WHITE PAPER Enterprises Adopting Mobile Messaging to Enhance Communications and Improve Business Operations Sponsored by: OpenMarket Robert Parker December 2014 IN THIS WHITE PAPER This white paper looks at how enterprises are taking advantage of mobile messaging technology to improve business operations and enhance communications related to customer service, sales/marketing, operations, IT administration, and employee relations. Based on an extensive survey (600 companies) across industries and geographies, this analysis suggests which processes represent the greatest opportunity for enhancement and the approaches organizations are taking to capture the potential value. The paper closes with actionable guidance for creating a mobile messaging strategy. SITUATION OVERVIEW There are over 3 billion mobile subscribers worldwide representing more than 6 billion connected devices. Globally, it is now the exception to see someone without a messaging-capable device. In emerging economies, mobile is usually the primary, if not the only, form of digital communication and Internet access. The proliferation of mobile has impacted communication within organizations already, but enterprises are realizing that much of this use is ad hoc and unstructured. Integrating mobile messaging capabilities into structured workflows the step-by-step processes that make up business operations is becoming a high priority for enterprises because it represents an opportunity to capture substantial value. Companies want to know where to start, what to prioritize, and how to manage. Mobile messaging can encompass a number of technologies, including short message service (SMS), multimedia messaging service (MMS), push notifications, and occasionally email. Most companies have robust infrastructures in place for the latter and are generally looking at new platforms to manage the other three. Of course, the general intent is to have a robust platform that can also integrate all technologies depending on individual channel needs. December 2014, IDC #251941
Line of Business Led Investment Recent IDC research shows that line-of-business domains are driving new investment in information technology, including mobile messaging services. This functional spending includes the domains covered in this document. As functional executives become increasingly comfortable with mobile technology and realize that it is integral to their success, they are becoming more involved with specification, selection, and deployment of services throughout their companies. To stay relevant, IT organizations are becoming more service centric (rather than project portfolio centric). Core to this service centricity is investment in platforms so they can respond quickly to line-of-business demands. This line-of-business trend ties closely to the growing investment in messaging platforms. IT wants to bring the communication channels together, complemented by a robust workflow engine, to create services in an agile way to serve functional needs. These mobile engagement deployments are impacting customer experience, operations, and employee relations most directly, and we surveyed the market to get a sense of the priorities and approaches. Employee Communications Is a Common Starting Point, But Customer Service Is the Big Opportunity Our survey results indicate that companies have the most mature deployments in the area of employee communications (see Figure 1). Company announcements and mobile workforce notification have the greatest incidence of use cases in production at companies. Company announcements were in production at more than 70% of the organizations surveyed, and roughly half had notifications. 2014 IDC #251941 2
FIGURE 1 State of Deployment of Mobile Messaging Services Q. At what stage is your organization today in the deployment of mobile messaging technology (SMS, MMS, and push notifications) for each of the following business activities? Company announcements Customer alerts, updates, reminders, and notifications Mobile workforce management and notification Password reset Customer promotions/offers IT system status and network outage alerts Employee surveys Sign-in and account authentication Escalation management Employee emergency alert systems Timesheet reminders Customer surveys 0 20 40 60 80 100 (% of respondents) In production enterprise wide In production by unit or department Pilot/proof of concept Researching Considering but not yet pursuing Not considering yet The high frequency of these services is intuitively logical. They are not particularly workflow-intensive, generally involve unilateral broadcast communication, and have some measure of device control, and the benefits are solid, albeit modest. And starting with these relatively easy-to-implement services is not a bad strategy as it can give organizations valuable experience in deploying messaging-based solutions. Also, there are a number of less mature employee relations use cases (e.g., timesheet processing and employee surveys) that can extend from the early efforts and drive further productivity gains. 2014 IDC #251941 3
Another quick win is right in IT's backyard. IT administrative processes like sign-in, account authorization, and password reset are seen with some frequency. Recent disclosures of serious security breaches have elevated these processes to the highest levels of most organizations. This domain is also a good starting point because IT is responsible for the process itself and can offer higher levels of service while gaining valuable experience. These use cases are a good next step from employee-related services because they often involve bilateral communication and, as a result, give the organization some experience in managing a multistep workflow. Customer experience use cases represent the greatest long-term value in the eyes of our survey respondents (see Figure 2). In fact, the top 3 areas were all customer related. For respondents from government organizations, we changed the term customers to constituents. FIGURE 2 Greatest Opportunities for Value from Mobile Messaging Services Q. Of the customer, employee, and operational business priorities from the list below, which three do you believe mobile messaging (SMS, MMS, and push notifications) can have the greatest impact on? Differentiating or improving the customer experience Gaining deeper customer insight Attracting and retaining customers Enhancing multichannel delivery capability Improving employee communications Optimizing our workforce Increasing brand awareness Global communications Lowering operating costs Improving operational efficiency Attracting and maintaining our workforce Managing employee welfare and safety Ensuring business continuity Increasing employee satisfaction Improving organization's security Increasing organization's revenue Introducing new and/or improved products Meeting industry compliance requirements Improving our risk mitigation 0 5 6 6 9 9 9 15 14 14 13 12 12 12 18 29 35 34 40 0 5 10 15 20 25 30 35 40 45 (% of respondents who named the business priority as one of the top 3 impacted by mobile messaging) Green = customer, red = operations, yellow = employee Note: Multiple responses were allowed. 2014 IDC #251941 4
All phases of the customer experience life cycle are included in the top 3 value opportunities: Marketing. Processes that attract customers to the organization and keep them loyal to the brand. Sales. Improving conversion rates and making real-time offers. Customer service. Supporting the information needs of customers and optimizing their use of the company's products and services. Greater behavioral insight and more relevant engagement enhance each of these critical customer touch points. With better and deeper understanding, companies can attract more potential customers, increase their ability to close sales, and ensure that customers are happy that the brand promises were kept, which results in longer-term customer loyalty. Despite the high-level acknowledgement of value, deployments remain relatively immature. This situation relates to the higher levels of complexity involved in building and deploying the mobile services needed. However, companies that endeavor to build a digital selling strategy that leverages mobile messaging will be better positioned to increase opportunities, improve conversion rates, and generate repeat business. In the area of operations, it is common for survey results to show an emphasis on cost and efficiency. These benefits were identified on some surveys, but the most popular choice was improving delivery capability. This result indicates that companies are viewing the impact of mobile messaging as a "customer first" proposition even when it comes to internal processes. The cumulative conclusion to be drawn from these results is not only to gain experience with employee communications but also to build long-term investment justification on customer-related benefits. The benefits are centered on engagement, improving the relationship beyond just price and building lasting relationships and loyalties. Investment in a mobile messaging platform creates multiple options for the line-of-business leadership to generate new revenue and ROI in a cost-effective manner. Regional Perspectives Not all regions have the same level of maturity, and priorities can vary. Our survey covered four geographies the United States, the United Kingdom, Europe (excluding the United Kingdom), and Asia to gain an understanding of these differences. Responses were evenly split (150 each) across regions. To compare maturity levels, we scored responses on a scale of 0 (not considering) to 5 (in production enterprise wide) (refer back to Figure 1 for the full range of choices). The results are summarized in Table 1. 2014 IDC #251941 5
TABLE 1 Messaging Service Maturity Level Service (Use Case) Asia Europe (Excluding United Kingdom) United Kingdom United States Overall Customer promotions 1.63 1.93 2.18 2.36 2.02 Customer alerts 2.01 2.31 2.59 2.64 2.39 Customer surveys 0.63 0.80 1.05 0.85 0.83 Password reset 1.89 2.13 1.69 1.94 1.91 Sign-in and account authentication 1.35 1.25 1.34 1.19 1.28 Company announcements 2.91 3.97 3.83 4.10 3.70 Employee surveys 2.03 0.69 0.79 0.98 1.12 Escalation management 0.64 0.81 0.71 1.05 0.80 IT system status and network outage alerts 2.37 2.46 2.47 2.41 2.43 Mobile workforce management and notification 2.84 2.93 2.69 2.82 2.82 Timesheet reminders 1.46 1.22 1.27 1.14 1.27 Employee emergency alert systems 1.15 0.85 0.94 1.04 1.00 Overall 1.74 1.78 1.80 1.88 1.80 Note: Ratings are based on a scale of 0 (not considering) to 5 (in production enterprise wide). In aggregate, there is limited maturity variation across regions, with Asia the least mature at 1.74 and the United States the most mature at 1.88. The maturity ranking by region is no surprise, but the narrow range was a bit unexpected. We expect this outcome is likely due to the wide deployment of devices in emerging regions and the attendant comfort with using messaging technology. The implementation with the most consistency across regions is IT system status and network outage notification, which has a range of only 2.37 (Asia) to 2.47 (the United Kingdom). 2014 IDC #251941 6
Not all the regions were that consistent at the service use case level. The United States was considerably more mature in its use of customer services (particularly promotions and alerts). This is due to less restrictive consumer privacy protections and established promotion practices. The United States is less mature relative to the overall results in employee engagement, particularly surveys, timesheet reminders, and authenticated sign-in. In Europe, the expectation was that the United Kingdom would be more mature than the rest of its neighbors. While this proved to be true, the margin was inconsequential (1.80 versus 1.78). The United Kingdom was significantly ahead in the customer area, with consistently higher maturity in promotions, alerts, and surveys. The U.K. consumer is more conditioned to nontraditional commerce channels, and the common language is an advantage. Continental Europe was ahead of the United Kingdom in several employee-related communications such as company announcements and mobile workforce management. Asia was the least mature region, but had its strongest showing in employee-related services. The most mature service was company announcements, followed closely by mobile workforce management. The region was also the most mature in the areas of timesheet reminders and emergency alerts. When evaluating regional responses around business priorities, we found even greater consistency (see Table 2). The table highlights where a particular regional result was 4 or more percentage points different from the overall results, and there are only 7 occurrences. Perhaps most interesting is the objective to drive brand awareness, where the U.K. results were well above the overall results, while the U.S. results were well below the overall results. Attracting customers or employees is a lower priority in Asia, while enhancing multichannel delivery is more important in continental Europe. 2014 IDC #251941 7
TABLE 2 Business Priorities Related to Messaging Services Investment (% of Respondents) Priority Asia Europe (Excluding United Kingdom) United Kingdom United States Overall Differentiating or improving the customer experience 42 39 35 41 40 Attracting and retaining customers 30 36 33 36 34 Gaining deeper customer insight 33 37 35 33 35 Improving employee communications 21 16 18 17 18 Managing employee welfare and safety 9 12 14 13 12 Increasing employee satisfaction 9 11 7 9 9 Optimizing our workforce 17 15 12 14 15 Attracting and maintaining our workforce 7 15 14 12 12 Meeting industry compliance requirements 5 5 3 5 5 Enhancing multichannel delivery capability 29 33 27 27 29 Improving operational efficiency 11 11 15 12 12 Lowering operating costs 13 11 15 15 13 Improving our risk mitigation 11 10 13 11 11 Ensuring business continuity 11 7 9 11 9 Increasing organization's revenue 7 6 7 4 6 Improving organization's security 13 6 6 11 9 Introducing new and/or improved products 3 5 7 7 6 Increasing brand awareness 14 12 19 9 14 Global communications 15 13 14 13 14 Note: Respondents were asked to choose the top 3 business priorities. This business priority analysis leads to an intuitive conclusion. The priorities are consistent across regions, and mobile messaging investment will be driven by the same objectives regardless of geography. 2014 IDC #251941 8
(% of respondents) Mobile Messaging Investment Practices Our survey established the potential value, especially in the area of customer engagement, needed to justify mobile messaging investment. The survey also looked at how companies were approaching that investment, including the architectural approaches, portfolio governance, and justification mechanisms. The Trend Toward More Initiatives, But Fewer Platforms The survey asked about both the number of vendors being used for messaging services and how many initiatives were active (see Figures 3A and 3B). The results show a fairly broad distribution, with most companies having more than one messaging platform deployed (62%) and more than one active initiative (78.5%). However, the most popular choices were one platform and two initiatives, though results vary by business function. FIGURE 3A Current Mobile Messaging Vendors/Aggregators Q. How many mobile messaging (SMS, MMS, push notifications) vendors/aggregators are you working with today? 35 30 25 20 15 10 5 0 Zero One Two Three Four+ 2014 IDC #251941 9
(% of respondents) FIGURE 3B Mobile Messaging Initiatives Planned or Underway in Department Q. In your respective business function (department), how many mobile messaging initiatives do you have planned or underway? 35 30 25 20 15 10 5 0 One Two Three Four Five+ Anecdotal evidence drawn from conversations with IDC clients from large enterprises indicates that there is a future desire to consolidate platforms, particularly SMS, MMS, and push notifications. Companies mention a number of factors: Security. Bringing the messaging together in a single platform streamlines the implementation and improves the efficacy of security policies. Scalability. A robust platform within a single infrastructure allows for more efficient resource usage. Availability. With a single point of messaging management, it is easier to ensure higher levels of uptime. Reach. Employees and customers may have different messaging preferences, and a single platform allows a company to reach them all with a single process. Reuse. Common elements can be reused across different functional use cases. Integration. A single interface for interacting with a corporate systems of record is needed. Vendor management. Reducing the number of vendors supporting similar functionality is desired. Collectively, these platform benefits enable a wider range of services to be delivered, reliable execution, and security mitigation while minimizing ongoing management costs. 2014 IDC #251941 10
Investment Justification Is Solution Led Today Survey results related to the basis for justification overwhelmingly favor the identification of a problem to be solved (see Figure 4). Nearly 80% identified this as a necessary component for justification. FIGURE 4 Basis for Investment Justification Q. In regard to making the business case for new mobile messaging projects or initiatives, what type of justification is required to gain funding? A problem needs to be identified and defined 78 ROI 45 Payback period Cost reduction 35 37 No formal justification required Total cost of ownership (TCO) 13 12 Internal rate of return (IRR) 6 0 10 20 30 40 50 60 70 80 90 (% of respondents) Note: Multiple responses were allowed. Conversations with more mature companies reveal another interesting shift. While traditional solution based investment justification with the attendant standard financial measures (ROI, payback period) is still in use, there is a movement toward what we would term purpose-based investment. Again, this relates to the growing interest in messaging technologies among lines of business to support their purpose improve the customer experience or increase conversion rates in the case of sales executives, for example. In a purpose-driven context, the investment favors a platform that creates a set of options for supporting the functional objectives rather than just solving a discrete communication problem. This approach is not necessarily widespread, but it is indicative of more mature and enlightened enterprises. We Want a Return, and We Want It Now For respondents who indicated that a traditional financial justification was required (ROI, IRR, payback, etc.), we probed further as to what the expectations were: Cost reductions. Nearly half expected cost reductions of 11 30%. 2014 IDC #251941 11
ROI. More than half wanted a return of 11 30%. Payback. 75% wanted payback in less than a year, with many wanting payback within six months or less. While these results appear aggressive, they are similar to the expectations for other areas of IT investment. Our identified leaders are more patient and tend to look at a set of messaging initiatives collectively, focusing on cumulative value rather than individual projects of limited scope. The opinion is that the traditional approaches can severely limit capturing the full potential. Selecting a Vendor We also asked companies about their preferences in selecting an appropriate vendor. Not surprisingly, there was a preference toward a vendor with multichannel capabilities (see Figure 5). The results are by no means overwhelming, with less than 40% indicating they were taking a platform approach. FIGURE 5 Preference by Provider Type Q. What approach will you take (or have you taken) with regard to adding mobile messaging (SMS, MMS, and push notifications) to your business? Use mobile messaging solutions from an existing communications vendor (e.g., email or voice provider) (22.8%) Source mobile messaging solutions from an SMS, MMS, and push notifications specialist (29.7%) Build your own mobile messaging solutions internally (10.7%) Other (0.2%) Choose a multichannel provider that can offer solutions across all communication channels (including mobile messaging, email, and voice) (36.7%) The mixed results lead us to several important conclusions: The movement toward a platform approach is less about supporting multiple channels and more about being able to offer an intelligent workflow so that the service use cases identified in this white paper can be defined, deployed, and managed. 2014 IDC #251941 12
Most platforms will have a dominant technology (e.g., email, mobile messaging) and support the others. Channels such as SMS, MMS, and push notifications are more nascent, and enterprises may want to partner with a mobile specialist who has the technical, regulatory, and best practice knowledge. The Most Important Vendor Attributes To understand what were considered the most important vendor qualifications, we asked survey participants to identify their biggest issues with existing vendors. To magnify that further, we asked if they were willing to pay a premium to avoid the issue (see Figure 6). FIGURE 6 Issues with Existing Vendors and Willingness to Pay a Premium Q. What are your top 3 issues with your current mobile messaging vendor? Q. Of the listed items, which ones would you be willing to pay a premium for? Does not offer professional or managed services Is not flexible enough Has poor customer support Doesn't provide APIs Lacks domain expertise in mobile Does not support the mobile messaging channels I require Cannot scale to support my business needs Does not support global SMS Lacks financial stability Mobile messages are not encrypted Is not able to export data into existing analytics and reporting systems 0 10 20 30 40 50 60 70 (% of respondents) A top 3 issue Worth a premium to correct 2014 IDC #251941 13
The data leads us to several conclusions: Companies don't consider services part of the platform purchase and understand they need additional funding. Companies are frustrated in their efforts to get quality services for mobile messaging implementations and would like to get them from the platform provider. There are expectations for competent levels of support and a willingness to pay more for more attentive delivery. Flexibility, integration (availability of APIs), and messaging expertise are all critical to selection, but companies expect the platform provider to provide this as an integral part of the offering, not as an add-on. The availability of services, either from the vendor directly or through vetted partners, should be an important consideration in any selection. Domain expertise in the technology, including the regulatory implications and best practices around that technology, is of critical importance. Further, a provider that demonstrates flexibility in supporting numerous use cases with unique requirements is also important. Template-driven platforms have proven to be lacking the flexibility needed to meet business objectives, especially in larger enterprises. ESSENTIAL GUIDANCE Our survey work validates that there is substantial value to be gained from investment in a mobile messaging platform, but that the experience is still relatively nascent. Based on conclusions drawn from the survey and conversations with companies that are more mature, we suggest that companies consider four important points before investing. Take a Long-Term, Purpose-Driven Approach to Investment Although our survey data indicates a strong preponderance for investing at a "one problem at a time" cadence, anecdotal evidence suggests that a broader view of multiple opportunities will be more effective. The interest among lines of business in the potential for these services to support their central purpose new revenue, greater efficiencies, and higher employee engagement should be captured in a strategic point-of-view document. Executive support for the investment will be driven not by the mundane capital appropriation process but by getting visibility to the comprehensive value of having a mobile messaging platform in place to take advantage of multiple service opportunities across functions. 2014 IDC #251941 14
Favor Platforms with Intelligent Workflow Although our research indicates there is a slight preference for the ability to support multiple channels, the results are decidedly mixed. What is more evident, based on the desire to move into more complex, customer engagement focused business operations, is a strong bias toward intelligent workflow. Selection criteria for the platform should be considered in terms of both the types and breadth of services generated and the ability to deploy and run those services efficiently. On the development side, look for a platform that can support message composition, workflow, integration, and reporting all supported by an intuitive development workbench. On the runtime or deployment side, security management and scalability should be augmented by strong subscriber management functionality. There are management efficiencies to be gained, but, perhaps more importantly, a degree of flexibility in deploying services that take advantage of the message recipients' preferences. However, since most companies have robust email infrastructures, the focus should be on the emerging communication formats SMS, MMS, and push notifications. Remember That A Good Product Is Necessary, But Not Sufficient in Vendor Selection Service Capabilities Are the Difference Maker Perhaps the most resounding data point in our survey was the obvious need for superior ongoing support including implementation guidance and managed services. Once a company has narrowed choices down to a short list, service capabilities should be heavily weighted in the final selection. Building a set of requirements for investment should focus on several service competencies: Domain experience. A vendor that has not only technical knowledge but also experience with the regulatory implications and best practices. Service flexibility. The ability to create services that match the unique requirements of an organization, especially in the area of customer engagement. Full service set. Professional services to create both the use cases and the managed services to run them optimally. Scale. Sufficient staff and other dedicated resources to support a company's initiatives in a timely manner. Customer support. Knowledgeable staff with a demonstrable ability to resolve issues quickly a cornerstone service capability. Validating these capabilities in the selection process will substantially raise the probability of success. Companies should structure requests for proposals (RFPs) to delineate each provider's capabilities and validate those responses with diligent reference checking. 2014 IDC #251941 15
Form a Mobility Center of Excellence or Program Office to Manage the Portfolio The inherent value of a mobile messaging platform will be in the ability to truly support the purpose of the line-of-business domains being served. To ensure success, a company must establish proper governance. IDC recommends establishing and staffing a center of excellence (also referred to as a program office) to manage the incoming demand from the organization, set priorities, and ensure that sufficient resources are allocated to implementation. These groups are often connected to agile development teams for rapid deployments of new services and modifications. With mobile devices in the hands of employees and customers who show a preference for messagingbased communications, companies have been taking advantage, but in an ad hoc, unstructured way. The ability to integrate messaging into important revenue-generating and productivity-critical enterprise processes will deliver organizational benefits while improving the customer experience and creating new relevancy for the IT organization. 2014 IDC #251941 16
About IDC International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make factbased decisions on technology purchases and business strategy. More than 1,100 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries worldwide. For 50 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. Global Headquarters 5 Speen Street Framingham, MA 01701 USA 508.872.8200 Twitter: @IDC idc-insights-community.com www.idc.com Copyright Notice External Publication of IDC Information and Data Any IDC information that is to be used in advertising, press releases, or promotional materials requires prior written approval from the appropriate IDC Vice President or Country Manager. A draft of the proposed document should accompany any such request. IDC reserves the right to deny approval of external usage for any reason. Copyright 2014 IDC. Reproduction without written permission is completely forbidden.