ConsumerisationFreedom of choiceposes issues for ITdepartmentsPage 2

Inside »

GrowthopportunitiesHopes for machineto machine talkPage 2

PartnershipsCreative agencieshave displacedsoftware houses asapp developersPage 2

Enhancing theclient experienceSmartphones andtablets becomeshopping advisersPage 3

Creative spaceTaming finalfrontier of mobiledevice advertisingPage 4

FT SPECIAL REPORT

The Connected BusinessMonday February 25 2013 www.ft.com/reports | twitter.com/ftreports

Mobilising the business hasbecome a priority for com-panies that want to stayahead of the competition,

build customer loyalty and improveefficiency. But as Andy Geisse, chiefexecutive of AT&T’s Business Solu-tions division points out, building aneffective corporate mobile strategy isabout much more than technology.

“Mobilising companies involves farmore than just handing smartphonesor tablets to employees,” he says.“AT&T helps businesses take it to thenext level by mobilising their proc-esses, as well as their physical assets.That’s how companies can gain com-petitive advantage and grow their rev-enues or significantly reduce theircosts, potentially transforming notonly their own operations but creat-ing change throughout their indus-try.”

A simple example comes fromFreescale Semiconductor. The chip-maker has deployed 150 Apple iPadsto operators in its semiconductorwafer making process so they checkmachine settings or look up toler-ances in an onscreen browser, ratherthan referring to pieces of paper ordragging unwieldy laptops around.

Freescale’s IT department suggestedreplacing ageing laptops with theiPads, immediately saving about$67,000 over the cost of refreshing thelaptops. “At the end of the day wewant to replace paper in all our facili-ties,” explains Tarek ElHadidi, Frees-cale’s chief information officer.

Mr ElHadidi believes the tabletdeployment, once completed acrossthe company’s three factories, willsave about 30 minutes per shift as aresult of improved efficiency, equiva-lent to annual savings of almost $1m.In addition he says the iPads shouldreduce support costs by about 50 percent.

Others are using mobile data toimprove customer service or produc-tivity and exploiting the rapidly fall-ing costs of technologies, such asmachine-to-machine (M2M) modules,to expand operations and addressopportunities in industries as diverseas logistics, utilities and forestry.

For example, fleet managementcompanies are using cellular net-works to optimise operations andreduce the need to dispatch trucksand, thus, cut costs. In the US, Ameri-can Trash Management is using M2Mtechnology to transform the wastemanagement business. ATM installsits SmartTrash device in the rubbishcompactors and balers of supermar-kets, retailers, hospitals, schools andfactories. The device time-stamps,records and analyses compactor dataincluding information about how fullthe compactor is and its energy use.

This information is transmittedacross Sprint’s and Verizon’s 3G net-works to ATM’s data centre. When acompactor requires pick-up, ATM con-tacts the customer’s hauling companyby phone, fax or email and schedulesa pick-up. Customers can acquiretheir compactor data from anywherevia a web browser. As a result, ATM’s

customers were able to reduce theirpick-ups on average from once a day,to once every 1.7 days. On average,the SmartTrash system saves custom-ers 25 per cent of waste managementcosts.

Some companies such as BritishGas, Britain’s biggest utility companywith 12m customers, have combinedboth approaches in an integratedmobile strategy designed to improvecustomer service and reduce costs.“We wanted to give our customersgreater control over energy and overhow they use and enjoy their homes,”says Nina Bhatia, managing directorof British Gas strategy for M&A andconnected homes.

As part of the programme BritishGas equipped its field engineers withtablets and smartphones to improveproductivity, designed a customer por-tal and developed an app that allowscustomers to remotely monitor andcontrol home appliances and securitysystems. About 600,000 people are

already using the app, which is availa-ble for both iOS and Android devices.

In addition, British Gas offers itscustomers an M2M home automationpackage consisting of a control mod-ule, wireless thermostats and a homehub that plugs into a broadbandrouter and enables them to monitorand control their home heating sys-tems. In the future the company mayalso allow makers of appliances toremotely monitor their products’ per-formance in the home, enabling themto anticipate problems and arrangerepairs where necessary.

Daniel Eckert, a director of PwC’sEmerging Technology & Architecturegroup, says there are many methodscompanies can use to create a success-ful mobility strategy. He identifies

three steps in particular.First, “make sure what you are

developing aligns to the organisa-tion’s overall business strategy. Thismay sound obvious, but in compari-son to creating traditional applica-tions, creating a solution for a mobiledevice is relatively inexpensive andmany organisations are creating theirown apps – using outside resources –without considering the impact ontheir entire strategy or organisation.”

Second, “make sure your support,operations, and technology teams areready, and be prepared to address aproblem quickly, before it becomes adiscussion point in social media chan-nels.”

Third, “take small steps. Your appdoesn’t have to have thousands offunctions; focus on the top four or fivefunctions that will benefit your cus-tomers. It is important, however, thatyou have a road map – plan on whatyou are going to create over the next12 months, and refresh it every 90days. The market changes overnight,your resources may be constrained, soyou must keep your teams focused oncreating the right application.”

Mr Eckert argues that financialservices is an industry where it isvery important to have a mobile strat-egy because of mobile banking andremote deposit capture (and soonmobile payments). However, he saysmost financial services organisationshave progressed beyond creating amobile strategy and are using mobileto innovate.

“The big banks started by offeringbasic mobile banking apps severalyears ago to support transaction andbalancing monitoring and bill pay-ment. In the past 18 months, theyhave introduced RDC (Remote DepositCapture), account to account trans-fers, robust alerting and notification,and person-to-person (P2P) payments.It wasn’t long ago that features andservices like these were out of reachof smaller, regional banks. Now, justabout every bank provides these serv-ices.”

He believes the next big wave ofmobile innovation will be in health-care. “We’re seeing a major push in

health and biometrics (a variety ofcompanies have fitness monitoringdevices) and some medical devices arealready connecting to mobile phonesand not only providing instant feed-back to the consumer but enablinghealthcare providers to monitor thehealth of their patients remotely.”

Indeed some such as Hans Vestberg,Ericsson’s chief executive, believemobilising companies and other

organisations will have a profoundimpact not only on customers, butalso on business processes them-selves. “In transport, in healthcare, inautomotive and elsewhere, companiesrealise they can use mobility andbroadband data to get closer to theircustomers and change their businessmodels,” says Mr Vestberg who adds:“We see mobility as a very big oppor-tunity.”

Stay ahead by becoming mobileStrategyThere ismuchmore to beingsmart than simplyissuing smartphonesand tablets, explainsPaul Taylor

‘Companies realise theycan use mobility andbroadband data to getcloser to their customers’

Nigel Moulton used to take a laptop tothe office and plug it into a hard-wired ethernet network. Now thechief technology officer of AvayaEmea, a business communicationscompany, juggles three wirelessdevices at work – a smartphone, atablet and laptop.

“When I’m at my desk, the laptop isusually plugged in,” he says. “Butwhen I go to meetings I might take it,as well as my smartphone and tablet.”

The ease and convenience of mobiledevices has meant many people havestarted using them for work, with orwithout permission. Often IT depart-ments struggle to support a proliferat-

ing range of wireless gadgets overwhich they have little control.

Spotting an opportunity, the soft-ware industry is riding to the rescuewith products and services to helpmanage mobility.

Shortage of bandwidth is often thefirst warning organisations get thatthey need to increase wireless capac-

ity, says Mr Moulton. Requirementshave soared as people have begunusing smartphones and tablets formore data-intensive applications.“Users soon start complaining whenvideo conferencing images becomeblurred or pixelated and audio callssound like a mobile phone conversa-tion from the 1990s,” he says.

Another problem is the cost. Manycompanies mistakenly think peopleusing their own devices will lead tosavings. However, Glyn Owen, portfo-lio manager at Damovo, an IT servicescompany, warns: “Be prepared toinvest money in tools to manage andcontrol it, rather than just hopingnothing will go wrong.”

For example, some 43 per cent ofenterprises worldwide have incurredan expensive data roaming bill in thepast year, at an average cost of morethan $1,000 per foreign trip, accordingto research by California-based iPass,a company that unifies the manage-ment of remote and mobile devices

Continued on Page 3

Personal devices raise prospectof unintended consequences

Juggler: Avaya Emea’s Nigel Moulton

Management

Ease of use and familiarityare countered by unforeseencosts and security issues,writes Jane Bird

2 ★ FINANCIAL TIMES MONDAY FEBRUARY 25 2013

Consumerisation and theb r i n g - y o u r - o w n - d e v i c e(BYOD) trend have changedthe way smartphones andtablets are selected and

used in business. Ten years ago, itwas standard practice for companiesand other large organisations to issueexecutive teams and key travellingstaff with smartphones, typically aBlackBerry designed primarily formobile email and messaging.

Employees loved the devices whilecorporate IT departments, many ofwhich installed BlackBerry EnterpriseServer (BES) software, appreciatedthe reliability, security and managea-bility of the BlackBerry system.

But as Research In Motion, theCanadian maker of the BlackBerry,and its rivals including Nokia andMotorola were to discover, the con-sumerisation of corporate IT, led bythe launch of the iPhone and the iOSoperating system in 2007 and the sub-sequent launch of Apple’s App store ayear later, changed the picture.

Touch-based devices such as theiPhone, iPad and Android-based hand-sets and tablets, provided consumerswith a window into a mobile con-nected world where information and

entertainment were a finger swipeaway. Inevitably, these devices beganto find their way into work places.

“It was clear employees were usingiPhones and Android smartphones intheir personal lives and did not wantto carry two devices – one for workand one for everything else,” saysNelson Saenz, director of IT for ActiveInterest Media, a California-basedmedia group that used company GoodTechnology to provide the software itneeded to manage the growing portfo-lio of devices its staff used at work.

Similarly in the UK, the Civil Avia-tion Authority is rolling out Good forEnterprise software that lets mobileworkers securely access emails, con-tacts and calendars using personal orcorporate-owned Android smart-phones, iPads and iPhones.

“At the start of this process, ouraim was to satisfy employees demandfor use of newer devices by movingaway from BlackBerry, reduce ouroverall cost of ownership and increasefunctionality while not compromisingsecurity,” says Darryl Sampson,CAA’s head of infrastructure.

Companies such as Good Technol-ogy have enabled IT departments toembrace the BYOD trend while main-

taining security and manageability.Handset makers including Samsung,the Korean smartphone marketleader, are providing mobile securityand enterprise management tools aspart of their efforts to win more cor-porate customers.

BlackBerry, recognising it mustaccommodate other brands if it is toretain its still sizeable market shareamong corporate customers, has builtthe ability to manage a diverse rangeof devices into the latest versions ofits BES software. It has introduced afeature with its BlackBerry 10 operat-ing system that will allow users totoggle between work and home modeson Z10 and Q10 handsets.

Although some companies haveresisted introducing personal devicesinto the corporate IT infrastructure,most recognised it makes more senseto embrace and manage the BYODtrend. Some 70 per cent of corporaterespondents in a Gartner survey pub-lished in December said they alreadyhave, or are planning to have, BYODpolicies in place within the next 12months that allow employees to usepersonal devices to connect to corpo-rate applications. Thirty-three percent of all organisations surveyed

have BYOD policies in place formobile devices.

Dionisio Zumerle, principal researchanalyst at Gartner, says BYOD has ahuge effect on mobile security. “Poli-cies and tools initially put in place todeal with mobile devices offering con-sumer-grade security must be revisedto deal with these devices being underthe ultimate control of a private user,rather than the organisation.”

In particular, Gartner says organisa-tions must consider action in severalareas when moving to a BYOD policy:

First, recognise that the right ofusers to employ the capabilities oftheir personal devices conflicts withenterprise mobile security policiesand increases the risk of data leakageand the exploiting of vulnerabilities.

“Using mobile device management(MDM) software is one way to enforcepolicy on mobile devices,” said theGartner report. “Users should obtainaccess to [corporate] information onlyafter having accepted an MDM agenton their personal devices, and possi-bly a URL filtering tool, such as acloud-based secure web gateway(SWG) service, to safeguard andenforce [company] policy on internettraffic. Businesses should consider

using application white listing, black-listing and containerisation, as well assetting up an enterprise appstore . . . for apps that are supported.”

Second, user freedom of choice ofdevice and the proliferation of deviceswith inadequate security make it diffi-cult to properly secure certain devicesand keep track of vulnerabilities andupdates. “Allowing users, rather thanthe IT department, to select operatingsystems and versions of mobiledevices opens the door to devices thatare inadequate from a security stand-point,” said the report. “An essentialsecurity baseline should requireenhanced password controls, locktimeout period enforcement, lock adevice after password retry limit, dataencryption, remote lock and/or wipe.”

The report warned that “excessivelylimiting the types of allowed deviceseliminates the benefits of BYOD forusers. There should be no compromiseof security for the sake of device vari-ety, but where it is possible to manageand secure a new device model, itshould be done. The policies that areenforced will depend on the risk appe-tite of the organisation and the sensi-tivity of data allowed to reside on thedevice.”

Even cows in France cansend text messages. Farm-ers do not need to get out ofbed at night to check themembers of the herd aboutto calve; they wait for amobile alert, sent from awirelessly connected heatsensor on the animal, to saylabour has begun.

“The size of farms isincreasing and people arenot living in the middle oftheir animals any more,”says Emmanuel Mounier,managing director and co-founder of Medria, a smallcompany based in Brittany,that has been developingthe wireless sensors since2007. “This gives thempeace of mind and fewercows die or are injured inlabour.”

About 4,000 farms inFrance, Germany and Bel-gium have the technology.Interest is growing amonglarge industrialised farmsin North America.

Other sensors from thecompany can alert thefarmer when the cow is inheat so that inseminationcan be planned for the rightmoment. Medria is develop-ing a sensor that can beswallowed by the animal tomonitor its food and waterintake.

“When an animal’s habitschange it is often a sign itis sick,” says Mr Mounier.“If you have a herd of 250cows in front of you it canbe vital to know quicklywhich one is unwell so therest don’t catch it.” Headds: “Its quite a goodexample of machine tomachine communications.

“People often don’t under-stand what that means butwith our product it is veryclear in people’s minds howit works.”

In Groningen in the Neth-erlands, another exampledemonstrates the kind of

savings that can be madewith sensors connected to awireless network. The citycouncil saved €92,035 afterit installed public bins thatcould send a text alertwhen they were full. Thecouncil reduced labourhours and petrol costs byonly sending trucks out tobins that needed emptying.

It is becoming increas-ingly possible to connectalmost anything via a wire-less link to the internet.According to Berg Insight,wireless analysts, therewere already 47.7m mobilephone connections linkingmachines to other machinesin 2008, and this is expectedto grow to 187m by 2014.

Remote monitors havebeen in use for years inindustrial settings but con-nected machines are spread-ing to a number of otherindustries and comingwithin reach of ordinaryconsumers. Ford, for exam-ple, recently teamed withAT&T, the telecoms opera-tor, to put wireless connec-tions in its electric FordFocus vehicles.

These will allow ownersto monitor the charging ofthe car, locate charging sta-tions and preheat or coolthe car remotely beforethey get in. Similarly,power companies are start-ing to transfer their cus-tomers over to the so called“smart grid”, where homeelectricity supplies are con-nected to the internet andmonitored remotely in realtime by the electricity com-panies. This could usher in

an era where more andmore domestic applianceshave online links.

“People talk aboutmachine to machine con-nections being about yourfridge ordering more milk.But realistically it is morelikely to be about poweruse. If the freezer is con-nected to a smart grid, mon-itoring the electrical net-work, it can start freezingin the middle of the nightwhen electricity prices areat their lowest,” says MattHatton, director at MachinaResearch, which advisescompanies on machine tomachine communications.

“It is not really a newthing, it has been aroundsince the 1970s with indus-trial automation. But todayit is starting to be a verydiverse group of sectorsthat are adopting it,” hesays. “When I was at theannual Consumer Electron-ics Show in Las Vegas fiveor six years ago there wasnot that much of interestout there for me as a tele-coms guy,” Mr Hatton says.“This year, everything wasabout connected TVs, con-nected fridges, connectedscales.”

Part of the reasonmachine to machine net-works are starting to takeoff is that telecoms opera-tors, seeing call rates pla-teauing elsewhere, are seiz-ing this as a growth oppor-tunity.

Medria charges about£3,000 for heat sensingequipment, plus a monthlyfee for processing data anda subscription for text mes-sagings, paid to a localmobile phone operator.

“This is a big opportunityfor the mobile phone com-panies and the data chargesare often sold at a higherprice than in the rest of themarket,” Mr Mounier says.“You would be lucky to payfive or six euro cents permessage, while in theconsumer market peopleare on unlimited bundles ofmessages.”

In many cases the effi-ciency gains of machine tomachine systems are easyto see. Haulage companiescan track vehicles androute them more efficiently.Some of them are also test-ing out insurance schemeswhere their vehicles aretracked in return for lowerpremiums for carefuldrivers. When cows areimpregnated at the opti-mum moment, their milkyields are maintained at ahigher level.

But in other cases savingscan be hard to quantify. “Itcould be an alarm that noti-fies you when something iswrong – if a machine sud-denly gets too hot,” saysKatja Ruud, analyst atGartner. “That one warningcould be very valuable if itavoids a disaster.“

Ms Ruud and Mr Hattonboth point to healthcare asan area where vast savingscould be achieved. TheGSMA, the mobile phoneindustry body is trying toencourage companies todevelop mobile systems tohelp diabetics monitorblood sugar levels andreduce the number of peo-ple being hospitalised forinsulin shock. Monitoringof other medical conditions,such as heart disease, couldalso save lives and cut carecosts.

Telecoms place high hopeson machine to machine talkGrowth opportunities

Networks that linkdevices have greatpotential, reportsMaija Palmer

When investment fundmanager Schroders enteredthe world of apps, it discov-ered something fundamen-tal had changed in softwareproduction. The traditionalsoftware house had beenelbowed aside by a differentbeast – the app developer.

“Our IT people didn’tknow how to build apps, sowe found an apps devel-oper, Mubaloo,” MatthewOakeley, head of group ITat Schroders recalls.

His first impression ofdealing with it, and otherapps developers Schrodershas turned to, is that thiswas not business as usualin the software industry.

“All these developersseemed to have started as acreative agency and thenbranched out into buildingapps.” Mubaloo is a market-ing agency that found itcould turn its talent fordesign to developing apps.

The process that ledSchroders to commission aproprietary app known asSalesConnect was differentfrom the usual way finan-cial software productsemerge. “We had a look atthe iPad and decided to letour people use it and findout what it was best for.”

The technology sectorloves to present its wares interms of prescripteddebates. The bring-your-own-device (BYOD)dilemma of integrating peo-ple’s smartphones andiPads with corporate sys-tems is a prime example.But it would be wrong tosee Schroders’ adoption ofapps in terms of BYOD,says Mr Oakeley.

“BYOD has not been aproblem for us, becausestaff who use an iPad signup for our terms of use.

They use the device fornote-taking or email to stayconnected but not for any-thing that might be consid-ered deeply confidential.”

For Schroders, keepingeverything categorised setthe entire BYOD circus toone side. Its policy defineshow iPads cannot be usedto access confidential mate-rial, restricts business com-munication to Schroders’sown secure email and banspublic cloud products suchas Dropbox.

Mr Oakeley is not afraidto say iPads may not be theanswer to everyone’sprayers. “Some people justdidn’t like the iPad,” hesays. But Schroders neededa tool that would allow staffvisiting third-party finan-cial consultants to displayits range of investmentvehicles to these prospec-tive customers.

Mubaloo developed anapp that could be synchro-nised with the latest pricesat the office and thenaccessed in a flash usingthe iPad as a demonstrationdevice. That exercise is

offline for speed and sim-plicity but online contentcan be presented as long asit is insulated from Schrod-ers’ operational systems.

SalesConnect is workingwell, Mr Oakeley says.“There is something aboutan app. It’s because it’sgraphics based and it’s thestory of the moment.”

However, he is extremelysceptical about the lifespanof apps. “Our strategy is todo all content via the webin the long term, ratherthan creating somethingspecific to Apple.”

The control Apple exerts

over the app world is one ofthe brakes on these colour-ful tools becoming reallyestablished in the corporateenvironment, Mr Oakeleysays. The need to revise anapp to integrate it withnew Apple software alsoirritates commercial users.“We have to go back toMubaloo every time Applebrings out a new version ofits operating system.”

A further drawback is theway each app has to be tai-lored to the specific deviceit runs on and the continu-ing gulf between Apple andthe formats of the Microsoftworld.

The graphical heritage ofcreative agencies is whatmakes them so suited tobreathing life into businessrequirements via an app.“Mubaloo thought aboutthe user experience firstand the IT side second. It’show more software compa-nies should work.”

Chelsea Apps Factory inLondon is another in thismould. It was founded byMike Anderson, a formerpublishing executive whospotted an emerging trend,namely “a huge enthusiasmfor all things mobile”.

He points to the attrac-tion of the short time inwhich apps can be devel-oped. “We can get todeployment in weeks, notmonths.” Developing a cor-porate app can cost lessthan £50,000, cheaper thanenterprise software.

Apps development within

large organisations can cre-ate huge problems, says MrAnderson. “A chief informa-tion officer can find he’s gota lot of apps but they’re allthe product of random com-missioning with differentdepartments using differenttechnologies. You’ve got tobring some order to the dis-order.” He thinks app devel-opers can do just that andis modest about what dis-tinguishes Chelsea AppsFactory. “We have aslightly more impressivegarage of skills and people.”

PA Consulting’s digitalexpert Dan Rossner has asoftware development back-ground and recognises thatapps represent a very differ-ent world. “It’s a bit wildwest at the moment,because apps are beingcommissioned by marketingdepartments,” he says.

Mr Rossner thinks it isimportant to look beyondthe iPad frenzy. “We’re try-ing to see where the appwill help a client becomemore competitive.”

JCDecaux, the outdooradvertising site specialist,recently turned to PA Con-sulting for a smartphoneapp that lets its staff take atime stamped and GPS-veri-fied shot of each display.This gives advertising agen-cies instant proof that thebillboard is carrying themessage in the right placeat the right time and itquite literally puts mobilityand competitive advantageon the same page.

Different beastin forest bringsapp solutionsPartnerships

Marketing agencieshave displacedsoftware houses, saysMichael Dempsey

‘If you have a herdof 250 cows in frontof you it can be vitalto know quicklywhich one is unwell’

Freedom ofchoice promptssecurity issuesfor IT chiefs

BYODOrganisationsmust consider action inseveral important areas before letting staff usetheir own devices for work, reportsPaul Taylor

‘It’s a bit wild west,as apps are beingcommissionedby marketingdepartments’

Safety alert: allowingusers to select mobiledevices opens the door toinadequate protection

Dreamstime

Some companies haveresisted introducingpersonal devices into thecorporate IT infrastructure

On track: hauliers can find better routes for vehicles Getty

The Connected Business

FINANCIAL TIMES MONDAY FEBRUARY 25 2013 ★ 3

and connectivity. It is easyto rack up roaming costs,for example, by taking partin a video conference fromyour hotel room, says Bar-bara Nelson, chief technol-ogy officer of iPass. “Peoplethink they are working, sodon’t even consider it.”

The company has partner-ships with mobile networkoperators worldwide to offerWiFi access internationallyvia 1.2m hotspots in air-ports, hotels, coffee shopsand trains. Costs are pre-dictable at a monthly fee of$40-$50 per user.

Another common mis-take, says Mr Owen, is fail-ing to draw up a corporatepolicy that covers what peo-ple will be trying to do withtheir mobile devices andfrom where. A 2012 surveyof 100 IT directors by Dam-ovo in the UK showed 39per cent of organisationshad not issued mobile usageguidelines.

There is a surprisingnumber of things to thinkabout, says Mr Owen. Forexample, “a decision needsto made about who owns amobile phone number,because if salespeople givetheir numbers out to cus-tomers, contact could belost if they leave.”

Security concerns areanother reason for takingcontrol. IT departmentsmust identify who is tryingto gain access and applyappropriate security filters.

Organisations need todecide if they are going tolet people download corpo-rate information on toremovable phone memorycards, or upload it via inter-net based services such asDropbox. Such tasks can beperformed using mobiledevice management tools

Continued from Page 1

from companies includingZenprise (Citrix), AirWatch,MobileIron and Good Tech-nology. You can block theuse of cameras or WiFiwithin areas of just a fewfeet, for instance, inresearch laboratories or inconfidential meetings.

You can even agree a pol-icy with network providers,so people cannot get pastrestrictions by switching

from WiFi to 3G or 4G, saysAvaya’s Mr Moulton.

Another approach isoffered by California-basedVMware, which creates“virtual boundaries” or“containers” by way of thecloud. These focus on theway users gain access toapplications irrespective ofthe device. You can evenhave separate phone num-bers for personal and busi-ness use on the same hand-set, with separate bills.

Restrictions do not engen-der goodwill when peoplehave brought their owndevices to work, considersBrian Gammage, VMware’sglobal chief market technol-ogist.

“If people want to playAngry Birds they can do soin a separate ‘container’.”

Adapting complex soft-ware applications for arange of mobile devices isproblematic and can causedelays.

Apps to perform specifictasks offer a faster route,argues Marc Christophides,support services deliverymanager for SThree, a glo-bal recruitment company.Apps are self-contained,easy to deliver and toadminister remotely, saysMr Christophides. “Theyare quick to deploy, simpleto use and, if they don’twork, they can usually justbe reloaded.”

New apps at SThree canbe approved and providedwithin 10 minutes, whetherstaff are in San Diego, Sin-gapore or Sydney, says MrChristophides. “And themoment someone leaves thecompany they can beremotely switched off.”

The Connected Business

Paul TaylorEditor, TheConnected Business

Maija PalmerTechnology Correspondent

Janina ConboyeFT Writer

Charles BatchelorJane BirdMichael DempseyJessica TwentymanFT Contributors

Adam JezardCommissioning Editor

Steven BirdDesign

Andy MearsPicture Editor

For advertising details,contact: James Aylott,telephone +44 (0)20 78733392, emailjames.aylott@ft.com, or yourusual FT representative.All FT Reports are availableon FT.com at ft.com/reportsFollow us on Twitter attwitter.com/ft.reports

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Contributors »

Personal devices can haveunintended consequences

‘If people want toplay Angry Birdsthey can do soin a separate“container”’

‘Be prepared to invest’: GlynOwen, Danovo portfolio chief

Once when you walkedthrough a city centre atnight and glanced at entic-ing store window displays,your desire to consume

ended there as the shops were shut.Mobile devices are changing this.

Even though the store doors are stillclosed you can scan a smartposter inthose same shop windows and pur-chase that coat or kettle with a fewclicks

This is just one example of howcompanies are increasingly supplyingcustomers with information and offersvia mobile devices to increase sales.

Mobile devices have the ability topersonalise a service and target a cus-tomer in a way a shop assistant youdo not know cannot. A shop assistantknows nothing about you, while theapps and services on your mobile ortablet device do.

Near field technology (NFC), whichis helping bridge the gap between thevirtual world and the bricks and mor-tar of high streets everywhere, meansyour smartphone, like your bank or

credit card, has a sim card that canstore payment information withinapps such as Google Wallet, whichcan also hold various store cards andvouchers.

GSMA, the worldwide trade organi-sation for mobile operators, runs anNFC programme and is working withmobile operators and retailers so theycan adapt to these sim-based phonesand target customers with offers assoon as they enter a store.

James Heaphy, GSMA’s NFC pro-gramme director, says: “If you go intoa shop and tap your phone on aninformation point it allows data trans-fer and can target you based on yourprevious purchases.”

He adds: “It also means you will getyour voucher or offers while shop-ping, rather than at the end when youpay at the till.”

Boots the Chemist in the UK, forexample, may give you a paper mon-ey-off coupon when you spend a cer-tain amount but it is easy to lose.

“Metro, the German group thatowns Macro [cash and carry] is

already using these methods in itsMacro stores,” adds Mr Heaphy. Swipeyourself in and you will receive offerson the things you like.

The technology takes advantage oflocation services, sending informationand offers to those who choose to optin. Mr Heaphy says this means a storeor chain can track the whole process,from where a voucher was scannedfrom a smartposter, say, through topayment for the product.

Retailers can then analyse moreeffectively who buys what, where andwhen and they also can more effec-tively aim at certain demographicswith offers specific to them.

For example. Dan Wagner, chiefexecutive of mPowa, the payment sys-tem provider, and an ecommerceexpert, is a life-long customer of Brit-ish chain Marks and Spencer. “Ialways buy my socks from there but ashop assistant won’t know this whilethe website or mobile site does.

“When I go on to the site it knowswho I am: ‘Welcome back Dan’. It alsoknows what I like to buy so will tar-get me with specific offers on theproducts I buy regularly. I like blacksocks, but maybe it’ll offer 20 per centoff grey ones.”

Mr Wagner believes retailers needto ensure their brand is accessible

from any channel and then musttarget shoppers quickly with thingsthey like.

However, once a retailer has gotcustomers in its shop, on its websiteor using its app, it has to provide aneasy experience for users.

This is where mobile paymentdevices are ideal. They allow shops toreduce the most irksome aspect ofshopping: queues. Cutting queuesmeans more money is being taken.NFC mobilises those taking the pay-ments, so they can be made anywhereon the shop floor, and it allows con-tactless payments through yourmobile.

Mr Wagner’s mPowa has also devel-oped a gadget that allows any retailerto take a card payment via a smart-phone, which is helping to drive salesin smaller businesses.

“The mobile point of sale is a realcatalyst. I think tills will becomeobsolete,” he says.

Another approach is that of BritishAirways, which has armed its groundcrews in New York with tablets. Ifyou fancy an upgrade at the lastminute a member of staff caninstantly show you videos of the cab-ins and the services on offer.

Aircrews are also provided with tab-lets. “If staff in the air have access tocustomer information then they knowexactly who’s on board,” says ChrisCarmichael, BA’s head of technicalinnovation. “Who is a gold cardholder [in BA’s Executive Club], forexample, can we offer them anupgrade onboard?”

Through access to customer details,staff can tailor their services to indi-viduals – a good experience meansyou will come back and more impor-tantly, recommend them.

BA’s tactic is to provide a slickexperience – from purchasing tickets,to boarding the aircraft – throughapps designed for all smartphones andtablet devices. “The aim is to keep itas light and simple as possible,” saysMr Carmichael.

It has also launched its Perfect Dayapp, which provides detailed guides toBA destinations created by travellers.Anyone can use it to share informa-tion instantly and make recommenda-tions that will hopefully lure morecustomers to book with BA.

Smartphonesset to take roleas shoppingadvisersCustomer services Janina Conboye findscompanies are increasingly targetingindividuals with offers and information

High-fliers: BAaircrews havebeen givendevices to helpimprove onboardpassengerservice BA

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4 ★ FINANCIAL TIMES MONDAY FEBRUARY 25 2013

The Connected Business

Every year, mobile advertisingis forecast to enjoy abonanza, and every yearadvertiser confidence andexpenditure lags far behind

consumer adoption of mobile devices.A study by research firm Berg

Insight estimates that mobile adsaccount for about 1 per cent of world-wide advertising outlay, while con-sumers are spending around a quarterof their available “media consumptiontime” browsing the internet and usingapps on smartphones and tablets.

Mobile advertising, nonetheless,represents a step in the dark. There isa vast oversupply of available adspace and not enough demand for it.This imbalance makes it hard foradvertisers to understand where theirads might be best placed.

There are problems presented bymobile devices themselves. For aneffective campaign, developers need totake into account the large number ofhandsets available, with differentscreen sizes, capabilities and operat-ing systems. This means the costs ofdeveloping engaging, interactivemobile ads can seem high, especiallyto an advertiser with no guarantee ofa return on their investment.

There is the challenge of under-standing the audiences reached by aparticular mobile ad campaign. Whileonline advertising on a conventionalPC or laptop uses cookies – codedownloaded by a website to a visitor’sbrowser – to track user behaviour andidentify audiences, this is more prob-lematic on mobile devices, as AndrewFrank, an analyst at research firmGartner, explains.

Apple has set the Safari browser onits iOS-based products (iPhones andiPads) to reject third-party cookies bydefault. Mr Frank says unless users

change their phone settings, which ispretty rare, cookies will work on thatdevice. He adds that Apple devicesreject apps that access a device’sUDID, an alphanumeric identificationstring unique to each iPhone andiPad.

With Android, there is more flexibil-ity. Fragmentation of the market,however, with different devices run-ning different versions of the operat-ing system, makes it hard for develop-ers to build a tracking mechanism torun across Android versions.

This makes mobile seem risky: achannel for which it is hard to buildeffective campaigns and harder still tomeasure their success. Advertisersand agencies representing them, findthis off putting says Alex Rahaman,chief executive officer and founder ofStrikeAd. His company provides amobile demand-side platform, or DSP,which allows companies to buy adver-tising space in a more targeted wayand track the success of campaigns.

DSP, established in online advertis-ing, is a way of connecting advertisers

looking for space with the large num-bers of ad exchanges that, in turn,represent the many online publishersselling space. A mobile DSP, like theone offered by StrikeAd performs thesame function but enables advertisersto pinpoint audiences by a number ofcharacteristics: the type of devicesthey use, their operating systems,their mobile carriers, the time of dayand, increasingly, their location.

Once the advertiser uploads theirtargeting criteria for a particular cam-paign, the DSP monitors a number of

ad exchanges where mobile ad inven-tory is bought and sold and, when asuitable ad space becomes available,bids on it. Because of the time thisprocess takes – often milliseconds –this kind of buying is known as real-time bidding.

“The DSP figures out what worksbest for a particular campaign, basedon when and where the ad was deliv-ered: which sites, which locations,which handsets, which target audi-ences,” Mr Rahaman says. “The DSPlearns to answer the important ques-

tions for itself: Did the ad work? Didthe audience engage with it? Did theypurchase a product, watch a video ordownload an app? Then we stop buy-ing space in all the places a campaigndoesn’t work and hone in with laser-focus on the best places to buy ads fora particular advertiser.”

This approach has enabled two-year-old StrikeAd to attract $3.5m inventure capital funding and relocatefrom London to New York but it haslots of competition. Indeed, this is arather crowded market, dominated bya crowd of start-ups, such as Tapad,EveryScreen Media and MediaMind.

Undeterred by the scramble, mobilead network Adfonic launched its ownDSP, Madison, last October. WesleyBiggs, its chief technology officer,says: “We had a crunch meeting witha large agency client that told us: ‘Wewant to do mobile, our clients areasking us to do more and spend morebut we can’t unless we can see wherethe results come from.’ The questionfor us was: ‘Do we have the courageto embrace this disruption?’”

The mainstream advertising agen-cies that Adfonic works with in theUK – representing Warner Brothers,Peugeot, McDonald’s and other brands– have campaigns on Madison or trial-ling the mobile DSP during 2013’s firstquarter, Mr Biggs says.

“One agency customer describedgetting hold of a mobile DSP as likehaving laser eye surgery. They couldsee the true performance of cam-paigns, tracked over time and thatmeant they had confidence in mobileas an ad channel for the first time,”he adds. “For advertisers to includemobile in their major campaignbudget lines, the industry has to givethem the visibility and transparencythey expect.”

Marketers aim to tame mobile’s final frontierAdvertising space Jessica Twentyman looks at how companies are keeping track of promotional campaigns in a complex environment

Campaign trail: services such as those from Adfonic allow clients more accurately to track how successful their mobile advertising and promotions have been

The growing popularity ofmobile payments is both anopportunity and a challengeto bankers, retailers andmobile phone operators.

Spotting the likely win-ners and losers is difficultbut the next two to threeyears are expected to see ashake-out in this market ascompeting technologies andbusiness models battle forsupremacy.

The banks run the risk ofoutsiders gaining a footholdin their basic business ofhandling money transac-tions – as mobile operatorsalready have in parts ofAfrica, for example – whilethe mobile operators facethe prospect of other pro-viders, such as banks andspecialist payment services,gaining a cheap ride ontheir networks.

The challenge for retail-ers is to stamp their brandon the payment experienceand to exploit the paymentinformation to assistmarketing and inventorymanagement.

Jean Lassignardie, chiefmarketing and sales officerfor global financial servicesat Capgemini, the IT con-sultants, says: “The growthof non-cash transactionshas been faster than pre-dicted over the past coupleof years, though it is stillsmall.

“It is not easy to see whatwill be the key technologyto emerge or the keybusiness model. We don’tsee one technology winningbig time. A variety of stand-ards will remain in use.”

Despite the attention theyattract, mobile paymentsaccount for only a small, iffast-growing, part of themoney transfer market.They are expected to repre-sent $1,700bn or 4 per centof global retail transactionsby 2017, according toJuniper Research. Banksstill account for mostmobile payments: $6.5bn ofthe total $7bn in 2011, risingto a forecast $15.3bn of the$17bn total in 2013, accord-ing to Capgemini’s WorldPayments Report. Butbanks are constrained byregulation and legacy busi-nesses, and non-banks areseeking to develop nichemarkets, it notes.

Attention is focused onthe competing claims ofremote payment technol-ogy, using apps and webbrowsers, and near-field

communication (NFC),which requires a user totouch a reader with hismobile or hold it very closeto a receiving device – typi-cally within 4-20 centime-tres to establish radiocontact. NFC technology,used by Google’s Wallet, isbeing heavily backed by themobile operators, who see itas a way of maintainingcontrol of the paymentprocess and of the fees thatare generated.

Opponents of NFC argueit is unnecessary – remotelyconfigured devices can beheld close to a reader if nec-essary – and that it is lessconvenient than a remotedevice that can be read

anywhere in a store, andwhich effectively can give asales assistant freedom inthe shop rather than leavethem stuck behind acounter.

“The carriers [mobilephone networks] are aggres-sive in trying to push NFCtechnology,” says SandyShen, global researchdirector for consumerservices at Gartner, an ITconsultancy. “It gives thema vehicle to charge serviceproviders and other applica-tion providers. If the carri-ers offer web-based servicesthey will get intermediatedout by the banks or theretailers.”

Resistance from users ofexisting mobile technologyis strong. David Marcus,president of PayPal, a pio-neer of online payments,warned that NFC wouldmake the shopping experi-

ence less efficient because itrequires the user to go to aspecific pay point in-store.

A fertile area of develop-ment for non-traditionalproviders of payment serv-ices is the small businessowner. In the past theyhave been unable to acceptcredit card payments fromcustomers because banksystems were aimed atlarger retailers and chargeswere too high. But the pasttwo years have seen severalproduct launches aimed atthis market.

NCR, a supplier of ATMbank cash dispensers andretail self-checkout termi-nals, last year launchedNCR Silver, a reader thesize of a small matchboxthat plugs into a mobilephone, which allows smallbusinesses to accept creditcard payments.

Square, a San Francisco-based company, has built astrong position in this mar-ket since it launched acredit card reader foriPhones and Android-basedmobile phones in 2010. Thetransaction fee of 2.75 percent is similar to thatcharged by conventionalcredit card processors butSquare does not chargemonthly or set-up fees.

A competitor is iZettle, aSwedish company that hasdeveloped a similar devicefor attaching to a mobile.Jacob de Geer, co-founder,says the company’s targetmarket is the small busi-ness employing one to threepeople and handling up tofive transactions a day,compared with the 30-50transactions required bythe bank-owned cardprocessors.

“This is a crowded spaceand there is a lack of com-mon standards across theindustry,” comments BenGale, NCR vice-presidentfor western Europe. “It willplay out over the next 18months.”

Outsiders muscle in onmonetary transactionsPayment systems

Banks face challengefrom technologycompanies, saysCharles Batchelor

‘This is a crowdedspace and there isa lack of commonstandards acrossthe industry’

Sandy Chen: networks are aggressively pushing NFC