Cracking the IT Department
By Steve Wallage, Tue Jan 28 13:30:00 GMT 2003

The IBM/Nokia deal on mobile VPNs follows a series of other announcements. The involvement of IBM is critical in making mobile solutions attractive to the IT director.

On December 17th, Nokia and IBM announced that they would work together to provide end-to-end secured business applications on advanced mobile handsets targeted at the enterprise market. IBM Global Services will now act as a system integrator (SI) of Nokia's Mobile VPN solution worldwide.

Dan MacDonald, Vice President of Product Management & Marketing, Nokia Internet Communications, believes that, "as we are in the early days of mobile data solutions, enterprises will look to SIs".

The deal makes great sense for both parties, but is also indicative of the type of deals that will become increasingly common in the next 12 months.

Nokia and IBM have previously partnered in such areas as digital media, digital rights management and public WLANs. The benefits for Nokia are clear as it can take advantage of the reach and expertise of IBM in offering new revenue opportunities for mobile operators, as well as promoting mobile data services directly to enterprise customers. The IBM approach is worth exploring in more detail.

Understanding the IBM Game Plan

Despite the dissapointing mobile data revenues growth rate, the fundamental IBM view is that IT will double its share of the mobile value chain as the mobile industry moves from voice to data.

IBM is clear of its role in the mobile value chain - it will not develop devices or compete with its customers, and will use partners for applications. Its mobile and wireless portfolio is based on SPEDE (service provider delivery environment) and COST (cost optimization and strategic transformation). Underlying this is its WebSphere platform.

The other major opportunity for IBM is in professional services. According to IDC research, IBM Global Services held around 25% of this highly fragmented market in 2001 (its closest competitor had 5%). IDC further predict that the global market for mobile and wireless professional services will increase from $3bn in 2001 to over $30bn in 2006. As part of the latest IBM and Nokia deal, IBM Global Services will offer a service portfolio that includes installation, maintenance, financing and consulting services. The services side will offer some of the highest margin in the mobile market.

The Wider Ramifications

Very few enterprises have a clearly defined strategy and implementation plan for mobile and wireless data solutions. Part of the problem is that the mobile industry does not have a strong relationship with the IT department. More worryingly, they often do not understand their needs and concerns.

Enterprises that have looked to develop a mobile business strategy have found a host of barriers. These include security, integrating mobile applications into existing legacy systems, managing new devices and infrastructure, and developing and deploying business applications over wireless links. They also include softer issues such as training and management issues such as asset allocations, virus scanning, and application updates.

Another challenge has been that mobile operators have tended to present mobile data solutions as standalone offerings, and taken a very 'mobile centric' view of the market. In reality, mobile is still a minor area for the IT department and their key concerns often center on the integration of mobile solutions with their existing offerings, and the resultant impact on what they offer across the board.

The IT director wants thing to be made easy, and not for mobile data solutions to cause a raft of new headaches. MacDonald at Nokia believes that mobile applications need to be 'horizontal' such as mobile e-mail across the organization, rather than just verticalized applications.

So, what can we expect to see happen as the mobile industry tries to meet the needs of the IT department?

Partnerships will be Key

As IBM has clearly stated where it wants to compete, and at least as importantly where it does not want to compete, mobile vendors need to make the same choices. Thus, it is important to have a number of major relationships rather than large numbers of meaningless alliances. For example, the players need to build up an eco-system of partners with a single key relationship in each technology and service area.

There can be advantages in acquisition. Deutsche Telekom acquired Debis to gain some key skills and an installed base in the systems integration market. Generally, the operators have been very shortsighted in their acquisition strategy, choosing to expand their footprint rather than gain new skills and access to new technologies. However, acquisitions should not divert from the core competencies of the company. Large-scale acquisitions often prove very difficult to execute, with even Cisco being very wary of making any acquisition involving more than a startup player.

Mobile companies must really empathize with the needs of the IT department and understand their focus on such issues as reliability, integration, support and upgrade path.

Another key area is security, which usually tops the list when IT managers are asked why they are reluctant to invest in mobile data solutions. Nokia has shown that it understands the importance of this area with partnerships with leading vendors such as CheckPoint for firewalls and TrendMicro for antivirus software, as well as its own in-house development and acquisitions.

Mobile Operators Must Evolve

According to IBM's own research among 400 European companies, over 70% would choose an IT company to implement a wireless data application compared to just 10% who would opt for a mobile operator. Part of this is due to the current focus of mobile operators on national markets, and not meeting the wider needs of the larger enterprises. Yet, mobile operators are in a great position with enterprises. They have an ongoing relationship and understand their mobile needs. Yet, mobile operators run the risk of being seen as just the basic mobile bandwidth provider, in much the same way that some fixed operators are perceived as just the source of basic services. Mobile operators need to ensure that they, and their partners, are the natural choice for enterprises looking for mobile data solutions.

VPNs Can Become Key Offerings

Fixed VPNs, and particularly those based on IP, have continued to show strong growth. In the fixed world, they are often a replacement for an existing private network or leased line solution. In the mobile world, enterprise buying of mobile services often remains far less sophisticated with a surprisingly high number of enterprises not even having a centralized procurement strategy. Hence, a VPN solution can provide significant cost savings as well as the potential for improved performance, functionality and service levels.

It's a Multi-channel World

Enterprises have also found the lack of mobile interoperability and multitude of form factors a highly frustrating barrier. In the fixed world, there has been a much greater drive towards open standards such as XML. The mobile industry has made some of the right noises with such efforts as OMA. IT managers need to be convinced that mobile data solutions will not be based on proprietary technologies. There must be a key focus on not just talking about standards, but on clear adherence to open solutions.

Many surveys point to a bright future for mobile data. For example, the IBM survey of European enterprises found that 80% planned to offer wireless e-mail within the next 12 months, and over 60% will offer 'more complex' applications. Of course, the cynics can suggest that 'plan to invest' is very different for 'will invest'. It is also true to say that many implementations will be to very limited numbers of employees. Mobile data solutions will need to exhibit compelling ROI (return on investment) to become adopted in the next 12 months. The mobile industry also needs to make every effort to highlight the ROI of mobile innovators such as FedEx and Hertz.

However, the wider concern for the mobile industry is that when the mobile data market does begin to grow, who will be the main beneficiaries? Players from the mobile industry who stick to their mobile-centric view of the world and talk about standalone mobile solutions look poorly placed. Mobile companies who make the transformation from voice to data providers, seek key partnerships with IT companies, and empathize with the needs of the IT department, will be the long-term winners.

As MacDonald at Nokia says, "IT directors have to be holistic" and deal with all aspects of IT.

Steve Wallage works and writes for the451. Steve has more than 13 years of experience as a technology analyst specializing in telecommunications.