Mobility's Steep Upward Growth Curve For 2006

What a difference a year makes. Last year, the IT department of information storage provider EMC supported only about 200 BlackBerrys in a company of 23,000 employees. Today, EMC supports roughly 5,000 of the popular handheld wireless devices—a number that continues to grow daily.

EMC's efforts to empower its workers with mobile communication technology illustrate one of the most compelling trends found in GCR Custom Research's IT Watch enterprise spending survey, conducted in November 2005. The survey projects an 8.1% jump in spending on mobile and wireless devices for 2006 (see chart, below). Our analysis finds that while these products and services present new opportunities, they must also be evaluated in the context of overall costs and alignment with business goals. CIOs need to watch the creeping threat posed by a spike in spending on mobile services, especially in a climate where overall IT spending is softening.

According to the survey, total IT spending on staffing, products, and services was tracking to grow 7.2% in 2005 over 2004. In 2006, however, total spending growth is predicted to slow to 4.5% among companies in all size groups. The softening in IT spending is consistent with U.S. GDP growth, which is expected to fall from about 3.5% in 2005 to roughly 2.5% this year.

At EMC, for example, the BlackBerry adoption plan was carefully managed. "Investments in mobility must be made cautiously and judiciously," says Terry Dymek, EMC's senior director of global technology. "Costs can very easily spin out of control."

Despite being a technology-driven company, EMC controlled the handheld-device rollout before letting the hardware proliferate. It did a thorough cost analysis and instituted employee policies governing the choice of wireless service providers and hardware early on, and applied familiar total-cost-of-ownership rules and decided to support only a single hardware platform: Research In Motion's BlackBerry.

EMC saw little benefit to standardizing on a single service provider, however. Employees are best served if they can pick and choose carriers; that way, they retain their existing cell-phone numbers. "We negotiated with each of the major carriers so that employees would have their choice," Dymek says, noting that the company didn't want to burden its IT department with wireless-service support. "If we contract with a single carrier and [the carrier] has a problem, then that becomes our headache."

Additionally, the survey shows enterprise mobility demand is outpacing security demand, though the two are complementary and interrelated. Enterprise spending for security hardware and services in the United States is expected to grow 6.8% this year, compared with the 8.1% jump in spending on mobility hardware and services.

Most IT professionals are trying to juggle their increasing mobility needs with security and other IT spending priorities. "Security is a huge consideration when we're looking at any kind of mobility," Dymek says. Field-service engineers at EMC were the first to receive custom applications for their BlackBerrys, for example, and since the reps get case and service information in the field, they also rely on secure connections to the company's data center.

Laurette Bradley, senior VP for information technology at Verizon, also treats security and mobility as twin priorities. "We have a massive focus on both," she says. She knows her group won't let its guard down and risk breaches. Verizon's investments in mobility extend past its critical field workers, supporting the always-on needs of corporate knowledge workers. "Massively more people have BlackBerrys compared with three years ago," Bradley says.

The impact of empowering the mobile knowledge worker is also highly evident at Citigroup. "Being able to extend E-mail to executives who are not at their desks is a real productivity win for us," says Steve Ellis, head of global operations for Citigroup's technology-infrastructure group.

It became clear to Citigroup's IT team that BlackBerrys weren't just an executive toy. For one thing, the devices went way beyond PDAs in providing instant voice and data communications in addition to offering views of attachments in familiar file formats. And the devices proved more mobile than notebook computers. "For an executive, a notebook is not that portable," Ellis says. "The BlackBerry is a truly portable device."

Citigroup's deployment of mobile technology has been somewhat less linear than that of EMC, which had the luxury of initially constraining the viral adoption of wireless handheld devices while it established rigorous policies. Like most financial-services organizations, Citigroup takes a decentralized approach to early adoption of IT—especially technologies that blur the business-consumer spectrum. Preliminary BlackBerry trials at Citigroup in New York and London rapidly morphed into a full-blown deployment. While EMC standardized on one platform, Citigroup is less firm. "We'll support executives who have PDAs, but we don't promote [the devices]," Ellis says.

In the context of overall IT spending, GCR expects the growth in mobile and cellular services to drive overall telecommunications services spending for the year. Traditional needs such as staffing, IT services, and software remain key spending priorities as well, with hardware taking a backseat in terms of growth.

GCR's IT Watch also provides insights into vertical markets that are driving IT spending growth. With the U.S. real-estate boom, it should come as no surprise that the real-estate and construction sectors will be relatively high IT spenders this year. Traditionally, these industries lag in the adoption of technology but are rapidly catching up. Professional services, a major driver of spending on mobility products and services, will deliver 6.4% growth in IT spending in 2006 off a strong base.

Still, other priorities remain strong too. Corporate acquisitions continue to require IT to integrate business processes. And companies must build additional systems to support their new product and service offerings.

EMC and Verizon have both been on acquisition binges of late. EMC bought eight companies in the past three years, for a total value in excess of $4.1 billion. The company is now busy consolidating disparate IT systems. Although initial priorities focus on merely connecting systems together, Dymek says he's also concentrating on "truly integrating corporate business processes."

EMC may have its work cut out, but the task pales in comparison to the challenge Verizon faces in integrating MCI. And while Verizon works on that integration, the company is also in the midst of a major fiber-to-the-premises deployment—one requiring entirely new systems to handle billing of not only voice and data, but also television services. At present, these initiatives are much higher priorities for Verizon than mobile spending.

Even while undertaking many new business projects, Verizon is keenly aware that old-fashioned customer service is the key to its success. And the company sees a definite link between mobility and customer service. In the past, field technicians had to call someone who was in front of a terminal to open and close jobs, to test newly installed services, and to report their time. Using wireless, Windows-based ruggedized PCs, "our technicians are much more informed," Bradley says. "Cutting out the middle person in a call center is a win-win. It's cheaper and more reliable for Verizon, and provides better service to the customer."

With all the buzz about BlackBerrys, other mobile technology has gotten lost in the mix. Notebook computers are becoming more entrenched, though businesses are careful to match needs to the hardware.

For the most part, companies still regard emerging data services and hardware, such as Evolution Data Optimized (EV-DO) and tablet PCs, as experimental at best. For example, Citigroup's Ellis says that while his company has tested tablet PCs, he doesn't think the devices are any better than standard laptops, except possibly for some marketing employees who are frequently on the road.

Jeremey Donovan is managing director of GCR Custom Research's IT Watch service.

Is mobile-technology spending a priority at your organization? Tell us at [email protected].

See Related Articles:

Rethinking The Mobile Workforce, August 2005

A Bird's-Eye View Of Global Technology, April 2005
A Method To The Mobile Madness, December 2003

Tracking IT demand is a challenging undertaking. By continuously sampling from a pool of more than 35,000 IT decision-makers, GCR's IT Watch—recently spun out of Gartner's Custom Research Group—keeps tabs on changing demand for IT products and services. The subscription-based research service asks survey participants to identify how they apportion spending to specific product and service categories by vendor.

While this is a useful approach from a respondent perspective, dissecting enterprise IT spending numbers can be tricky when it comes to products like the BlackBerry. The categories of mobile devices are blurring, given the addition of features to each product line. Data-only devices, such as the BlackBerry 5790 and the Palm Zire and Tungsten families, are counted in the PDA and handheld-computers category of IT Watch. Voice-enabled devices, such as the BlackBerry 7100 family and the Palm Treo 650, are part of the mobile phones and smartphones category.

This higher level of aggregation, though not explicitly showing the dynamic mid-double-digit growth of smartphones, gives IT managers a holistic perspective for benchmarking spending. Now that enterprises have bought fancier razors—smartphones like the BlackBerry—they're spending more on the blades—that is, wireless services.