Perspectives on Enterprise Mobility

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Key messages

Mobility is a game changer for large enterprises; companies need to monitor major discontinuities

Real-world adoption growing and companies beginning to deploy this at scale, healthcare, and fin services leading the way

For CIOs, decision on the mobility stack is the most critical

McKinsey & Company

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What is enterprise mobility?

3. Vertical-specific mobile solutions Emerging technologies (e.g. M2M/sensors) transforming verticals/ industries (e.g., Smart grids) Target big and inefficient spend pools and transform using mobility Improve productivity/quality/ outcomes

2. Mobilizing existing enterprise software applications

Largely field force productivity applications that mobile-enable enterprise backend (e.g. CRM, ERP, SCM)

1. Mobile enabling communication 3. Debottleneck mobile and collaboration $2bn 19% application applications space

Data and voice plans and other communications apps FMC, mobile e-mail, mobile PIMs

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Enterprise mobility is gaining momentum

US Estimates # of Ent. Subs 30-40M

# of M2M Sensors

100M+

2015 Ent. Mobility Rev1

~$50-75B2

EBITDA for Players

30-45%

1 Does not include connectivity 2 HW, SW & SVCs McKinsey & Company

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Key features driving enterprise adoption

Immediate startup time, always-on

High mobility (less than 3 pounds weight) and battery life (full work day)

Touch-based input (no keyboard)

Wireless, always-on connectivity

SOURCE: Apple, Archos, HP, Lenovo

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7 major disruptions that will shape Ent. mobility adoption in next 12 months
Evidence Data connectivity margins under pressure Carriers wont be the only route to market for devices RIMs leadership is getting challenged Androids fragmentation to be an issue for developers Emerging enterprise mobile vertical / horizontal dilemma Cloud transition forces shift in mobile middleware + MEAP Unified collab will reinvent mobiles killer app Data use rising rapidly (e.g., ~50MB/mo on BB going to ~1GB/mo on iPhone/Android) Telcos rapidly investing in new capacity and tech (e.g., 3G -> 4G) to meet requirements

Today >70% of US enterprise mobile devices are sold through / by carriers Over-crowded device OEMs have increasingly large challenge to be preferred in carrier sales End-users demand shift to iPhone / Android CIOs say BB share falls >50% within 2 years to <35%

Developers deeply concerned about Android fragmentation likely to worsen as OEMs struggle to differentiate against falling margins AAPL is leader today and MSFT beginning to merge platforms to manage fragmentation Scale = profits and traditionally horizontal = scale Mobile enterprise decisions are driven by vertical solutions over medium term

Traditional heavy approaches being replaced (Sybase/ WebSphere down 1-2 points share/year) by agile approaches from upstarts like Antenna and Spring (growing 25% y/o)

CIOs challenged to articulate mobile value beyond communications >60% of CIOs plan unified collaboration on desktop in next 1-2 years

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Key messages

Mobility is a game changer for large enterprises; companies need to monitor major discontinuities

Real-world adoption growing and companies beginning to deploy this at scale, healthcare, and fin services leading the way

For CIOs, decision on the mobility stack is the most critical

McKinsey & Company

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Businesses across all industries are using mobile apps to enhance customer interaction NOT EXHAUSTIVE
Marketing Horizontal How it is changing the game 2D barcodes that link to advertisements, coupons etc. 2D barcodes as substitutes for paper giftcards Apps that provide product information, specific campaigns Enabling customers to make purchases using mobile apps (e.g. insurance policies, hotel rooms etc) Enables customer banking transactions using mobile apps (e.g. account check). Remote monitoring of patients with chronic conditions by pharma companies. Prescription adherence apps by pharma companies and pharmacies Mobile check-in and boarding passes Filing auto-insurance claims Early adopters

Sales channel

Banking Vertical specific

Pharma / Healthcare

Transportation Insurance

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In healthcare, mobile solutions can impact patients from prevention / wellness to end-of-life support
Stages of healthcare needs Preventive1 Wellness & lifestyle Diagnosis Acute/ emergency care Chronic care Rehabilitation End of life support

Patients Patients

Remote consultation Teleemergency

Remote healthcare monitoring

Key stakeholders

Chronic illness treatment

Drug compliance

Providers Providers

Imaging & EHR

RFID Tracking Inventory monitoring

Workflow management Payors Payors Mobile payment and insurance claims Compliance monitoring Sales support

Producers Producers
1 Includes education, awareness, vaccinations, health checks, etc. SOURCE: Team analysis

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User experience - Mobile health solution for wellness from a consumers view
Cross-device measurement Cloud aggregation of metrics Multi-screen, multiaudience visualization

Diet & activity tracked by mobile phone

Consumer can track biometrics on any screen

Data aggregated,correlated, and stored in the cloud

Resulting glucose levels measured by glucose meter

Episodic alerts sent to care provider

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Mobility applications are increasingly adopted by corporations

EXAMPLES

Medtronic launched an internal App store for iPads in 2011 with more than a dozen apps Example apps include mStar, a sales reps tool that automates product ordering and registration Currently iPad-only

Pfizers Mon Krono Sant app is a memory aide for consumers, offering a health record for chronic disease sufferers Application allows to share self-reported information with physicians

Novo Nordisks Coags Uncomplicated iPad / iPhone helps physicians diagnose medical conditions based on lab test results The app is part of a campaign to promote the drug NovoSeven

SOURCE: AT&T; Mobile Health News; Silicon.com; RIM; Otto Bock; WellDoc

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The iPad has gained popularity in hospitals based on its ease of use, portability, and low cost
Description of use Deployed 1,000 iPads for mobile access to EHR within the hospital, iPhone support planned in early 2010

EXAMPLES

Developed in-house app for EHR access allowing use of calendars, hospital e-mail and contacts, as well as patients results and charts which can be accessed inside and outside hospital. Was referenced as case study on Apples web site. $500,000 pilot project for physicians in Victoria, Australia to allow them to access any web-enabled application run by their hospital, as well as to tap into health information resources Cedars-Sinai hospital was given early access by Apple to iPad before official release to experiment with enhancing the physician patient relationship The Internal Medicine Residents at the Univ. of Chicago Medical Center are now equipped with iPads as their primary device for clinical use (115 devices deployed in late 2010)
SOURCE: Literature search; team analysis McKinsey & Company

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Apple is building a healthy eco-system to drive adoption of mobile solutions in healthcare

Solution types Solutions provided EHR EHR management management Solutions for medical documentation covering billing, dictation, SOAP notes, and prescription Partners Customers Quotes Service providers With iPad, I no longer have to type or use multiple check lists for my patient exams. Very easy to use and navigate - Anonymous, www.appcomments.com Service providers iPad is ideally suited to visual conversation The patient and I can flip through the x-rays and clinical photos together - Dr. Jonathan L. Ferencz, www.apple.com Individual patients I can access to my health record easily I feel like that I have my own health manager in my hand - Wayne LeFevre, itunes.apple.com McKinsey & Company

Image view Image view

Solutions for 2D/3D image processing and display (e.g., MRI, X-ray)

Personal Personal wellness/ wellness/ health health management management

Personal healthcare system through digital record and print out of personal healthrelated symptoms and history

SOURCE: Experts interviews; literature search; team analysis

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Mobile Financial Solutions can be broadly split into 3 major categories

Detailed further

Description Typical vendor and other transactional payments 3 Payments 2 Remittance Transfer of money between accounts / people

Typical use cases Merchandise purchases Ticketing Bill payment

Money transfers Person-to-person International remittance Prepaid top-ups ATM branch locator Account balance Account alerts Transaction alert

1 Basic banking

Typical banking transactions Bank balance enquiry Stock trading Deposits and withdrawals

SOURCE: Federal Reserve Bank of Boston; E&Y analysis; team analysis

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Developing markets have more widely adopted services but also include a lot of market players
Trends China China Extensive availability of mobile banking services such as money transfer and bill payment offered by commercial banks Payment services being adopted by operators with fairly un-standardized usage of technology Recent examples China mobile adopted RF SIM with integrated NFC radio for payments in fast food chains, retail and transportation services China mobile taken equity share in a regional bank to support its mobile payment initiatives China Unicom expected to deploy NFC payments mCheck most popular service with over 1 million registered users Paymate has launched money transfer services in collaboration with Tata using IVR technology NGpay setting up a market place on mobile by signing up multiple agents M-Pesa in Kenya one of the most successful launch of mobile services with over 9 million users Standard Chartered in South Africa offering Instant Money and Mdinar by Banque Internationale Arabe de Tunisia in Tunisia

India India

Third party service providers take on more active role in deploying mobile financial services because of guidelines imposed on banks Common technologies include SMS, USSD, WAP client and IVR Widely adopted mobile payments players with over 30 deployments Money transfer is most widely supported and used service Majority of deployments championed by mobile careers with some recent entrants from banking SMS and USSD preferred technologies

Africa Africa

SOURCE: Gartner; team analysis

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Innovative IT investing insurers are starting to provide consumer-facing mobile applications

Key functions

Customers integrated financial account information (USAAs insurance, bank, investment accounts) Mobile banking (e.g., money transfer)

Mobile payment for insurance bill Customer services (e.g., tow services, nearby gas stations, repair shops, rental cars)

Self-claim report services (e.g., photo upload, guide nearby repair shops, claim progress check) Policy quotation generation with car type with year and self-policy contract

Mobile platforms

iPhone/iPad Android BlackBerry Windows Phone 7

iPhone/iPad Android BlackBerry Windows Phone 7

iPhone Android

SOURCE: Literature search

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RIM is providing mobility solutions for insurance industry by partnering with solution providers and insurers
Type Vertical Vertical solution solution Recent movements Offers a mobility solution for insurance industry partnering with solution provider All-in-One Agent Solutions for customers to access their insurance info Brokers and Brokerage Mobility to deliver seamless CRM service to customers Launched CSCs new app for insurance agents and policyholders mobile access to insurance services on insurers life/P&C systems Recently Introduced tablet PC, PlayBook and it attracts many financial service institutions including TD and Sun Life Financials Sun Life Financial Inc, an insurance company is planning to buy 1,000 units of PlayBook Novaricas research found that 52% of all insurance carriers support Blackberries for their claims adjusters in 2010 Partners

B2B app B2B app

Device Device sales sales

SOURCE: Literature search

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A rich eco-system of solution providers provide mobility solutions in Insurance

Potential partners Sales solution providers Sales solution providers (agent portal/CRM) (agent portal/CRM)

Claims solution providers Claims solution providers

Pin point enabling Pin point enabling solution providers solution providers (document creation/ (document creation/ E-signature/virtual desktop) E-signature/virtual desktop)

SOURCE: Team analysis

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Key messages

Mobility is a game changer for large enterprises; companies need to monitor major discontinuities Real-world adoption growing and companies beginning to deploy this at scale, healthcare, and fin services leading the way

For CIOs, decision on the mobility stack is the most critical

McKinsey & Company

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Top trends from McKinseys survey of 250 CIOs of large enterprises

Key findings from peer group Market Market growth growth A Mobility spend expected to increase ~5% over the next year. B 56% of companies see strong demand to support a wide range of mobile Oss.. C Most organizations prefer BlackBerry smartphones and Apple tablets. D Most restrict personal use in some way (primarily web restrictions). 60-70% allow personal apps, email and personal media/data. E Enterprise tablet penetration is growing. ~25% penetration in 2 years, Tablets Tablets F CIOs expect limited laptop replacement due to tablets. G Companies plan to significantly expand mobile applications in the next 2 years (by 2013, 90% peers will have 25+ apps) H All major application types (e.g., productivity, CRM) expected to be offered on mobile platforms I Primary application challenges include security and productivity apps

Smart Smart phones phones

Applications Applications

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Most critical decision the CIO needs to make is on the mobile stack
Four major stacks in market today OS Platform OS Platform Device & Device & connectivity1 connectivity1

PRELIMINARY

Application Application Model Model

Local apps

Web-based apps Client/server apps (e.g., productivity) Infrastructure Infrastructure

Web apps

Web apps

Web apps

1 In many countries, device exclusivity agreements dictate connectivity options. Subset of global carriers displayed. SOURCE: Team Analysis McKinsey & Company

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Devices

On devices, many entrants in the space, with little differentiation between them; PC OEMs competing on price
Manufacturer/OEM Released Tablet? OS Price (3G, 32 GB) 729 Strong Android challengers Gross Margin1 Company2 Tablet 39% 40% Channel Compoexpertise nent Industrial Software Brand advantage design capabilities Retail Carrier strength3

599 N/A 799

29% 32% 26%

43% N/A 38%

N/A N/A N/A N/A

599 (no 3G) Wildcards N/A In line with iPad ~800-1000

46% 30% 24% 64%

Price challengers

N/A 449 (16 GB, no 3G) 749

23% 10% 23%

N/A N/A N/A

1 Green indicates gross margin 35%, blue 25-35%, and orange < 25% 2 Where available, gross margin of business unit that produces smartphones/tablets is used 3 Based on Interbrand brand value; green indicates valuation $15 billion, blue $5-15 billion, and orange < $5 billion

SOURCE: Company financial statements; lit. search; Interbrand; team analysis; PD 781490 Tablet Market Dynamics

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Application Model

On app model, very little to differentiate between the 3 stacks

Microsoft has currently released a mobile office package only for Windows Phone, however many third-party options fill this gap. Implemented on BES Messaging CRM, ERP CRM Security Siebel CRM supported on the browser SAP CRM supported via app IBM Traveler as an independent app. or Ultralite on the browser Numerous mobile apps such as Sales Assistant, Business indicators Business Objects application supported since 2009 Plans to implement throughout 2010 Siebel CRM supported on the browser Availability only via 3rd party providers

Symantec have so far announced a mobile security suite only for Symbian phones LiveCycle available as app LiveCycle available as app N/A

Processes App in pilot phase available CRM App in pilot phase available Available via 3rd party apps such as CompanionLink

Availability only via mobile CRM 3rd party providers CRM Accounting CRM Available on the browser in beta mode Available as app Available on the browser in beta mode Available as app N/A

N/A

SOURCE: McKinsey (Autumn 2010); PD 777935 Virtual Desktop Infrastructure Market Overview

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Infrastructure

On infrastructure, mobile enabling apps require additional infrastructure

Infrastructure cost driver

BASIC EXCHANGE ACTIVESYNC SCENARIO Support cost driver Device cost driver

ActiveSync component requires both additional Exchange client-access servers and mailbox servers to handle increased transaction load

Internet Firewall Exchange Infrastructure

Storage

Apps (optional) iOS or Android device (using built-in email/ contacts/calendar apps) Separate MDM service recommended to manage security and control of devices (e.g., remote wipe) BES may serve this function once Ubitexx adds support for non-RIM devices VDI (optional)

Helpdesk

Mobile device management (MDM)

SOURCE: Team analysis

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In Conclusion

Mobility is a game changer for large enterprises; companies need to monitor major discontinuities Real-world adoption growing and companies beginning to deploy this at scale, healthcare, and fin services leading the way

For CIOs, decision on the mobility stack is the most critical

McKinsey & Company

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