This time last year, analysts told Computer Weekly that 2002 was the year when mobile commerce was going to become a mainstream business application. With Forrester Research predicting that that the UK m-commerce market would be worth £2.8bn by 2005, IT directors were advised to begin looking at their m-commerce strategies to ensure their companies were not left behind.
However, 12 months on, progress has been slow. Although the likes of Tesco.com have launched high-profile m-commerce initiatives, most companies, wary of the gloomy economic outlook, have not shown any interest in mobile projects or have adopted a wait-and-see approach.
A wide-ranging survey of 1,205 UK companies across 15 sectors, exclusive to Computer Weekly, has revealed that 65% of firms have no m-commerce strategy in place and are not considering implementing one. The survey defines m-commerce as activities such as communications, content delivery, enabling financial services, B2B services, mobile marketing, location-based services, retail services and entertainment.
The research, commissioned by m-payments provider Paybox, found that the lack of demand from customers was the main reason for the low level of interest in m-commerce (cited by 68% of respondents). The lack of a proven business model is also preventing progress in the area, according to 33% of those surveyed.
This apathy towards m-commerce comes as no surprise to Alex Kwiatkowski, senior consultant at analyst firm Ovum.
"Most companies' plans for m-commerce are some way down the line as there is no pressing need to do anything now," he said. "This is reflected in the changing business model of the [m-commerce] suppliers, who are looking around trying to find a niche or companies to partner with."
The change of mood since the start of 2002 is not down to any failure in mobile technology, but the general tightening of IT budgets, Kwiatkowski said.
"The technology has not changed, but budgets have," he said. "Companies need a compelling reason to go through with projects - return on investment is absolutely critical."
The survey confirmed that many companies believe there is not enough ROI to justify m-commerce projects at the moment. Thirty four per cent of respondents said they did not know when their m-commerce strategies would produce a return, with a further 23% reporting it would take up to two more years to break even.
However, some analysts believe companies need to consider more than just ROI when assessing the viability of an m-commerce project.
M-commerce brings a number of intangible benefits that cannot be accurately calculated, such as improved brand image and competitive advantage, said Richard Clifford, m-commerce analyst at research firm Datamonitor.
"It is easy to ignore the intangible benefits that IT systems and software can bring," he said. "It has become more popular to focus on the tangibles as a sales lead generator tool in the current economic climate, where financial directors will not countenance IT spend that does not make or save money. However, in the case of mobile technology, the intangible benefits are just as important as the tangible ones."
There are signs that companies are beginning to recognise benefits of this type. The survey revealed that 44% of respondents would implement an m-commerce strategy "to be seen as an innovative organisation". This is in comparison to 40% who said they would use m-commerce to increase sales and 35% who said reducing costs and increasing efficiency was key.
Any increase in efficiency needs to be measured in a particular way, Clifford said. "Emphasis must be placed on the efficiencies that can be made in internal business processes, not on the amount of time that can be saved per day, as time is not effectively captured or accounted for."
While many early m-commerce projects were managed by marketing teams, the trend seems to be changing, with IT directors having more responsibility, the survey found.
Forty seven per cent of respondents said the IT director would be responsible for m-commerce, 11% said the marketing manager would have control and 24% said the chief executive would take charge.
This is an encouraging sign, but IT departments must communicate, Kwiatkowski warned. "It is good that IT directors are getting more responsibility because they understand how the system works, but they need to liaise with marketing teams," he said. "Problems occur when one side is very keen but does not involve the other in decision making. However, any project needs to be owned by one group overall - perhaps the finance department."
Implementing an m-commerce strategy may raise technical issues, such as the integration of a portal with existing IT infrastructure, but it should not be too complex, Kwiatkowski said.
"If a business has old legacy systems not designed to work with newer applications, such as mobile, there may be an issue, but in many ways Y2K was a blessing in disguise because it meant companies upgraded their systems," he said. "But there are examples of companies with pretty unsophisticated IT operations which have put these [m-commerce] systems in."
Despite the slow progress, m-commerce will become important in the next two to three years, the survey found. Thirty two per cent of respondents said they would implement an m-commerce strategy within the next two years, with a further 20% expecting movement within 12 months.
Kwiatkowski remains optimistic about the progress of m-commerce. "I expect m-commerce to be beyond the early-adopter stage, to be in the early mainstream, by 2004," he said. "Companies need to get the technology in place and make sure it works before they go shouting from the rooftops about it. It is important to manage people's expectations."