VDC Research: Enterprise & Government Mobility Market Blog

Can Apple Devices Rough the Rugged DSD Market?

According to a recent article from Mobile Enterprise Magazine, PepsiCo’s North American Beverages division has adopted Apple products into its Direct Store Delivery system. Not only are roughly 4,000 field merchandisers equipped with iPhones and 2,000 field managers with iPads, but PepsiCo has gone a step further and developed two iOS apps entirely in-house through its technology group:

Power4Merch

• Enables merchandisers to view schedules, store and display details
• Notifies merchandisers of driver arrival
• Displays store details and account information

Manager’s Briefcase

• Enables managers to coordinate and monitor deliveries, schedules and contracts
• Displays pricing and planograms
• Provides electronic versions of paperwork and automated notifications to merchandisers

This unprecedented move is sure to shake the DSD market, which is characterized by mature processes, long upgrade cycles and heavy reliance on legacy rugged devices. While consumer grade technologies have slowly but surely trickled into markets ranging from retail and healthcare to education and insurance, DSD organizations’ risk aversion and reliance on mature processes has thus far stunted adoption of smartphones and tablets in the DSD space.  PepsiCo’s move to implement iOS devices is even more risky given the considerable capital investment required to purchase solutions, integrate with existing (Windows-based) systems and train mobile workers. However, according to Brian Spearman (SVP of Go-To-Market and Service, PepsiCo North America Beverages), PepsiCo is seeing early success with this program, estimating that the new iOS apps save each employee an impressive 6 hours a week.

Use of Power4Merch and Manager’s Briefcase has actually increased the operational efficiency of the DSD system by facilitating real time communication, leveraging data, and eliminating the need for printed information such as schedules and order quantities.

Beyond facilitating advances in operational efficiency, DSD organizations are increasingly looking at consumer grade technologies as a means to enhance their brand and image in customer-facing merchandising activities. Devices such as the iPad are generally more visually appealing as well as easier to operate than traditional rugged devices. They boast high resolution and larger screens, making sales presentations and customer/end-user surveying activities more intuitive and effective. Further, many DSD drivers are already familiar with operating consumer grade technology, and companies may find it more cost-effective to leverage personal devices instead of those purchased by the company. These are clear advantages that could drive a shift towards consumer grade devices in the DSD market.

A recent VDC survey of DSD IT decision-makers revealed that those in this price sensitive market feel that ruggedized devices may be overpriced relative to the value they provide. And yet, rugged vendors emphasize the total cost of device ownership, citing additional costs to manage and support consumer grade devices throughout their lifecycle (e.g. repairs, OS updates, and replacement cycle).  To address growing interest in the tablet form factor in the DSD market, vendors such as Panasonic and Motorola have been working to develop rugged tablets capable of utilizing apps and increasing operational efficiency as well. In the end, consumer grade devices are sure to make an entrance into the DSD market, albeit slow and cautious. Whether they will prosper will be determined when the first iPhone falls two inches to the ground and shatters. 

Stay tuned for more insights into the DSD Market.  VDC's Enterprise Mobility & Connected Devices Practice will be publishing its annual Direct Store Delivery Report by end of Q2.

Exploiting Enterprise Mobility to Address Pain Points in Manufacturing Industry

Manufacturing organizations are using mobile solutions to give their increasingly mobile workforce access to real-time data on the go. Demand for increased visibility of assets, execution of business remotely, and goals to improve sales and customer service are some of the factors behind increasing adoption of enterprise mobility solutions among manufacturers.

Whether they are involved in process or discrete manufacturing, majority of the manufacturing organizations are highly receptive towards mobilizing traditional manufacturing applications such as asset management, shop floor management, field service and field sales management.

Here are some enterprise mobility investment drivers in manufacturing industry:

Give anytime anywhere access to employees. Besides gains in productivity and efficiency, the employees are looking to better communicate and collaborate, as well as making decisions on the go based on the real-time information available to them.

Enterprise applications remain to be the heart and soul of manufacturing. While manufacturing industry has been slow in making the transition to mobility (in comparison to the other vertical market segments), the process is expected to be much more smooth from now on since the traditional enterprise application vendors (e.g. SAP, Oracle, Infor, Epicor, etc) are on board. VDC anticipates more modules/ suites from these applications (e.g. ERP, CRM, MES, WMS, etc) to be mobilized in addition to the modules like Expense Management that lead the way in making the shift to mobile.

Jump on the mobility bandwagon now, if you haven’t already done so. Organizations have started to view mobility as an extension of their core processes and functions within the manufacturing environment. Inventory management, for example has been an application that many manufacturing organizations are using in their warehouses and DCs.

Sprint Bets on "Everything is Connected" with Velocity

On November 29 at the L.A. Auto Show, Sprint announced a new product dubbed Velocity that is an in-vehicle communications platform for automotive manufacturers. The in-dashboard product will have capabilities to deliver music, news, weather, sports and other infotainment features, security, navigation, remote connections for mobile devices, emergency services and engine diagnostics. Sprint will support global deployment via its many partnerships with multiple network providers, and let a customer connect an embedded head unit or mobile phones to applications like voice-activated texting and e-mail. Automotive OEMS will have the option of taking either a modular approach to meet custom needs, or use the product as a turnkey solution.

By partnering with technology providers such as Airbiquity and Wireless Car, Sprint is significantly reducing the development, integration, and selection requirements faced by an automotive OEM for this type of technology. It also opens up the range of products that Sprint offers in the machine-to-machine segment and positions itself at the high end of the value chain among the technology providers supporting the Velocity product.

For automotive manfacturers, it really provides three key opportunities:  the potential for higher margins for vehicle dealers; product differentiation; reducing the complexity of supply chain; and utilizing a business model that delivers effective cost and quality for the product.

As a network provider, Sprint expands its product line-up with a higher value machine, and positions itself well in the market and supply chain as well as providing another revenue stream via a billing service to the machine. In addition, the product aids automotive OEMs by reducing complexity in the supply chain. However, this does bring to the forefront a question of how many subscription services is the "connected" customer willing to pay? As consumers or enterprises continue to acquire and support multiple devices, the burden of paying for service on these devices is going to increase. In most scenarios, these different subscriptions are using data for various services. Network providers need to evaluate their business model, and think about billing based on access versus billing by each individual device. Future service plans need to be built around network access and data consumption versus device connections.

Similar to the product Sprint is bringing to the market, in 2007, Ford Motor Company launched a factory-installed, integrated in-vehicle communications and entertainment system called SYNC. The SYNC system runs on the Windows Embedded Automotive operating system designed by Microsoft and consists of applications and user interfaces developed by Ford and third-party developers. SYNC is only available in Ford products, and some features of the product are limited in markets outside the United States due to compatibility issues, in particular, voice command services such as turn-by-turn directions in Canada.

Sprint's new product certainly reflects the future of "everything is connected", and is a glimpse of what the world of machine-to-machine may deliver. To be competitive the product needs to ensure  seamless integration:  the ease of upgrading operating system software for vehicle radio, and navigation systems as well as applications; a high level of functionality; and supporting features and functions of mobile field workers in different industries. If Sprint can deliver the highest level of functionality in areas such as navigation and web browsing, it has an opportunity to edge out current technologies such as Bluetooth that many drivers employ to access some of the same functionality provided by in-vehicle communication platforms, and users that have been accessing similar capabilities via mobile phone or tablets in their vehicle.

When and Where for HTML5?

Even before Facebook declared, "The biggest mistake we made as a company was betting too much on HTML5 as opposed to native.", there had been much debate about the viability of developing mobile applications on HTML5. When an e-mail came to a colleague with the message:  Don't Miss Out:  Try our new NYTimes Web App for iPad free; my thoughts were, hey, here's a web app being boldly promoted by a content leader formerly known for a native app.

VDC has never seen HTML5 as a panacea for developing applications that can deploy on any device. For the enterprise, the challenge is understanding the needs of the user to determine if a native or web application (see our full report, Mobile Development Platforms http://bit.ly/i3C8x1) is the most suitable path to get the job done. What essential requirements should be evaluated to determine the path for mobile application development?

Nearly as important as cost considerations, are the technical and functional requirements of the application, which we consider the most significant drivers for selecting a native, web app, or a hybrid development approach. The enterprise needs to align the end-user requirements with the business need to drive the decision-making process.

Whether your mobile strategy is looking to increase revenues, expand markets, compete directly, play catch-up in the market; or some other goal; be sure to balance the needs of the user with the priority of the mobile opportunity for the end-user. One of the most frequent comments about HTML is that it's not robust enough to create "stickiness" with customers. (Limited capabilities in supporting advanced device features available by a native OS such as integrating data from the app into the phone, push notifications, update calendars, etc.) For a content provider, like the NYTimes, is it essential to provide these features, or is it enough to start with a mostly digital version of their paper with some other features? Whether it is or not, it meets a user requirement for a web app.

To determine technical and functional requirements, again, the user profile should lead the evaluation, but within mobile parameters. Given the nature of mobile (a small screen, gaps in connectivity), the enterprise does not necessarily need to replicate a desktop application on mobile. If the browser (as a "container") cannot connect with core device-side features, what will be the impact in a mobile environment for the user? Is a camera, or microphone paramount to the user experience?

Other companies such as LinkedIn and Walmart have taken a hybrid approach, which allows access to some hardware device features, and does not limit application development to only one platform. As a content providers, one guiding parameter for mobile strategy is reaching all users.

Is The New York Times using this app to evaluate HTML5? Probably. Does it accelerate customer penetration on mobile devices? Yes. Does it give them the user experience to launch other web apps in the future? Definitely, and the "middleman" (and their revenue share) are taken out of the equation.

What parameters are you seeing for native versus web approach? What features if made available on HTML could displace a native approach?

Requirements are Changing in Field Mobility

VDC Research recently published Strategic Insights 2012: Field Mobility Solutions Report as part of its Enterprise Mobility Vertical & Applications Markets Research Service. Some key findings from this research include:

Hardware requirements are changing in field mobility organizations - Both field service and field sales organizations are looking to deploy tablets as a result of the real estate that they can get from the large display size. While the notebooks used to dominate these markets (in terms of rugged large from factor devices), the portability element is making tablets a much viable choice. The trend with equipping mobile workers with multiple devices continue to receive traction. The demand for having a mobile device at the point of interaction with the customer in addition to an in-vehicle solution is on the rise.

Rugged value proposition is being re-evaluated - With the increaseing availability of user friendly devices that have touchscreen and broad app ecosystems, the value proposition of ruggedized solutions need to be redefined. While rugged form factor will continue to be used for some mission-critical workflows, BYOD trend has made its way into this market. End user requirements are changing the applications and mobile platforms are becoming more important than ever. Many rugged mobile device vendors as well as field mobility organizations are adopting multiple OS strategies where they are introducing or deploying Android-based devices.

Customer engagement is becoming a key differentiator - As they evaluate/ deploy enterprise mobility solutions, field mobility organizations are looking to gain improvements in customer service in addition to improvements in workforce productivity. Cross and up selling capabilities and improvements in first-time fix rates are critical for field sales and field service organizations respectively. Thus, client facing applications are receiving traction as these organizations are looking to gain higher customer retention rates.

BYOD in the Government Sector - the USDA's Large MDM-Oriented RFP

The United States Department of Agriculture (USDA) has recently issued a multi-million dollar RFP for a variety of integrated MDM-oriented mobile solutions. As stated in their RFP and PWS, the Agency plans to award its next-generation and enterprise-grade mobility contract to a single vendor via a blanket purchase agreement (vendors may propose a proprietary solution or one built through partnerships with other providers). The document makes it clear that the agency recognizes that its workforce is being impacted by BYOD:

"new boundaries are being established within USDA that support the mobilization of our workforce and that blur the lines between personal computing and corporate resources."

Several key and core mobility management components are desired — specifically a solution that tightly integrates:

• MDM (the agency expects to grow its current footprint of mobile devices from 3,000 to 100,000 in "the next few years")

• MAM (the agency has specified that it requires a solution that can accommodate the deployment of both in-house and commercially developed applications).

• Secure Container (the agency seeks a solution that allows Government data to be securely isolated from personal data while being managed from the MDM solution it decides on).

While the Agency expects its workforce to be relatively stable in the coming years, it expects mobile devices to play an increasingly important role in the future. It expects BYOD to account for the lion share of the device growth within its workforce in the coming years — however, government furnished equipment (GFE) will also increase. The Agency's RFP reveals the device diversity (3,600 mobile devices are currently being managed, consisting of: iOS, Android 2.2+ and Windows Phone 7) that it must contend with, and also makes it clear that it recognizes the importance of preserving the user experience:

"everything must appear “seamless” to end-users while delivering significant business value in a secure manner."

According to the solicitation documents, organizational experience with the USDA and its primary service provider (International Technology Service or ITS) is preferable — the RFP appears to be open to all federal business opportunity vendors. While the experience requirement could potentially eliminate many smaller vendors, the reality is that there are a limited number of vendors whose solution range spans MDM/MAM/Secure Container that can claim the "tight integration" capabilities that the Agency demands. The fact that the USDA recognizes that participating vendors can propose a proprietary solution or one built through partnerships is notable, and speaks to the Agency's recognition of the state of our mobile ecosystem.

The RFP also reveals that McAfee is the incumbent MDM vendor putting them in an advantageous position for the contract (the company also has recently enhanced its MAM capabilities). However, there are other MDM vendors of note who possess the key criteria that the USDA is looking for (AirWatch, SAP, and MobileIron) as well as others (e.g., Boxtone and Zenprise) who are well positioned to partner due to their ability to tightly integrate with best-in-class MAM vendors such as Apperian and AppCentral, and secure container vendors such Good Technology and Bitzer Mobile.

There is certain to be aggressive per device pricing proposed from the vendors vying for this business — we'll be keeping an eye on this large contract, and will continue to blog about it as details emerge. VDC will also will be publishing a comprehensive MDM Report later this month.

The Attack Surface Problem on Mobile Platforms

In comparison to desktop PCs, the number of threats on mobile platforms is actually low (today), but the pace of device proliferation has changed the traditional definition of a network endpoint, and has made smartphones and tablets an attractive target for those seeking to do harm. While device manufacturers continue to enhance the embedded security that resides on their hardware with each successive release, cyber criminals are altering their tactics and are keen on taking advantage of flaws in mobile platforms and applications. Another complication for corporate IT is the fragmented state of today’s mobile OS landscape. While RIM continues to struggle, our data indicates that on average, organizations support more than 2 OSes (we anticipate this to be the case for the foreseeable future as well). This is problematic from a security and device management perspective, and increases the complexity associated with effectively administering a multi-platform mobile environment.

For the criminally minded, information such as personal email, contacts, passwords and other stored personal and/or corporate data, all present a potential treasure trove of high-value information that can be exploited. Scams such as phishing (where passwords and other personal information can be stolen), location (GPS) tracking, and financial malware, are all opening the door to illicit and potentially criminal activity. Invariably, new technology platforms introduce new vulnerabilities, which often enable new attacks by increasingly potent adversaries. The challenge organizations that recognize the strategic advantage available to them from investing in mobility solutions will be to prioritize investments in technologies and practices which can best protect assets and maintain operational efficiencies without disrupting business innovation. This will be an essential top management issue as mobile workforces continue to expand.

A common characteristic of mobile devices is their multiple connectivity options (depicted below), this is distinctly different from traditional PCs which appear as a single end-point on a corporate network. The robust connectivity options make mobile devices extremely powerful, and data retrieval and information sharing painless; however, they expose mobile devices to a variety of security threats, particularly when deployed in corporate settings.

Bottom line – understanding the attack surface on mobile platforms is critically important for companies as they expand thier mobile workforce. Moving forward, developing a threat vector based defense-in-depth architecture will be required – the battle for who provides these security solutions has, and is sure to intensify. The best protection to “future proof” mobile technology platforms will be to not only appropriately invest in the staffing and training of IT personnel, but to arm them with the powerful software solutions that continue to mature and provide the level or protection that is necessary in today’s mobile ecosystem.

A growing number of vendors are acutely aware of the attack surface problem, and are emphasizing their security-orientation as they compete in the enterprise mobility market – if you represent an organization with a mobile-oriented enterprise-grade security solution, I'd welcome the opportunity to speak with you about your solution(s).

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Some Enterprise Mobility Acronyms are More Important than Others ...

Why BYOD is en Vogue

Chances are if you work (or have worked) in a marketing, product management, or IT role, you've come across your share of acronyms — the mobile boom we are in the midst of has the enterprise mobility ecosytem in full acronym bloom. While this isn't a surprise given the astronomic growth in adoption of smartphones and tablets that we are seeing, if you've been in the workforce for say a decade or more, you've seen your share of acronyms come and go. However, as a long-time industry watcher I can say that there is one salient acronym that will also eventually "go" but whose impact will be felt in the modern workplace for years to come — no surprise, I'm referring to BYOD.

"The Genie is out of the Bottle" is a tried and true expression that folks like me like to use, and it couldn't be more applicable to what is happening in enterprise mobility today. BYOD (many prefer the term "Consumerization of IT", yes another acronym — CoIT) is prolific in the messaging from mobile-focused vendors for good reason, it refers to the increasing influence that consumers are having on the technology which we expect to use at work. This concept, along with the mobile device proliferation that is common in business environments today is bringing both challenges and opportunities for IT organizations. While IT is accustomed to “pushing back,” increasingly it is the employees who are doing the pushing, and they are regularly getting their own personal mobile devices supported on corporate networks. This trend has brought the need for investment in solutions to control and manage their increasingly mobile workforce. Clearly there is a significant opportunity in front of the growing number of vendors that are sharpening their focus on enterprise mobility — while many startups are "mobile first", traditional ISVs are positioning their product roadmaps (often via acquisition) to attack the enterprise mobility segment.

Acronyms all have their day (DOS, DSL, Y2K etc.), and BYOD will fade to obscurity as well, but as of Q3 2012 it is having a profound impact in the enterprise — see our "SWOT" analysis of it's impact below:

Be sure to Register for an Important Webinar Discussing the Impact of BYOD on July 19th

If you'd like to learn more about this topic, I welcome your participation in an important webinar I will be co-hosting with Bitzer Mobile (@bitzermobile) next week — you can register for it by clicking here

Hangar 14’s Streetwise CADlink Application to Support Adoption of Consumer-Grade Tablets into the Fire Department

Recent conversations with various public safety units – including police, EMS, and firefighter – highlighted a key barrier that has slowed adoption of consumer-grade tablets into the fire department – the lack of Android and iOS applications to support key workflows in this market.  Many police departments, on the other hand, have experimented more with laptop and tablet technologies, and thus have drawn more attention from commercial vendors offering applications and hardware packages.  In order for fire department units to take advantage of the more cost-effective consumer-grade tablet device, we will need to see a stronger ecosystem of apps develop to further the utility of these devices when firefighters bring these devices into the field.   

One FD IT department we spoke with expressed the challenge this has presented for their department in deploying tablets.  This unit explained that they would likely deploy Android tablets – largely because the application Streetwise CADlink is currently available for this OS.  The Streetwise CADlink was developed by Hangar 14 Solutions – a company led by firefighting veteran Phil Kouwe.  

While small, this startup appears destined for strong growth in coming months as this solution enters the market.  As Phil Kouwe explained, many fire departments currently have deployed Toughbooks or other netbook form factor devices – these devices often remain closed, and are thus not truly mobilizing these workflows or enhancing productivity in the field.  The Hangar 14 solution for Android tablets is designed to integrate critical response information, enabling firefighters in the field to access incident information, maps, turn-by-turn directions, hydrant locations, satellite views, and the locations of other units responding to the site.  As the Streetwise CADlink application gains increased visibility and potentially expands to support iOS devices, we expect this solution to significantly impact the adoption of consumer-grade tablets into the firefighting market.

Mobile Payment Market Welcomes Swiff

As the market gets flooded by mobile payment solution providers in the recent years, the receptivity for accepting mobile payments has increased. Based on our end-user research, 37.1% of the retailers claimed that they are either using or currently evaluating mobile payment/ POS solutions. While the interest for more consumer-oriented solutions such as location based services is higher, the security and compliance requirements for mobile payment solutions are a lot more complicated.

PayPal recently introduced PayPal Here in the past couple of weeks and is now a strong competitor to Square-like solutions that have been emerging. Last week, the market welcomed another entrant, this time an Asia-based solution, Swiff. The company offers secured mobile payment with its mobile card reader dongle. While the increasing competitiveness in the mobile payment market should be part of an another blog, we thought the Singapore-based Swiff was worth noting given the interesting approach they are taking.

Instead of directly targeting merchants (i.e. mostly SMBs) that are interested in accepting card-based payments, Swiff is partnering directly with banks and financial institutions. The company is not just building on the existing relationships that these organizations have with their clients, but also targets to earn their trust much more easily. So, instead of having a PayPal-like company accepting the payment from the customer and paying the merchant, Swiff is enabling banks to be the medium in accepting payments. Given the high demand for mobile banking in regions such as Latin America and Africa, as well as emerging country markets like India, we believe partnering with banks could be a good differentiator. It is also worth mentioning that the flat-rate business model that is followed by other providers like Square, PayPal and Intuit's GoPayment, that is roughly around 2.7% to 3% based on the solution provider could potentially be a better move than the varying rates applied by Swiff - which varies between 1.6% to 3%. It is interesting to see new entrants trying to distinguish themselves from the competition and we expect the mobile payment market to continue attracting such interest around the globe.