Hot Topic Mobile Enterprise Services in Latin America Value-Added Services and Mobile Applications Lead to Market Growth November 2013 Executive Summary Embratel
Research Team Lead Analyst Carina Gonçalves Research Analyst ICT Latin America (+5511) 3065-8427 carina.goncalves@frost.com Research Manager Renato Pasquini Telecom Industry Manager ICT Latin America (+5511) 3065-8433 renato.pasquini@frost.com Research Director Jose Roberto Mavignier Business Unit Leader ICT Latin America (+5511) 3065-8463 joseroberto.mavignier@frost.com 2
Contents Section Slide Numbers Executive Summary 4 Introduction 7 Key Definitions 9 Market Assessment 11 Brazil Breakdown 26 Appendix 28 The Frost & Sullivan Story 31 3
Executive Summary 4
Key Study Findings Mobile enterprise value-added services (VAS) are in the radar of information and communication technologies (ICT) companies, as one of the most promising revenue streams in the next years. VAS such as location-based services, Voice VPN, mobile office, mobile cloud computing, application-topeer (A2P), short message service (SMS) and others are being improved and expanded in order to increase average revenue per line (ARPL) and improve customer experience. Telcos want to offer integrated solutions in order to optimize the adoption of mobile enterprise services by small, medium and large businesses. These solutions also drive an increase of data services and voice services of carriers infrastructure, thus providing a base to preserve the traditional telecom business. The ecosystem in Latin America is being developed and the availability of different mobile applications is expected to increase heavily in the next years. Companies are likely to adopt applications under mobile device management (MDM) solutions, in order to guarantee security, and deal with the phenomenon of consumerization, as personal smart device adoption in enterprises keeps growing. Source: Frost & Sullivan 5
Key Study Findings Frost & Sullivan estimates that the mobile enterprise services market revenue for Brazil, Colombia and Mexico, will grow from U.S. $ 11.84 billion in 2012 to U.S. $ 17.84 billion in 2018. However, many solutions are still tailor-made for special projects. For further adoption, it is important that shelf products are provided by Telcos with easy contract options by clients, as a few Telcos have been doing with cloud services applications stores. We expect that with the evolution of 4G networks and Wi-Fi hotspots, the experience with cloud services will enhance and this will allow the development of more advanced services, including video. For the client, the return on investment needs to be calculated in large projects. However, the as a service model provides an easy access for small and medium enterprises to adopt applications and services. The evolution of this model is resulting in an increase of productivity and efficiency in this segment, as users make real-time decisions; even if they are away from their physical locations, they still have access to systems that allow better management of operations, such as CRM, Accounting, Supply Chain Management, etc. However, there is still lack of awareness of the benefits that enterprise mobile solutions can deliver. Therefore the challenge is to educate customers and make the service more tangible. Other key industry barriers that need to be addressed are consumer trust on security, and low penetration of data-capable devices. Source: Frost & Sullivan 6
Introduction 7
Research Objectives, Scope, and Methodology Objectives: This study focuses on analyzing what mobile carriers are doing regarding mobile enterprise services. The key focus areas of the research are as follows: Main trends for mobile enterprise Market assessment and forecast Types of services by carriers Scope Geographic coverage: Brazil, Colombia and Mexico Forecast period: 2013 2018 Base year: 2012 Monetary units: US dollars Mexico Colombia Brazil Research methodology Primary research was conducted, and secondary research included Frost & sullivan online database, market participants financial reports, and regulators Web sites. Source: Frost & Sullivan 8
Key Definitions 9
Key Definitions Mobile Enterprise Services: Multiple components including plans, devices, operating systems, applications, access options, and corporate policies. This is the comprehensive set of tools and processes an enterprise uses to manage its mobility environment. Mobile Value-added Services (VAS): VAS are enhanced services, which add value to the basic telecommunications services and bearer services for which separate licenses are issued. Location-based Services (LBSs): LBS offer organizations the ability to identify and track locations, goods, and services in the form of directions, or maps and GPS coordination. It also provides location-based time cards, which give the duration of the stay of an employee at a particular location. These services are used in fleet management and vehicle location services, as well as in environments that have mobile equipment. Supply Chain Management (SCM): Supply chain management helps with efficient logistics tracking and planning. The advantages include: mobile dispatch, mobile order tracking, package tracking, instant messaging, on-the-spot mobile printers, exception alerts, virtual real-time vehicle tracking, and the integration of various data collection devices, for example, barcode, RFID (radio frequency identification), electronic signatures, and so on. Field Force Automation (FFA): Timely communication and coordination, both inbound and outbound, to the field are critical for FFA. It enables workflow processes, service scheduling, status reporting, remote data entry, and a host of other benefits. Mobile sales force automation (SFA): involves the extension of corporate customer relationship management (CRM)/SFA systems to mobile devices. This often allows itinerant, field sales personnel to access product information, pricing, inventory status, and customer information on mobile devices enabling users to perform contact management, calendar entries, opportunity analyses, and order management functions, while being away from their office environment. Source: Frost & Sullivan 10
Market Assessment 11
Mobile Enterprise Services Market Assessment Key Takeaway: Mobile enterprise value-added services (VAS) are in the radar of information and communication technologies (ICT) companies, as one of the most promising revenue streams in the next years. VAS such as location-based services, Voice VPN, mobile office, mobile cloud computing, application-to-peer (A2P), short message service (SMS) and others are being improved and expanded in order to increase average revenue per line (ARPL) and improve customer experience. Telcos want to offer integrated solutions in order to optimize the adoption of mobile enterprise services by small, medium and large businesses. These solutions also drive an increase of data services and voice services of carriers infrastructure, thus providing a base to preserve the traditional telecom business. Source: Frost & Sullivan 12
Units (Million) Mobile Enterprise Services Market Assessment Key Takeaway: The evolution of smarter devices with a high level of computing capability is now widespread. These devices can replace laptops on the field and travelling. Enterprises have slowly started to realize the value of integrating these devices into their communications. Key Market Drivers 30 Devices Forecast, Brazil, 2012 2014 Tablets CAGR, 2012 2014 = 78.6% Notebooks CAGR, 2012 2014 = 24.8% Smartphones CAGR, 2012 2014 = 33.9% 1 2 3 Smart device uptake and adoption of personal devices in enterprises is expected. Increased productivity and collaboration with field and remote employees are essential. Managed mobility services are likely to spur the uptake of mobility solutions. 4 Alternative revenue stream for network operators is expected to boost growth. 25 20 15 10 5 0 2012 2013 2014 Tablets 2,1 4,2 6,7 Notebooks 13,1 16,8 20,4 Smartphones 15,5 21,4 27,8 Tablets in Brazil are expected to grow almost 80% by 2014. Note: All figures are rounded. The base year is 2012. Source: Frost & Sullivan 13
Mobile Enterprise Services Market Assessment Key Takeaway: Some prospects still not recognize the advantages of mobile enterprise services. Therefore the challenge is to make the service tangible, adding value to the customer. Education also is essential for the usage of mobile enterprise services. Key Market Restraints This mindset is more prevalent among conservative vertical segments for example, the financial services sector where security and other compliance issues are critical to business operations. Access is not the only security concern; corporations also have begun to realize that any data that is downloaded or sent as an email attachment can be vulnerable if the device is lost or stolen. 1 2 3 4 5 End-user unawareness of the benefits of mobile solutions Quality of service of mobile broadband networks Affordability of mobile solutions End-user concerns on the security of solutions Low penetration of smart devices Source: Frost & Sullivan 14
Impact Mapping of Drivers and Restraints Driver Rank 1 Very Certain 2 1 3 4 Restraint Rank 1 5 2 3 4 Unimportant 5 4 3 4 1 2 2 3 Critical Impact Size High Medium Very Uncertain Low Legend: Blue: 1) Smart device uptake 2) Increased productivity 3) Managed mobility services 4) Alternative revenue stream Red: 1) End-user unawareness 2) Quality of service 3) Affordability 4) Concerns on the security 5) Low penetration of smart devices Source: Frost & Sullivan 15
Revenue ($ Billion) Lines (Million) Mobile Enterprise Services in Brazil, Colombia and Mexico Key Takeaway: The mobile enterprise services market penetration has encouragingly and steadily increased, but there is still potential for growth considering the economic outlook and enterprise market demand. 20,00 18,00 16,00 14,00 12,00 10,00 8,00 6,00 4,00 2,00 0,00 Mobile Enterprise Services Market: Lines and Revenue Forecast, Brazil+Colombia+Mexico, 2012 2018 Revenue CAGR = 7.1 Lines CAGR = 11.2% 2012 2013 2014 2015 2016 2017 2018 Revenue ($ B) 11,84 12,96 14,00 15,01 15,95 16,90 17,84 Lines (M) 35,1 39,2 43,7 48,7 54,1 59,9 66,4 Year 70,0 60,0 50,0 40,0 30,0 20,0 10,0 0,0 Note: All figures are rounded. The base year is 2012. Source: Frost & Sullivan analysis. 16
Mobile Enterprise Services Market Assessment Key Takeaway: The opportunities are immense in the enterprise mobility market segment. Service providers and vendors that can build an end-to-end ecosystem to address the challenges will be well placed to thrive in this market. Mobile Device Management (MDM) Mobile Application Management (MAM) Network Security Access Security Device Security Fleet Management Telecom Expense Management (TEM) Service Management Maintenance Management Key Applications Enterprise Mobility is starting to take center stage in many organizations and is clearly on the minds of Information Technology (TI) managers and Chiefs Information Officer (CIOs). Enterprise Mobility is far greater than just management of mobile devices. Many other aspects also need to be considered like applications management and the security issues surrounding mobility. Consequently organizations must balance the expectations of employees in pursuing an enterprise mobility strategy whilst at the same time putting in place adequate governance and security policies. Source: Frost & Sullivan 17
Market Value Lifecycle Stages of Key Services/Applications Mobile Enterprise Services Market: Life Cycle Stages of Key Services/Applications (Latin America), 2013 Reduced labor expense, increase in customer satisfaction and reduced paperwork are the top ROI impact of these applications. Mobile broadband is expected to be one of the fastest developing services. Mobile Device Management M-Health Mobile VoIP Cloud services Mobile Broadband LBS Content System Apps (CRM, SCM, ERP) M2M Video conferencing Unified Communication SFA Convergent services Voice SCM FFA SMS Business E-mail and Mobile Office Point-of- Sale (POS) application Integration of smart devices into the workplace will drive adoption of mobile applications and Software as a Service. Currently accounts for a small portion of operator s revenues, but M2M solutions are considered to offer very high growth potential. Development Growth Maturity Decline Time Source: Frost & Sullivan analysis 18
Mobile Enterprise Services Market Assessment Key Takeaway: Applications are likely to be flexible in terms of OS platforms and infrastructures. Currently the majority of the mobile enterprise solutions have custom design based on the customer business requirement. There a few shelf products available and these services also need to be adapted for implementation depending on the client infrastructure. Most operators use development partners. In this case, the customer should contact the own partner if it has software problems. If happens a hardware or information transmission problem, the partner will contact the manufacturer or the operator itself. The advantage of been a Telco customer is that mobility is its core business and it can develop customized solutions with all the knowledge required for this. Source: Frost & Sullivan 19
Mobile Enterprise Services Market Assessment Key Takeaway: Growth in virtualization and cloud computing drives ease of implementing mobile enterprise solutions. Cloud solutions is a trend in this segment because they offer the possibility to contract application in the as a service model. But these solutions are vulnerable to the bandwidth and availability of mobile networks. Currently it s more popular the hybrid model in which an application on the device sends the data in the end of a request. Source: Frost & Sullivan 20
Mobile Enterprise Services Market Assessment Key Takeaway: For the client, the payback is fast and the ROI is high because of the cost reduction applications could bring. Mobile enterprise services also bring optimization of the information flow and productivity. CUSTOMER VALUE Increased productivity. Enhanced communication in the organization. Reduced paperwork. Improved reliability and quality of information. Increased speed in information updates. Better relationships and client service. Possibility of real-time decision making. Reduced errors, with standardization and registration, having no problems with rekeying and other communication errors. Reduced need for voice communication because the content is carried via data transmission. Monitoring of risky operations (e.g. transport of money). Prevention of loss of revenue due to lack of connectivity. Integration with Enterprise Resource Planning (ERP) solutions, Customer Relationship Management (CRM) and others. Greater control of the operation created by the visibility with periodic reports of the service running. Economy, because is not necessary to invest in servers, hardware or integration. The manager just need to enable the devices and manage everything online. Source: Carriers s websites. Frost & Sullivan 21
Mobile Enterprise Services Market Assessment Key Takeaway: Mobile enterprise solutions provide the best working tools for service companies that require security, availability, ease of implementation, cost and time savings. Industrial Transportation Transport companies with high-value loads. Point of sale and logistics companies. Healthcare Companies that practice remote monitoring and assistance. Corporate management focused on products that rely on excessive control. Companies with sales force. Corporate staff with strong mobility. Management companies with products and services of high consumption. TARGET MARKET Retail and Finance Trade marketing sector. Promotional marketing agencies. Event companies Consumer and Home Supermarkets, drugstores, department stores. Consumables companies (food, clothing, etc.). Safety and Emergency Corporations that require security for its executives. Private security firms. Source: Frost & Sullivan 22
Brazil Breakdown 23
Revenue ($ Billion) Lines (Million) Mobile Enterprise Services in Brazil Key Takeaway: Lines are expected to grow at a much faster rate than ARPLs. This is mainly due to the rapid expansion of M2M services, which have a very low ARPL, usually lower than $5.00. 12,00 Mobile Enterprise Services Market: Lines and Revenue Forecast, Brazil, 2012 2018 Revenue CAGR = 7.4%, Lines CAGR = 12.6% 60,0 10,00 50,0 8,00 6,00 4,00 2,00 0,00 2012 2013 2014 2015 2016 2017 2018 Revenue ($ B) 6,35 6,98 7,56 8,13 8,66 9,22 9,77 Lines (M) 23,4 26,3 29,7 33,6 37,8 42,5 47,7 40,0 30,0 20,0 10,0 0,0 Year Note: All figures are rounded. The base year is 2012. Source: Frost & Sullivan analysis. 24
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Additional Sources of Information on ICT Communication Services Blog Mobile and Wireless Communications Blog Previous ICT Analyst Briefings Slideshare: 2013 Predictions for Telecom Services in Latin America Events Recent studies in Latin America: o Argentina Total Telecommunications Services Market 2012 o Colombia s Total Telecommunications Services Market o Latin American Satellite Services Markets 2012 o Latin American Broadband Services Markets o Latin American Data Communications Services Market, 2012 o Latin American New Business Models for Telecom Services, 2012 o Latin American Pay TV Services Markets, 2011 26
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