The Mobile Big Bang

2010 will be remembered as the year when the

smartphone revolution began in Korea. With mobile
phone makers in heated competition for market space,
smartphone sales skyrocketed 300 percent in the first six
months alone from 2009. The smartphone is creating a
mobile office, allowing access to company files and
onsite operations such as contract signings. A slew of
mobile information services also are accompanying the
craze.

KANG Minhyung

The Mobile Big Bang1

KANG Minhyung

2010 will be remembered as the year when the smartphone

revolution began in Korea. With mobile phone makers in heated
competition for market space, smartphone sales skyrocketed 300
percent in the first six months alone from 2009. The smartphone is
creating a mobile office, allowing access to company files and onsite
operations such as contract signings. A slew of mobile information
services also are accompanying the craze.

Explosive Smartphone Growth

The global smartphone craze has led to an explosion in mobile Internet use,
ushering in a mobile era. As mobile phone manufacturers like Samsung Electronics
and Apple race to introduce their high-performance smartphones, one out of five
people in the world is projected to have a smartphone by 2011. In just five years, the
rate of smartphone users has grown from five out of every 100 to 20 out of every
100. It took fixed-line phones 31 years to reach that level, the Internet eight years
and cellular phones six years. The global explosion in mobile devices, including
smartphones, is also expected to ignite exponential growth in mobile traffic, which
already has had annual average growth of over 108 percent. By 2014, mobile traffic
is projected to reach 3.6 million terabytes (TB), which is 39 times that of 2009.

2010 is the first year of runaway adoption of the smartphone in Korea. As of June,
the number of smartphone users in Korea stood at 2.2 million, a 300 percent
upsurge from the end of 2009. This figure is expected to exceed four million in 2010.
The mobile big bang will bring radical changes to corporate management styles, not
to mention the whole spectrum of lifestyles, including individual leisure and
formation of social relationships. According to a survey of Korean executives,
conducted in April, 14.1 percent had already adopted a mobile office system, and
25.1 percent of them planned to join the trend.

The survey clearly shows that the mobile office is indeed on the road to turning
mainstream in Korea.2 The mobile era is manifested in the demolition of the wall
between online and offline life, and genuine personalization. With employees
working away from the office (offline) being able to access the information
anywhere at anytime, the division between online and offline has become blurred.
Employees away from the office, for example, are spared the inconvenience of
returning to their workplace to get needed information. Leveraging this advantage,
smartphones are offering convergence services that combine offline activity with
online information, i.e. augmented reality (AR)3 and location- based Social Network
Services (SNS).4 Meanwhile, mobile phone users are provided with location- and
time-specific, personalized information, such as GPS services, user preferences,
and information about their immediate surroundings. A case in point is LBS
(Location-Based Services), which helps users navigate to well-reviewed restaurants
nearby, and offers information on mass transit arrival times.
Changes in Business Operations
The mobile big bang brings changes to companies in three general areas: work
environment (infrastructure), working modes, and the value chains (business
models). Such changes are projected to sweep across the manufacturing and
service industries as well as directly related industries (mobile carriers and IT-
related companies).
Realization of mobile Offices
Through fixed-mobile convergence (FMC),5 office fixed-line phones and mobile
phones are interlinked to enable real-time communication between employees
regardless of time or place. In a survey of North American IT administrators a
whopping 78% blamed business6 disruptions on delayed communication with chief
decision makers, underscoring how delayed communication is taking a heavy toll
inside many businesses. Untrammeled communication with physically unavailable
employees (e.g. attending a meeting or in the field) via smartphones will reduce
business delays caused by interrupted communication. Also, if unexpected
problems arise, smooth communication between the relevant employees will ensure
a swift grasp and handling of the situation.

Having access to major work systems, such as Enterprise Resource Planning

(ERP), Customer Relationship Management (CRM), and Supply Chain Management
(SCM), employees in the field are able to make speedy, accurate decisions. A variety
of information needed in the field, such as order processing, analysis of a
customers' profitability and parts orders, can be obtained instantly, which improves
the decision-making process and productivity. Swindon Commercial Service (SCS),
a British facility management services provider, cut costs by 10% by setting up a
mobile system in which field employees can report and be instructed on a real-time
basis rather than return to their office for instructions. Furthermore, the information
gathered in the field such as orders and inventory levels can be reflected in the
main system in real-time. Japanese insurance agency T&D Confirm ramped up its
business efficiency by building a mobile system that enables its sales people to
submit their reports online after consulting with customers.

On the domestic front, Korean companies are keen to revitalize communication

between employees by utilizing mobile offices like fixed-mobile convergence and
groupware interconnectivity. Linkages with major work systems including ERP,
CRM and SCM are also expanding the coverage of mobile offices. Since Kolon
Group announced its plan in January to apply fixed-mobile convergence and
groupware interconnectivity throughout its entire 42 affiliates, Woori Financial
Group and SK Group have followed suit with plans to adopt the mobile office
system across the board. The mobile office system is rapidly spreading through
large companies like Samsung Electronics, KT, and POSCO.

Expansion of the Mobile Work Mode

Mobile-triggered changes in the work environment have led to changes in working
modes. With access to all the information needed in the field, field employees stand
to have more discretion. The increased empowerment of field employees can
quicken business operations and enhance employee satisfaction. For instance,
sales people in the field can access a customer's previous business transactions
and credit rating, consequently expediting price negotiations and contract signings.
Korean insurers like Mirae Asset Life Insurance and Hanwha General Insurance Co.
revamped their entire systems this year: field employees were given smartphones
that allow them to offer a one-stop service-ranging from insurance planning and
sending insurance applications to printing contracts and obtaining customer
signatures.

On the other hand, as the amount of information available increases and more work
can be completed onsite, field employees are becoming multi-functional. Seoul
Metropolitan Rapid Transit Corporation, for example, handed out smartphones
installed with a subway facility maintenance system to 6,500 employees in January.
The employees were instructed to take photos when problems with facilities and
trains arose, and immediately transmit the photos to those in charge. This mode of
working turns the entire workforce into safety monitors.

In addition to in-house information sharing, sharing information with corporate

clients and suppliers has also become more active, which raises the efficiency of
the entire supply chain, such as improvements in inventory turnover and on-time
delivery rates. Companies can prevent unnecessary inventory accumulation and
delivery delays by swiftly sharing information on order processing, the corporate
client's inventory levels, the arrival of new products, and problems with logistics
and manufacturing flows. In 2007, Compania Argentina de Granos (CAGSA), an
Argentine agricultural products middleman, set up a mobile supply network that
integrated approximately 4,000 smartphones, owned by the production and logistics
managers of its produce suppliers, with CAGSA's ERP system. Real-time
communication with outside experts has also facilitated information sharing. UC
Davis Medical Center in California created a system in which local emergency
responders can receive instructions from doctors via video conferences while
attending to critical cases. Whole Foods Market, a US organic foods retailer, set up
a mobile application system that offers customers the list of ingredients of the dish
they would like to cook and guides them to where the ingredients can be found in
the store.

The diminishing importance of working in the office has led to the expansion of
telecommuting, such as working at home and working remotely (though not
necessarily at home). The number of "mobile workers" is expected to top one billion
by the end of this year, and 1.2 billion7- over one-third of the entire global labor
force-by 2013. The Presidential Council on Information Society in Korea plans to
build 22 smart offices8 by 2013 under its "Roadmap for Smart offices." BT's (British
Telecom) telecommuting program "BT Workstyle," which allows for a variety of
work modes including working at home and flexible work hours, has been
successful, with 87 percent of BT's 92,000 employees on board the program in
2008,-of which 14,000 are working at home. Compared to those in the office, the
productivity of work-at-home employees is 20 percent to 60 percent higher. Also,
the maternity return rate reached 99 percent, more than twice the industrial average
of 47 percent.
Mobile-Based Business Models
The addition of mobile information services to existing products or to product
supply channels can enhance customer convenience. Fendi equipped its luxury
bicycle "Selleria" with GPS sensors to give customers a sense of security, and the
Bank of America released an application that helps customers find the closest ATM.
Moreover, Hyundai Heavy Industries' "Hi-Mate", a remote management system,
enables the monitoring of conditions and operation of excavators in real-time. In
other words, even after selling the excavators, Hyundai Heavy Industries offers
speedy, differentiated services to customers by taking advantage of its Hi-Mate
system, which monitors how well construction equipment is operating and whether
any parts need to be replaced.

In addition, in a mobile environment, mobile sensing and communications

technology make it possible to charge customers based on the frequency and use
of products or services. In other words, the transition from the existing purchase-
oriented sales model to a membership-based model,-which charges customers
based on the amount of use,-has become easier. By flexibly setting prices in line
with the customer's usage patterns and demands, companies can cut their product
and service usage fees. For example, an airplane engine manufacturer leases its
engines, rather than sells them, and charges customers in proportion to the amount
used, which is measured by sensors attached to the engines. British auto insurer
Norwich Union expanded its customer base by setting up premiums based on the
policy holder's driving habits and mileage, information which is obtained via a GPS
receiver and mobile technology placed in their vehicles.

Lastly, it is possible to adopt a completely different business model via mobile

technology. In partnership with a department store, Inax (a Japanese bathroom
products manufacturer) sends customers text messages about their health after
analyzing their bowel movements. Safaricom, Kenya's leading mobile phone service
provider, offers a mobile phone-based money transfer service called "M-Pesa,"
which saves subscribers time in going to the bank. The service has become very
popular, evidenced by its 38 percent subscription rate for all the households in
Kenya.

Furthermore, there has been a convergence of mobile technology with a growing

number of broadcasting, music and medical companies worldwide who recognize
the potential of the mobile era. To launch their mobile services, they rent
frequencies from mobile carriers, the key part of the value chain of mobile
communications services, and integrate the frequencies with their own strengths
(such as content competitiveness and customer loyalty) in the value chains of
existing business segments.

Analyses and reconstruction of the information obtained via mobile devices can
also lead to new business models. For instance, by using mobile sensors,
amusement parks can have a good understanding of visitor traffic flows, thereby
obtaining information on favored rides and wait times. By analyzing the gathered
information, amusement parks can change the overall arrangement of rides and
other entertainment attractions. Nokia acquired travel social network site Doppler to
evaluate an individual's travel history and provide smartphone-equipped travelers
with information on travel destinations, travel courses, travel distances, and energy
consumption.
Implications and Suggestions
The mobile big bang, which has already fundamentally changed the way companies
manage their organizations, is obviously an irreversible trend. In the face of
unprecedented changes of great proportions, simply analyzing estimated
investments and expected outcomes is insufficient in making sound judgment;
therefore, the strategic judgments of the CEO have become more important. While
leveraging thorough analyses of estimated investments and expected outcomes,
CEOs must take drastic measures to swiftly capitalize on the opportunities the
mobile big bang is presenting. In response to changing management environments
in the mobile era, management must adjust in three areas: people, organization, and
business. Through self-motivation and efficient monitoring, employees armed with
information power should be encouraged. External capability building through
reinforced partnerships should also be pursued. In addition, the wisdom of fine-
tuning business models through the convergence of existing business segments
and obtaining of good understanding of the key values of the mobile era are vital. In
Korea, the government should lay the groundwork for the mobile era and push for
regulatory reforms so as to use the mobile big bang as the driving force behind
economic growth.

Keywords
Mobile big bang, mobile office, smartphone, business model, ERP, CRM, SCM

Note

1. The "mobile big bang" means the explosion in the use of mobile infrastructure,
mobile devices and mobile services.

2. Samsung Economic Research Institute conducted a survey of 447 SERICEO

members and found that the adoption of mobile offices had jumped from the 5%
reported in Samsung SDS data in 2009.

3. "Augmented reality" (AR) is a term for a live direct or indirect view of a physical
real-world environment whose elements are augmented by virtual computer-
generated imagery. For instance, if smartphone users film their surroundings,
information on nearby major facilities pops up on the screen.

4. A case in point is the location-based social network "Foursquare," which is a web

and mobile application that allows registered users to connect with friends and
update their location.

5. "Fixed-mobile convergence" means the integration of fixed-line phone services

and mobile phone services. For example, the same phones are used as Internet
phones via Wi-Fi networks in certain areas, and as general mobile phones via 3G
networks in other areas.
6. Howarth, A. (2006). "Giving Customers Content, Flexibility & Choice." Cisco
Technology Center.

7. IDC (Feb. 18, 2010). More Than One Billion Mobile Workers Worldwide by Year's
End, IDC Press Release.

8. IT-based offices that enable workers to work from various locations without
commuting to a central place of work