Empowering SMBs with mobile services

Internet companies have demonstrated a sustainable business model for selling products and services to the long tail. Companies such as Netflix, eBay, iTunes and Amazon have successfully tapped the long tail and built entire businesses by selling a large number of unique products in small quantities to a large customer base. The mobile industry has also demonstrated its ability to sell mobile games, ringtones and music in a similar fashion. The mobile industry is now searching for similar models to address the needs of SMBs by leveraging enterprise mobility products and services.
 
IDC estimates that SMB's IT spending in Asia Pacific this year will total $103 billion, representing 34% of the region’s total IT spending. Of the estimated 28 million SMBs (fewer than 1,000 employees) in the region, nearly 56% do not have a single PC. This presents an enormous untapped opportunity for mobile service providers, particularly in emerging markets where businesses at the lower end of the value chain do not have basic ICT infrastructure. In China, nearly 66% of the estimated four million SMBs are not computerized.
 
IDC's Asia-Pacific unified communications and enterprise survey found that 49% of SMBs provide mobile devices or handhelds to employees and 27% provide mobile voice and data service plans. Mobile service providers are in an inimitable position to deliver cloud-based services to SMBs. So far, mobile service providers' data services platform has not been adequately exploited to meet the needs of SMBs. Like the internet, the mobile data services environment could spawn communities and business ecosystems such as the supply chain of a retail network.
 
Each retail chain has hundreds of SMB suppliers. The procurement process within a retail chain could be supported by a mobile application, given that not all suppliers will have access to e-procurement applications. Mobile service providers have a scalable data service platform to handle a large number of transactions. In addition, they have robust billing and provisioning capabilities built into the mobile data service platform. Lastly, the SMBs could be billed for application usage through the mobile service bill, which precludes the need for credit card payment.
 
Mobile device players and IT service providers are gearing up to support business ecosystems to enable order, distribution and sales management processes.
 
Nokia Tej, for example, is a hosted mobile service that can be leveraged by the business partner community. Similarly, the IT players are starting to offer hosted services for communities and government sponsored public services. Driven by the need to deliver improved public services, government agencies in markets such as India want to tap managed mobile services to provide public services such as healthcare.
 
A critical factor for attracting these communities is cost. The falling cost of smartphones and mobile services is tearing down this fundamental adoption barrier. IDC believes that the industry will innovate to provide cost-effective mobile applications and services for the SMB segment.
 
In Indonesia BlackBerry devices saw widespread adoption, with Facebook application being a key driver. The local carriers believe that they have an opportunity to build cloud-based services for communities or interest groups.
 
Similar to the internet, the mobile service environment needs to foster self organization, with minimal intervention from the service provider.
 
IDC believes that self-organization is a critical success factor for building SMB ecosystems in the mobile environment. If the mobile business services platform is intuitive and relevant for different SMB ecosystems, the industry will see a spontaneous creation of all types of mobile business ecosystems.
 
 
The applications for specific business ecosystem should draw on the user experience of social networking sites such as Facebook, Orkut and LinkedIn. In addition, these services need to be seamless across the mobile and internet environments, similar to Facebook. The communities should be able to access a common set of features through PCs and mobile devices.
 
Mobile service providers have the option of pursuing different business models for building such communities. They could build a cloud-based SMB platform with billing and analytics capabilities, giving developers a free hand to self provision applications. The platform would be ideal for social networking software for select industry verticals, such as hospitality or healthcare. Another potential business model for mobile service providers is to build a tightly managed SMB service platform with a few applications that have a fairly evolved alignment with business processes of a few industry verticals. These applications could be mobile salesforce or supply-chain management applications. Alternatively, mobile service providers could simply leverage existing mobile application stores of mobile device players such as RIM, Nokia or Apple.
 
A key challenge for building such broad-based services is the ability to maintain a uniform experience across different devices. On the upside, businesses of all sizes already have a heavy reliance on mobile phones for business communication and smartphones are also expected to become more affordable. The developer community needs to step up innovation to build nifty applications that can be ported on low mid-range smartphones. For entry-level mobile devices, a combination of SMS and mobile data with push and pull mechanisms will need to be used to create meaningful applications.
 
Shalini Verma is a research manager in IDC’s Asia-Pacific communications group

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