adopt the broadest range of mobile applications. In fact, a number of early-adopters in the time-sensitive financial services and healthcare industries have already extended mobile platforms to employees. To rationalize their investments, companies are increasingly demonstrating tangible return on investment (ROI), with improved productivity, reduced operational costs, and enhanced customer service. As with most technologies that find widespread commercial adoption, the cost of mobile equipment and services continues to decline, while the performance and features steadily improve. Many enterprises acknowledge that certain mobile applications can be a valuable asset to their businesses, yet technical challenges and cost barriers have, historically, prevented them from implementing solutions. With a host of new applications set to leverage maturing network technologies and improving middleware platforms, the essential ingredients for compelling enterprise solutions are in place. The variety and breadth of applications and services is overwhelming, from Sales Force Automation (SFA) and Field Force Management (FFM) to Enterprise Resource Planning (ERP), and Mobile Office Applications Frost & Sullivan 3

4 As the enterprise procurement process for wireless data solutions intensifies, there is a renewed focus to advance applications by providing middleware platforms that are extremely flexible, highly secure, technology/device agnostic, and easily manageable. A platform can offer full flexibility of choice and pave the way for the development of the next generation application only if these criteria are met. The winners in the competition to provide Mobile Enterprise applications and solutions are likely to be the players that are flexible enough to introduce high quality, just-in-time enterprise solutions, targeted and tailored to company preferences. The following paper is designed to examine this exciting, yet confusing, picture and provide valuable insights into a market that has lacked an indepth, structured analysis or business case. Drivers The Demand for a Highly Mobile Workforce Drives Demand for Enterprise Solutions The need for contactability in the U.S. has contributed to an increase in overall demand for mobile products and services. In particular, the demand for a highly mobile workforce and the need to expand corporate Intranet access is driving growth for mobile enterprise services. More and more enterprises are seeking the means to extend corporate data to their mobile workforce in order to enhance the responsiveness of sales and support staff. In addition, advances in systems management software are allowing centralized control over mobile systems to be more feasible, enabling enterprises to interact more effectively and efficiently with their mobile workforce. Corporations are finding it more cost effective to equip their mobile work force with wirelessly-enabled messaging devices, PDAs or smart phones, as opposed to more burde nsome laptops, which take longer to access, cost more, and are less suited for a pure mobile environment. Advancements and Maturation of Multiple Network Technologies Stimulate Market Growth An important catalyst for wireless data adoption is the maturation of legacy data networks as well as the introduction of next generation network technologies. Network operators have recognized the value proposition with packet networks and most have made the necessary investments. Packet technology bypasses the traditional method of dialing into a network in order to send and receive data. Rather, packet technology enables a handheld device to access an always-on connection. With the maturation of legacy data networks, such as CDPD, Mobitex, ARDIS, and ReFLEX, coverage has progressed, service pricing has declined, and reliability has improved. A Host of Compelling Enterprise Applications Spurs Penetration Rates Advancements in network technologies and the associated development of sophisticated, targeted enterprise solutions are critical drivers for adoption. The development of the wireless Internet is enabling companies to extend mission-critical enterprise solutions, such as Mobile Office Applications, Customer Relationship Management (CRM), Sales Force Automation (SFA), Frost & Sullivan

5 and Enterprise Resource Planning (ERP), to workers via a host of wireless devices. With an assortment of new applications set to leverage improving network technologies, the essential ingredients for compelling, value-added enterprise applications are in place. The Increased Availability, Compatibility, and Capacity of Mobile Terminals Facilitates Growth The increased availability, compatibility, and capacity of Internet-enabled mobile terminals will be critical to facilitate enterprise growth. Frost & Sullivan believes that there will soon be more mobile handheld devices connecting to the Internet than desktop PCs. Device manufacturers are developing a wide range of mobile terminals with increased capacity for content and applications. The introduction of advanced terminals, including Interactive Messaging Devices, PDAs, and Pocket PCs, with the capacity to support advanced enterprise applications, will drive enterprise adoption of wireless data. Challenges Industry Participants will Need to Maintain Open, Flexible Structures to Respond to Rapid Technological Change The wireless data market for enterprise will be characterized by rapidly advancing technologies, evolving industry standards, dynamic customer demands, and frequent new product and service introductions. It will be critical for vendors to improve the performance, content, and reliability of enterprise offerings as the demands of the market evolve. If a significant number of vendors adopt new technologies or standards, companies may need to incur substantial expenditures modifying or adapting enabling technologies and infrastructure. Thus, success will rely on the ability to maintain flexible, open structures that can quickly adjust to the rapidly changing technologies and industry challenges. Hype of Next Generation Services Creates Misconceptions and Can Lead to a Let-Down Effect The marketing of next generation high-speed networks can often be misleading. The overhyped speeds and limited coverage areas with high-speed networks such as GPRS and CDMA 1x have led to a let-down effect for many customers. Theoretically, GPRS can achieve speeds of 115 Kbps. Actual services, however, indicate rates that vary between 19Kbps to 38 Kbps. Furthermore, broadband wireless technologies in the U.S. have yet to be deployed nationwide and are therefore extremely limited in coverage. In fact, true Third Generation (3G) networks, such as WCDMA and CDMA2000, are not expected to be available to North American markets until late 2005 to In the interim, the high costs associated in deploying these nextgeneration networks indicates that service rollout, particularly in rural and remote areas, will be limited. High Costs of Mobile Data and Devices Depress Subscriber Growth Next generation wireless data services and equipment are expected to remain extremely costly over the next five years, as carriers struggle to establish to economies of scale and recoup 2002 Frost & Sullivan 5

6 enormous infrastructure investments. The substantial equipment, infrastructure, and service costs associated with next generation network technologies are expected to greatly hamper adoption of services. The cost of hardware systems alone will need to drop dramatically for applications to be deployed en masse and for commercial adoption to be practical. From a price and performance standpoint, many mobile devices supporting wireless content and services are unlikely to achieve broad-based adoption unless costs decrease substantially. Application Trends The variety and breadth of mobile enterprise solutions is overwhelming, from mobile office applications to sales force automation, workforce management, and enterprise resource planning. Frost & Sullivan has identified the broad application categories in sections that are most likely to succeed in the mobile enterprise space. The following is a summary of the four principle solution sets that Frost & Sullivan has identified as the most viable for the U.S. mobile enterprise market. Mobile Office: Mobile Office applications enable remote access to desktop applications such as Microsoft Exchange and Lotus Domino. Mobile Office solutions normally support real-time access to , calendars, contact information, and often attachments. Service providers are now working with partners to offer wireless real-time, remote Mobile Office access to the carriers installed corporate customer bases. A comprehensive Mobile Office package can provide such functions as contact management, note and information sharing, quick proposal and presentation generation, calendars, contacts, and other PIM tools. Mobile CRM: Mobile CRM involves the mobile extension of integrated, front-office CRM software to sales personnel to plan, schedule and control the presales and postsales activities in an organization. Although the dividing lines are not crystal clear, CRM generally includes sales force automation (SFA) applications, which automate the sales activities within an organization. Mobile CRM applications are now enabling remote sales personnel to manage sales activities with customized embedded analytical tools that systematize customer databases, allowing sales personnel to better understand, anticipate, and influence customer needs. Mobile FSA: The field service industry employs more than seven million mobile technicians in the United States. Mobile Field Service Automation (FSA) enables field and dispatched personnel to maintain productive, real-time communication with headquarters and other workers in the field. Mobile FSA applications can address needs of a variety of businesses including service and repair, pick-up and delivery, and property management. Mobile ERP: Mobile Enterprise Resource Planning (ERP) focuses on automating systems to improve the supply chain management of an enterprise. Evolving out of the manufacturing industry, ERP commonly involves a wide range of primary business Frost & Sullivan

7 applications, including production and material management (i.e. back-end order status, shipping dates, tracking numbers, etc.), plant maintenance, sales and distribution, accounting, and project management. Major Research Findings Opportunities and Forecasts Frost & Sullivan research indicates that the average monthly wireless spending is significantly higher when the user is part of a centrally managed business account and reimbursed for wireless usage. Thus, it is critical for operators to distinguish within their installed base of corporate customers between business rate customers that personally pay their monthly usage fees, and those that are part of a centrally managed plan and reimbursed by the company. Service providers can further segment these customer groups by vertical market to maximize marketing efficiency. The enterprise customer figures, reflected in the Frost & Sullivan forecasts, represent users who are strictly part of a centrally managed business rate and reimbursed by an organization. The highly mobile corporate user is expected to be increasingly dependent on access to missioncritical company information. Frost & Sullivan expects that the growth will be primarily driven by the less price sensitive, early corporate adopter. Figure 1.1 depicts the addressable mobile enterprise market and the anticipated adoption levels from 2001 to The North American Mobile Enterprise Market for wireless data is expected to grow from approximately 2.12 million subscribers in 2001 to approximately 23 million subscribers by year-end The growth rate for subscribers will be most dramatic from 2003 to 2006, as network advances converge with availability and compatibility of Internet-enabled handsets. Mobile Enterprise: Addressable Market and Mobile Data Penetration (North Am., ) Mobile Enterprise: Data Penetration Frost & Sullivan Subscribers (Millions) Addressable Market Mobile Data Users Figure Frost & Sullivan 7

8 Some major takeouts from Frost & Sullivan s market forecasts are as follows: Compound Annual Growth Rate (CAGR) for mobile enterprise adoption of 57.7 percent from 2001 to Over 23 million mobile data enterprise users at year-end Frost & Sullivan mobile enterprise revenue projections for wireless data are based on a pricing model incorporating revenues from middleware and usage volumes. The growth in mobile enterprise revenue will be primarily driven by the increasing per capita usage of data from 2001 through Data services will initially be priced at a premium and targeted toward enterprise customers. In order to determine overall market revenue from access via carriers, Frost & Sullivan estimated ARPUs, based on the premium paid per user for access to wireless data, as well as the actual volume of data consumed. Mobile Enterprise PDA Revenues (North Am., ) Mobile Enterprise: PDA Data Revenue by Source (NA ) $7, $6, $5, Frost & Sullivan ($Millions) $4, $3, $2, $1, $ Traffic Revenues Middleware Revenue Figure 2 Major take-outs from Figure 2 are as follows: CAGR for mobile enterprise data revenue from wireless PDAs of 69.1 percent from 2001 to Over $2.5 billion in mobile enterprise revenue generated from middleware and data traffic for wireless PDAs at year-end Demand Analysis Frost & Sullivan has identified the following customer segments that will likely generate the most significant wireless data revenues and drive the development of mobile applications: Mobile Executives: The mobile professional segment is largely composed of top Frost & Sullivan

9 executives, directors, and mid-level managers who travel frequently. This segment is particularly apt to adopt Mobile Office applications, such as remote access to corporate intranets (i.e. Microsoft Outlook, Lotus Notes), messaging, and PIM tools. The mobile professional segment is increasingly demanding company-specific solutions that involve frequent data retrieval. Typical devices used by this segment include Smartphones, Interactive Messaging Devices, PDAs, Pocket PCs, and notebooks. Mobile Sales Professionals: Remote sales employees have emerged as a driving force for mobile CRM and SFA applications. Mobile sales personnel are increasingly demanding real-time access to mobile CRM software to manage large amounts of company, customer, product, and competitor information while away from the desk. Enterprises are recognizing that for mobile sales professionals to effectively address customer needs, it is critical that the remote employee has real-time access to customer records and associated information. Frost & Sullivan expects industries such as Healthcare and Financial Services to drive the demand for mobile CRM software. Typical devices include Messengers, PDAs and Pocket PCs. Field Service Employees: Field service employees rely on work applications and devices to complete their job functions. These employees are not typically tied to a desktop and use a variety of vertical devices. Large companies such as FedEx have relied on wireless data solutions to stay in constant contact with dispatched mobile field service employees and maintain real-time status on field activities. Field service employees operate in a variety of industries often performing tasks such as service, repair, and delivery. The proliferation of devices and applications designed for this segment has fueled significant growth for wireless data services. For service providers to effectively serve these customer segments, they must understand the key issues and needs unique to each segment, and market offerings accordingly. Enterprises and corporate customers will consider a variety of factors in making a wireless data procurement decision. Frost & Sullivan does not believe that cost is the primary factor when selecting a wireless data solution. Instead, security, reliability, and network performance top the list. An Analysis of the Arch Wireless Enterprise Solution (AWES ) For the purposes of this paper, Frost & Sullivan has applied the top factors influencing enterprise adoption to the Arch Wireless Enterprise Solution (AWES). For vendors to effectively serve a range of industries and customer groups, they must understand the key issues and needs unique to each segment, and market offerings accordingly. Enterprises and corporate customers will consider a variety of factors in making a wireless data procurement decision. Frost & Sullivan ranks, by order of impact, the most important decisions influencing enterprise adoption and applies each to the operational attributes of the AWES platform Frost & Sullivan 9

10 AWES Platform Architecture Arch Wireless Enterprise Solution (AWES) addresses the need to efficiently link the back office to mobile devices so mobile workers can have real-time access to customized, mission-critical data and applications. AWES is a flexible and robust wireless enterprise platform. Using standard technologies, AWES allows any device, network or application to securely connect to data within a corporate network using the following framework: AWES Architecture - Features Devices WML HTML WCTP Mobility Engine Software XML Service Bridge Data Objects Presentation MS Exchange Objects Core Lotus Notes Objects Device Profiles Administration Filesystem Objects Standard Technologies (XML, XSLT, SOAP, WML, HTML) SmartClient or ThinClient mode J2EE / XML or COM / XML CRM Objects Other Apps Objects Figure 3 AWES Solution The AWES platform can support a variety of Mobile Office applications, including both Microsoft Exchange and Lotus Notes. Updates and changes are reflected automatically on the desktop, with no need for a cradle to synchronize the information. AWES can support the following functions: Receive, compose, and send in real time Contacts, Calendar, and other PIM tools View and send and calendar attachments Server File Access (files on shared drive, public folders or desktop) AWES customers have been particularly impressed with the solution s ability to open attachments including Microsoft Excel, Word and PowerPoint documents without buying additional software or incurring additional costs Frost & Sullivan

11 AWES Extensibility Capabilities AWES enables access to enterprise applications and access to files on any network drive. Crucial enterprise applications and functions supported by AWES include: CRM applications SFA, ERP and legacy system data Software Developer Kit (SDK) available AWES Security The threat of circumvention of security measures and consequent misappropriation of proprietary information is a real concern for enterprise customers. The most basic security issue involves extending enterprise data and applications beyond the firewall and VPN. Wireless transmission is plagued by the conception that it is inherently insecure when data is transmitted through the airwaves. In order to ensure confidence, particularly in an environment where corporate information may be extended outside of the firewall, it is critical to create a secure platform where corporate customers feel comfortable accessing confidential information. The Arch Wireless Enterprise Solution is designed to keep enterprise data securely contained within the corporate network. WCTP is the protocol that securely carries the information between the customer premises and the Arch Wireless Gateway. Once at the Gateway, the information is carried over the wireless network using the ReFLEX protocol. The binary WCTP data is enveloped in ReFLEX. The process is fairly straightforward: The device generates 128-bit encrypted request payload and then wraps it with ReFLEX for sending At the network gateway, the request payload is unwrapped from ReFLEX, encoded to WCTP (XML), and sent via HTTP still encrypted Once behind the firewall, the request payload is decoded, and routed to core for processing End-to-end encryption occurs within the application inside the firewall at the enterprise premise and on the device. No decryption happens anywhere along the path. AWES Network Performance The overall performance, coverage and compatibility of underlying wireless networks is likely to be an extremely significant factor with respect to the success of most enterprise solutions. Although AWES supports a network-agnostic architecture with the ability to leverage all legacy technology investments, the majority of current customers have elected to be supported by ReFLEX Frost & Sullivan 11

12 The ReFLEX protocol, on which the Arch Wireless data network is based, is a standard protocol for wireless messaging. ReFLEX has the ability to reach more than 92 percent of the U.S. population greater than all digital cellular, PCS and wireless broadband networks. For large enterprises selecting Field Service Automation (FSA) applications, service coverage area, was the most significant factor in choosing a wireless enterprise solution. (ReFLEX reaches all 50 states, as well as Canada, Mexico, and the Caribbean.) In addition, ReFLEX technology uses extremely high power transmission, allowing for in-building penetration up to twenty times greater than broadband PCS. Other user benefits include high message transmission reliability, simulcast technology (the ability to send a single message to multiple recipients), and extended battery life for wireless messaging devices. AWES Return on Investment (ROI) Many businesses have exhibited apprehension and uncertainty with regard to the costs, security, and return on investment (ROI) associated with the implementation of mobile enterprise solutions. There are, however, a number of quantitative methods to measure performance that can justify the investment. ROI for an enterprise electing to deploy a mobile solution often depends on the number of users supported, the capacity of the wireless application, and the total cost of ownership (TCO) of the device. For business-to-employee applications, the TCO includes the costs of the device, airtime consumed, and maintenance. The cost to implement and maintain a wireless solution will vary depending on the model used to deploy the solution. Arch Wireless has taken an active role in presenting the business case of AWES by demonstrating tangible ROI to customers to rationalize their investment. Many enterprise customers are experiencing impressive returns on their wireless investments. Return on investment has been benchmarked by AWES using the following criteria: Productivity Revenue Generation Time/Cost Savings Enhanced Customer Service Total Cost of Ownership (TCO) A number of AWES customers have indicated they find it more cost effective to equip their mobile work force with wirelessly-enabled messaging devices and PDAs, as opposed to laptops, which take longer to access, cost more (particularly in terms of device cost and maintenance), and are less suited for a pure mobile environment. For those that have selected Arch Wireless as their service provider, there has been a general consensus on the advantages of competitive airtime charges. In fact, a recent Frost & Sullivan pricing comparison, based on unit deployments, revealed percent savings on basic airtime costs with Arch Wireless versus Frost & Sullivan

13 competitive offerings an impressive value proposition for enterprise customers. AWES Enterprise Manageability An extremely important administrative factor influencing enterprise adoption is the manageability of the solution. Enterprises expect platforms where they can easily self-provision the service, add new users, track usage and manage the services using a simple web-based administrative interface. With the AWES web administration utility, users and systems administrators can manage the installation through an easy-to-use interface. More specifically, users can control password information, configure device PIN information, and notification options. In addition, systems administrators can add or modify new and existing users and configure user access to , services network settings, and server settings. AWES Flexibility The winners in the Mobile Enterprise space will be flexible enough to introduce high quality, justin-time solutions targeted and tailored to enterprise needs. The mobile industry is characterized by rapidly changing technology, evolving industry standards, evolving customer demands, and frequent new product and service introductions. It will be critical to improve the performance, content, and reliability of products and services as the demands of the market evolve. Thus, success will rely on the ability to maintain flexible, open structures that can quickly adjust to the rapidly changing technologies and industry challenges. The AWES platform was designed with exactly this in mind. AWES is both network and device agnostic, allowing customers and partners to leverage existing technology investments. For instance, if a significant number of vendors adopt new devices, technologies or standards, customers will not need to incur substantial expenditures modifying or adapting enabling technologies and infrastructure. Conclusions Technical challenges and cost barriers have, historically, inhibited the widespread adoption of mobile data services for the enterprise. Many businesses have exhibited apprehension and uncertainty with regard to the costs, security, and return on investment associated with the implementation of mobile enterprise solutions. Today, many analysts are hyping next generation networks as the answer to these challenges. However, a more meticulous examination suggests many of these high-speed networks are not yet ready to support widespread deployment of an enterprise solution. Next generation wireless data services and equipment are expected to remain extremely costly over the next five years, as carriers struggle to establish economies of scale and recoup enormous infrastructure investments. The substantial equipment, infrastructure, and service costs associated with next generation network technologies are expected to greatly 2002 Frost & Sullivan 13

14 hamper adoption of services. Furthermore, broadband wireless technologies in the U.S. have yet to be deployed nationwide and are therefore extremely limited in coverage. The industry has come a long way in supporting enterprises with reliable, ubiquitous, and economical solutions using existing network infrastructure. With the maturation of data networks such as ReFLEX, coverage has progressed, service pricing has declined, and reliability has improved. AWES has emerged as a comprehensive solution, effectively addressing the evolving demands of the mobile enterprise market. The ability to seamlessly integrate wireless data solutions into readily usable, affordable packages, while maintaining open structures will be the key to success for service providers and middleware vendors. Frost & Sullivan believes that AWES presents an innovative platform that is extremely flexible, highly secure, and easily manageable. Through customer case studies, AWES has effectively presented the business case for the implementation of mobile enterprise solutions by demonstrating tangible ROI through improved productivity, reduced operational costs, and enhanced customer service. Moreover, as a technology agnostic solution, the AWES platform provides customers the freedom to adopt new technologies, products, and services as industry standards and customer demands evolve Frost & Sullivan

15 Information and analysis used in the production of this white paper comes from a detailed report by Frost & Sullivan on North American Next Generation Mobile Enterprise Markets. For more information on this report, please contact Greg Caressi, Research Director, gcaressi@frost.com 2002 Frost & Sullivan 15

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