This scenario is not particularly far-fetched, although the service engineer’s ability to fix the problem and update his company’s back office systems at the same time might appear to be. One of the key applications that make such a real-time response possible is field service automation. Field service automation along with field force management and sales force automation are among a crop of applications that take advantage of mobile networks to allow field workers to update the back office in real time on the road. It is a very promising market – not only for vendors of these particular applications, but also mobile operators, W-LAN and other mobile network technologies.
Despite the obvious customer responsiveness’ advantages of mobile applications there are still considerable barriers to making the scenario above a commonplace event. The main barriers according to Frost & Sullivan research revolve around the business justification. For many vertical markets the level of ‘real-time’ customer service is just not required. For organisations in other vertical markets the scenario above aptly describes the immediate relationship they have with their customers, but the return on investment case is not clear. Mobile applications require the end user organisation make considerable investments not only in on-going software licences and network costs, but for those that have not outsourced them entirely, in hiring and retaining specific mobile skills.
The boom of mobile applications
Despite these barriers consultants at Frost & Sullivan believe that an increasing number of organisations will find the case for mobile applications irresistible. In the vertical markets where customer response times do make sense, and good examples of these are utilities and pharmaceutical sales, the competitive advantages offered by mobile applications are obvious. In the longer term, as the end user costs of mobile data fall in real terms and the skills required to implement and run mobile applications become more commonplace, the market will grow further as new industries that at present doubt the business case become customers.
In terms of the market over all, Frost & Sullivan believes that currently the market for mobile application software is less than €100 million in Western Europe but this will rise to well over a €1.3 billion by 2008. Currently there are in the region of 300.000 users of mobile applications estimated in Europe. This is will rise to nearly seven million by 2008.
For mobile operators, the enterprise market is often somewhat secondary in importance to the mass consumer market. However all operators are under pressure to increase their average revenue per user (ARPU) and many are looking to markets such as enterprise applications to increase data revenue. However, although business data revenues will climb steadily throughout the forecast period, they will not make an impact on overall ARPU. Because of a number of factors, such as constant and predictable pricing lower roaming tariffs, ARPU is expected to climb overall.
Pricing matters
Although the overall opportunity for mobile operators in relation to their consumer businesses is small, Frost & Sullivan believes that in 2008 enterprise application data will account for over 300.000 megabytes of traffic per quarter. It is also considered that data is a much lower margin product for mobile operators than voice, the market becomes even more attractive.
When looked at in proportion with measurements such as GDP and population, the Scandinavian countries are currently proving to be early market leaders. However as the market becomes more mature, growth in these countries will slow as their size means saturation levels are reached earlier and the market becomes a replacement-led. This will not happen for some years yet, the market being only now in its early infancy.
In terms of actors, the market consists of a wide range of pure play and start up vendors as well as established enterprise application software vendors. There are some very promising start-ups including Smartner, a Finnish mobile software vendor and Extended Systems from the US. These vendors’ unique selling points are based on the fact that they are focused purely on mobile technologies and have developed their systems specifically for the market.
Pitted against the start-ups are the large established enterprise software vendors, such as SAP, PeopleSoft and Siebel most of which have mobile offerings even if it isn’t a specific area of focus for them. Frost & Sullivan contends that the start-ups will have to prove themselves against these giants. These larger vendors have clients that trust them to deliver true enterprise functionality, they have strong, established partnerships with systems integrators that they can rely on to add depth of understanding, mobile skills and indeed prospect for new customers. It is this group that will ultimately win out. As in many markets in the past most start-ups will find the going too tough and will fail as the market becomes more competitive, some will be acquired. A small number will succeed in the longer term - those that can match the excellence of their technology with marketing and business savoir faire.
Andrew Tanner-Smith ist Consultant ICT Practice bei Frost & Sullivan.
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