Professor Jeffrey L. Funk -- of the Hitotsubashi University's Institute of Innovation Research in Tokyo -- is one of the world's top authorities on wireless Internet in Japan. Funk has written two books on the subject, including "The Mobile Internet" and the soon-to-be-released book "Mobile Disruption." This paper is a condensed version of a chapter from "Mobile Disruption." Introduction It is estimated there were between 100,000 and 200,000 business people accessing information in corporate databases from their mobile phones as of April 2003. This growth has been driven by the rapid diffusion of Internet-compatible phones and the innovations in the mobile Internet-related technology that began accelerating in the year 2000. It is ironic that there are probably many more mobile Internet business users in Japan than in the United States or Europe in spite of the fact that U.S. and European service providers initially placed much more emphasis on business users than Japanese service providers (e.g., see J.P. Morgan, 2000). The reason for this unexpected turn of events is that screen savers and ring tones -- and the micro-payment services that support these contents -- created a critical mass of users in Japan, which in turn has driven innovation in the market. Improvements in displays, camera phones, application processors, memory and software are improving the performance-cost ratios of business applications (Funk, 2001; Funk, 2003). Just as entertainment has been an unexpected driver of this growth and innovation in the overall mobile Internet, unexpected applications such as delivery, construction, maintenance and sales are driving business use in the mobile Internet. Firms that have little experience with ERP (Enterprise Resource Planning Software) and CRM (Customer Relationship Management) are implementing a new set of applications and they are using a new set of solutions that are offered by a new set of firms. More than 50 firms were offering almost 80 mobile business solutions in mid-2003, and none of these solutions were from the leading suppliers of ERP and CRM like SAP, PeopleSoft, Oracle, J.D. Edwards & Co., or Siebel. Furthermore, most users are doing their own systems integration and are probably providing a larger percentage of innovations than the suppliers of the software systems do. Just as users were the main sources of innovations in the first computer systems, (1) scientific and measuring equipment, and various kinds of manufacturing equipment (von Hippel, 1988), many firms are developing their own mobile intranet systems because they have needs that are not yet understood by suppliers. The mobile nature of the devices places unique demands on the system; the small screens and keyboards place unique restrictions on the type of information that can be accessed; and improved applications processors are rapidly changing the phone's user interface (Funk, 2003). Until suppliers understand these unique demands and restrictions and a dominant design for the phones emerge (Anderson and Tushman, 1990), it will be difficult for suppliers to offer standard systems that can be used by a wide variety of firms. This paper summarizes three stages of mobile intranet usage. Mail, the first stage, can also be divided into three stages (see Table 1). Table 1 is based on Japanese published sources and interviews with over 20 firms directly involved with business applications in Japan, including users, system integrators, software providers and service providers. The first section of this paper describes some simple mail solutions and examples of these systems in applications like delivery, taxis and trucking. The second stage is mobile groupware, and the third stage is accessing corporate data from the mobile phone. The latter sections of this paper discuss mobile groupware and some examples of Stage 3 systems in applications such as maintenance, construction, and sales force automation (SFA). Some of these Stage 3 systems rely on mail and thus are called push-based systems where the addition of URLs to these mail messages makes them Stage 3 systems. Using data from various Japanese firms, we can also estimate the number of firms and business people who are using phones to access corporate data. Table 1 shows estimates for the number of firms that had reached the three stages as of the end of 2000, 2001 and 2002 (the fiscal year ends on March 31 in Japan).
As shown in Table 1, growth occurred primarily in Stage 1 systems in 2000 and 2001. Furthermore, also as of early 2003, there were more than 500,000 subscribers to various mobile mail services that facilitate access to their PC mail and several times more business people probably do this on their own or rely on their firms to provide the service.In 2002, growth centered on Stage 2 and 3 systems. Of the estimated more than 100 firms that had introduced Stage 3 systems as of the end of 2002, at least 10 of these systems had given phones to more than 3,000 of their employees. This suggests there were probably more than 100,000 business people using mobile phones to access Stage 3 systems at this time and perhaps as many as 200,000. It is likely that growth in Stage 3 systems will accelerate in 2003 and continue to exceed that of Stage 1 and 2 systems. There may be more than 1 million business users of these Stage 3 systems by the end of 2004. Furthermore, this will likely drive further increases in corporate data usage that is currently fairly low. (2) First-Stage Systems: Mail There are a variety of ways to handle corporate mail. The most simple solution is for individuals to have their PC mail forwarded to their phone. Potential problems with this approach include viruses, crowded in-boxes on the phone, and full mailboxes in i-mode servers. Net Village provides a simple solution to this problem called remote mail service. For several dollars a month, individuals can have their PC mail converted to c-HTML format so that it can be read on their mobile phone. Users first register their PC mail server and user names along with the password. When they wish to access their PC mail from their mobile phone, they access Net Village's mobile site, input the password via the mobile phone keyboard, and the mail is loaded onto temporary home pages. Net Village's Java program provides additional capabilities. By eliminating the need for downloading the tags and other formatting information, the Java program reduces the packet charges by more than 50 percent while at the same time providing faster mail response. Net Village's servers will check the PC mail in-box as often as every 30 seconds for mail including the reporting of mail from specific mail addresses. Furthermore, it enables users to activate other Java programs such as screen savers (which could be corporate-based) and maps and even access Microsoft Word and Excel files. A key issue is the expandability of such a service that is currently aimed at individuals. Many organizations (including my university) do not allow outside access to their servers, and for this and other reasons Net Village's may always be a solution to an individual's mail problem. Increasing the size of the Java program will increase the complexity of applications, but will multiple people be able to share information? Examples of Stage 1 Systems Delivery companies, which are some of the leading users of information technology in the world, are currently the largest implementers of Stage 1 systems in Japan. The mobile Internet and conventional GPS systems provide new options and new tradeoffs for these delivery firms. For example, Sagawa Kyubin began using mobile phones instead of proprietary handsets (a customized PDA) for communication between call centers and drivers in early 2001. Operators contact drivers with mobile mail concerning changes in pick-up or delivery locations and times, and the drivers simply click on a URL and the appropriate place within the home page to signal that the delivery has been completed. The central database is updated every 15 minutes. The implementation of the system, including the 25,000 phones, cost 2 billion yen (about $19 million). Bike Dot Japan began using conventional GPS and mobile mail in place of their proprietary mail systems (a customized PDA) to communicate with delivery personnel in late 2001. Bike Dot Japan delivers parcels using small motorcycles. Operators in the call center look at screens that show the pick-up and delivery points for the parcels to choose the most appropriate vehicle and notify it with mobile mail. It is now possible for one person to complete the job whereas previously it took one person for the order and one person for the delivery notification. Using this technology Bike Dot Japan has been able to reduce call center personnel needs by 40 percent and delivery times by 5 to 10 minutes. Second Stage Systems: Groupware Mobile groupware can be defined as the second stage in the creation of mobile intranets since it can provide more functions than the mail-based services described above. Groupware started with software packages such as Lotus Notes and Notes Exchange and now a large variety of these packages exist, many of which address specific applications such as project management for a specific industry. In addition to mail, users can access project schedules, bulletin boards, and other people's calendars and share files. Mobile packages More than 20 firms offer mail and groupware solutions for mobile phones. Some of these solutions provide compatibility with existing PC software such as Microsoft Outlook. Other solutions focus on specific tasks such as instant messaging or exchanging multimedia images, or more general applications such as sales force automation, time card or bulletin board services, university clubs or community sites. Two of the leaders are Cybozu and Dream Arts. Cybozu introduced software in January 2001 that includes the ability to access some groupware functions such as mail, calendars and bulletin boards on mobile phones and PDAs. The software recognizes whether the access terminal is a phone or a PDA and adjusts the screen sizes accordingly. The PDA version also has browsing and data synchronization functions and accesses more data in a single download and saves it on the PDA so that it is faster for the user to retrieve the data. Dream Arts also offers a mobile groupware package. While Cybozu targets small groups that contain as few as 10 people, Dream Arts targets much larger groups; up to 10,000 people can use its groupware program. It sells these packages through system integrators such as IBM while Cybozu's software can be downloaded from the Internet.
Dream Arts' focus on larger groups has caused it to focus on applications that are slightly different from those of Cybozu. One function enables users to create and send surveys to mobile phones. While it is also possible to send surveys to PCs in traditional groupware packages, mobile phones require different forms of surveys (Funk, 2003).Furthermore, users can also input data into their mobile phone while interviewing consumers where the data could be text, voice, or pictures. Camera phone users can attach pictures to mail and send them to their PC where the Dream Arts' system enables users to create reports and schedules from these inputs. Like the type of services offered by Net Village, there are a number of questions about the future viability of mobile groupware packages. Although their focus on group as opposed to individual problems suggests that the market for groupware will quickly surpass the market for Net Village's services, how can mobile groupware suppliers use new technologies such as Java, which other firms like NTT Software have introduced, to expand the functionality of their products? The Java program reduces the amount of tags and other formatting information and thus reduces data charges. Furthermore, can groupware be constructed from a set of smaller client-based programs such as Java or will existing suppliers of PC-based groupware resist such efforts for either technical or organizational reasons? Without such a capability, groupware cannot benefit from the increased processing power of phones and thus could be at a disadvantage when compared to new approaches. Multi-tasking There are also fundamental changes in the phone design that will facilitate solutions such as mobile groupware. On the PC, many people simultaneously work on Microsoft Word and Power Point documents while they keep their Microsoft Exchange or Eudora mail program running. They refer to multiple documents while they work and exchange data between the documents. Existing mobile phones cannot do this due to restrictions in the operating systems that are used in mobile phones. For example, in a maintenance example described below, the maintenance worker cannot easily move back and forth between viewing a mail message or home page, or making a call. The worker must cancel the mobile Internet session in order to view the mail message again or make a call (this problem does not exist when a phone call comes in). This makes it difficult to refer to the information in the mail message or in the URL while talking to someone. A simple solution is to use a Java program to manage various applications, including the downloading of data into these applications. For example, a firm called Gravana offers Bullant Remote, which is a 20-kilobyte Java program for managing multiple applications simultaneously. Another solution is to change the operating systems (OS) that are used in phones. In addition to facilitating multi-tasking, this will also facilitate file management including the saving of Java programs, photos, ringing tones, maps, and business data and their transfer to newly purchased phones. Symbian was supposed to provide phones with a standard operating system but support for Symbian continues to dwindle. Most Japanese manufacturers use TRON, a proprietary OS, or a proprietary version of Symbian's OS and the winning OS has still not yet been decided. This is one place where Microsoft might be able to enter the mobile field. In addition to multi-tasking, the ability to easily exchange files between phones and PCs would be valuable for many users. On the other hand, Microsoft's solutions are based on Windows and they are currently too complex for the small screens, keyboards, processors and memories in phones. This is a major reason why many industry observers believe that Mobimagic, the much-ballyhooed joint venture between Microsoft and NTT DoCoMo, has produced few results in its three years of existence. Stage 3 Systems: Maintenance Applications Modern economies require continuous maintenance of items such as elevators, copy machines, computers, and power and transportation systems. Managing these engineers can be a complex and expensive business; ideally you would like to choose the engineer with the right skills and the right location and provide that person with the right information about the customer. Stage 3 mobile intranet systems and GPS devices provide additional tools in the struggle to achieve these goals. For example, consider Japan Business Computer Corporation (JBCC), which provides maintenance for IBM computers. It has 16 branches, 74 offices, and maintenance contracts with 2,000 companies. Its maintenance engineers make about 18,000 visits each month to its clients' offices. Previously, an operator in the call center chose an engineer based on his or her best judgment and sent a message to that engineer's pager. The engineer then made a phone call from a pay or mobile phone to discuss the customer's problem with the operator. The operator explained the problem to the engineer and if it was determined that the engineer should be assigned to the customer, the operator verbally provided the engineer with additional information. The operator then called the customer and confirmed the visit. The engineer also called the operator when he arrived at the customer's site and when he completed the work and the operator updated the databases accordingly. Mobile mail and other computer technology play a key role in the new process (see Table 2). When an operator receives a call from a customer, the operator chooses an engineer based on information about the available engineers in the computer database. The operators send them mail that contains information about the customer both in the main body of the mail and in a URL that is included in the mail. The main body of the mail includes the firm's name, phone number, address and a place for confirming their ability to visit the customer in a return mail message. The URLs, which make this application a Stage 3 system, provide links to maps, maintenance contracts, spare parts, and project status. The contract information includes the product manufacturing number and whether the product is still under guarantee. The links to the spare parts enable engineers to order parts, which are delivered via special courier. Engineers update the project status as they complete the project by choosing from a list of choices in the URL. These choices include 'waiting for the next project,' 'waiting for more information,' 'in transit to next project,' 'started task,' 'finished task' and 'returning to the office.' All of this is done with the push of one button, and engineers are not required to search through long menus. The operators can access the project and engineer status information from PCs in the call center. Each engineer's schedule includes their own inputs and inputs by their boss (e.g., meeting times). Engineers can also access their schedules on their mobile phones, and operators use these schedules to choose engineers for assignments. The new system has reduced telecommunication costs, increased labor productivity and increased customer responsiveness. Telecommunication costs were 37 percent lower than those of the previous year, which involved savings of more than one million yen ($9,288) per month. Call center operators can handle more calls, engineers can solve more problems, and the engineers arrive at the customer's location faster than before JBCC introduced the new system. JBCC is now considering the use of GPS, camera phones and mobile groupware in its system. Stage 3 Systems: Construction The mobile phone provides an additional tool for the construction industry, which is currently implementing Internet-based solutions. In the short run, workers can use their phones to update process schedules, and in the long run they can access information about specifications, record tasks with the camera function and keep track of materials with the GPS function. One of the leaders in using both the PC and mobile-Internet in the construction industry in Japan is Sumitomo Construction. Sumitomo Construction first applied Internet tools to its home construction business, which builds over 10,000 custom homes per year. As of mid-2002, 2,000 of the expected 5,000 PCs had been installed and 4,000 phones were being used. Sales personnel prepare a home's specifications on the PC while consulting with the customer in a sales office. They choose dimensions, colors, and other features, and Sumitomo Construction shares this information with suppliers from an early stage. While previously the specifications and schedule were sent three weeks in advance of the start of construction, this information is now shared with suppliers as early as three months in advance. The sales offices choose the starting and completion dates and the work offices create the detailed process schedules. Sumitomo's construction workers use their mobile phones to update process schedules. These schedules are divided into 200 steps, 70 percent of which can be input from a mobile phone and the remaining 30 percent can only be input from a PC. Of the mobile inputs, carpenters input about 100 of them while other workers input about 40 of them. The work offices send mail to the carpenters each day at about 2 p.m. The workers click on the URL, and they indicate whether they have completed a specific step or steps. After completing a specific step, the next steps in the process are included in the following day's mail. Carpenters complete, on the average, 1.5 process steps per day. Each night, the work offices look at the process status and update the schedules, which includes when specialists like plumbers and electricians should be at the construction site and when materials must be delivered. The plumbers and electricians work multiple sites and only spend a few consecutive days at one site. They bring tools and materials to the site and then return to their own offices where they can access these schedules on their PCs. While in the future the plumbers and electricians may also provide updates to the process schedules via mail, as of late 2002 the work office managers do this for them since the plumbers and electricians may only work a few days per month at a Sumitomo construction site. Sumitomo Construction is currently on track to reduce the average construction time from 112 to 90 days -- about 20 percent -- and reduce the average construction cost by 5 percent through the better scheduling that the mobile phones provide. Previously, the site manager spent a lot of time checking the status of various tasks and then contacting the plumbers and electricians. There were often multiple days lost due to poor scheduling, and site managers spent a lot of time rechecking the status of multiple steps before deciding to proceed, particularly in the cases where multiple steps needed to be completed before the next process step could be started. The data input on the mobile phone enables the site manager to have better data on process steps and to spend more time managing as opposed to collecting data. In the future, Sumitomo Construction plans to use camera and location information in its system. Stage 3 Systems: SFA Applications Currently, the largest Stage 3 application in Japan may be SFA (Sales Force Automation). Sales is one of the oldest and still one of the largest professions in the world even in countries where B2Bs have seen significant growth, such as in the United States. Whether these B2Bs eventually reduce the need for salespeople and, if so, where will they do this first are important questions that need to be addressed. However, these questions are not within the scope of this analysis, and instead this analysis assumes that sales will remain an important profession for the next 10 to 20 years during which many firms will be implementing systems that enable their salespeople to access sales-related information from their mobile phones. For example, consider Sony's implementation of an SFA system called e-mouse beginning in the summer of 2001. By early 2002 about 1,740 salespeople were using their mobile phones to check mail, schedules, wholesale prices, inventories and sales figures. This number had risen to 2,700 by mid-2003, 500 of which were using Java programs to access information. Sony is currently introducing a similar system for its maintenance employees. The results are greater time spent visiting customers. While previously salespeople spent most of their mornings in the office doing administrative work and spent their afternoons visiting companies, they now spend most of their days visiting companies. They do their administrative work on their mobile phones between visits either in their cars, on public transportation such as trains, or in coffee shops. Sony considered laptops, but their high cost, short battery times and heavy weights caused Sony to choose mobile phones. Summary The explosive growth and resulting innovations in the Japanese mobile Internet have caused business applications to emerge. And just as an unexpected application -- entertainment -- has driven this growth and innovation, an unexpected set of users and applications are driving business usage. Instead of firms using mobile phones to access existing ERP (Enterprise Resource Planning) and CRM (Customer Relationship Management) systems, there is a different set of users, many of whom are doing their own systems integration and are the sources of the key innovations. The early applications include delivery, construction, maintenance, and sales and the key technological trends include larger displays, increased processing power and network speeds, Java, and the effect of these on improving the phone's user interface. Improvements in the user interface will most likely expand these business applications with the first step being Java. Many of the new application tools are based on Java and this will likely accelerate in the near future. Furthermore, faster processing speeds will lead to the greater use of 3D images, including 3D displays of data, voice recognition and other forms of new interfaces (Funk, 2003). It will be interesting to see how general solutions, sometimes called dominant designs, emerge and evolve as the user interface is improved. Although many suppliers claim to offer standard solutions, most users will not buy a general-purpose package until they perceive that a general solution has emerged. If new user interfaces completely change the design of general-purpose packages, it is probably not in the best interests of users to quickly purchase such general-purpose packages. Alternatively, if suppliers of these systems are able to create an effective strategy for how to upgrade their packages (and installations) as the user interface evolves, general-purpose solutions might quickly emerge. This will likely depend on the complexity of the application. Standard solutions will probably emerge much more quickly for Stage 1 and 2 systems and simple Stage 3 systems such as report preparation and taxis. In fact, most users already rely on such standard solutions for these applications (Funk, 2003). On the other hand, it appears that the emergence of standard solutions for more complex Stage 3 applications such as maintenance, construction, and SFA will take longer to appear. Here, users are integrating a number of mail, groupware and other standard solutions; the latter includes existing ERP and CRM systems. How the latter process will play out is still unclear. Will this necessary integration give existing ERP and CRM providers the opportunity to become leading suppliers of mobile solutions? Or will the firms that introduce these first mobile-based SFA systems like Sony become major suppliers of the software? In maintenance, JBCC, and two other firms (Otsuka Shokai and NEC) that have implemented systems internally would like to sell their systems to other companies. JBCC modified software called "Service Alliance" that was originally created for laptops. ASTEA, a supplier of CRM software, developed Service Alliance for laptops so that maintenance workers could receive requests in the field and respond to them through a connection between the laptops and their mobile phones. JBCC modified the mail and other functions for the small size of the mobile phone. Otsuka Shokai is an office equipment and software supplier that is now trying to sell a general-purpose solution to maintenance groups. On the other hand, the integration of such maintenance system with existing information systems provides existing suppliers of ERP and CRM with an opportunity to become suppliers of the mobile software. How these standard solutions become available outside of Japan is a more complex question. Most Japanese firms are waiting until mobile Internet services begin to grow in the United States or Europe before they begin trying to offer their standard solutions in these countries. Furthermore, the Western world may be slower than Japan and other Asian countries to use mobile phones in place of laptops to access their corporate intranets since public transportation plays a smaller role in these countries. But as Western firms begin to use mobile phones to access corporate intranets, it is likely that Japan's lead in introducing such phone-based mobile intranets will give them an advantage in the supplying of standard solutions for these mobile Intranets. This paper is published with permission of professor Jeffrey L. Funk of the Hitotsubashi University's Institute of Innovation Research in Tokyo, Japan. Funk has authored a number of papers on wireless use in Japan, including "Disruption: How the Mobile Phone is Changing the Japanese Internet and Software Industries" and "Mobile Shopping and Multi-Channel Integration in the Japanese Mobile Internet." References 1. Anderson, P. and M. Tushman (1990). 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