Despite supplier hype, the mobile e-business - or m-commerce - revolution is still a little way off. However, the explosion of handheld devices and wireless technologies such as Short Message Service (SMS) and Wireless Application Protocol (Wap) is transforming the landscape of e-business.
Revenues in the mobile application market are set to soar from $3.3bn (£2.4bn) in 2001 to $44.8bn by 2005, according to analyst firm IDC.
Despite the protracted delays over the roll-out of third-generation (3G) mobile services, businesses are starting to integrate mobile and location-based technology into their IT strategies. Companies are harnessing m-commerce technology to allow mobile workers to use handheld and mobile devices to access office productivity software and sales and marketing information held on the corporate network.
Financial services and logistics companies are using Wap gateways and SMS technology to target customers and improve service. However, IT managers face a steep learning curve. Many businesses have yet to get to grips with e-business, let alone a multichannel strategy that includes m-commerce.
Industry experts stress that m-commerce is still in its infancy. They distinguish between the fairly basic m-commerce methods being put in place now (Wap and SMS) and the more sophisticated systems that are expected in the future (multichannel and multimedia content) on the back of broadband Internet access.
"The higher-level trend in e- or m-commerce is the integration of multiple channels into a business strategy," says Duncan Brown, consulting director at analyst firm Ovum. "I think we are approaching the stage where e-commerce and m-commerce are variants of doing business with the same kind of people.
"To date, you have had a sticking plaster approach. First you had e-commerce, then maybe a Web server bolted onto the management system. And then you had m-commerce with a Wap server bolted on."
The use of m-commerce within the business is a good place to start when formulating an m-commerce strategy. A key application here is sales force automation - giving sales staff access to e-mail and other corporate information when they are out of the office.
A growing number of suppliers, including SAP and Siebel, now offer wireless versions of sales automation packages. IT services giants, such as IBM and Computer Associates, offer consultancy services and nurture close relationships with the mobile device manufacturers.
Chris Bray, wireless e-business executive at IBM, believes mobile devices can be an effective way to share information across firms through an intranet. "Companies could keep sales manuals on their corporate intranet or you could have maintenance engineers accessing back-office systems," he says. Companies are also using SMS to keep in touch with staff by texting them reminders and alerts.
Handheld devices and personal digital assistants (PDAs) are at the centre of activity in the m-commerce market. Shrewd mobile device manufacturers are targeting the business market through alliances with enterprise suppliers and electronic payment providers.
For example, under an agreement signed with German enterprise software giant SAP earlier this year, users of Palm's PDAs are now able to access mySAP.com's e-business software, including enterprise portals and customer relationship management software. The two companies plan to jointly sell the system, which is based on the Palm operating system.
Palm has also been extending its reach in the area of electronic payments. Under an alliance with electronic payment providers Verifone and Ingenico, Palm aims to develop technology that will enable the secure transfer of payment details from Palm's handheld computers to electronic point of sale systems run by the two companies.
Meanwhile, earlier this year, Palm started shipping the first PDAs to have Internet connection software as standard.
Wireless handsets and PDAs are also converging, as illustrated by the Nokia Communicator. The device is a cross between a mobile phone and a PDA, and it offers Web browsing, phone, fax and e-mail facilities. Users can also create and download Microsoft Word and Excel documents.
Location-based technology is another example of m-commerce being put into practice. It is designed to target customers or employees in a particular area by tracking their handset.
Users can be located by three main options: the cell of origin (the cell area of the mobile network base station); radio signal transmission; and global positioning system, which is the most advanced technology. Analysts view location-based technology as one of the most practical aspects of m-commerce.
"Location-based technology has been around for a while but is quite expensive," says Brown. "It comes from the main network suppliers such as Nokia and Ericsson. A logistics company may use it to find out where its drivers are. As long as their mobile phones are on, the drivers can be tracked to the nearest cell."
However, before using location-based technology it is usually necessary to get your network operator to modify the base station transmitter.
There are also other practical issues for IT managers to consider when planning a company's m-business strategy. These include the integration of a portal or Web server with existing IT infrastructure; security; and whether or not your existing legacy systems are able to handle the increased number of transactions hitting the company from the mobile channel.
"There is a transaction issue for banks," says Bray. "With PC or mobile electronic transactions, it will normally mean that the number of hits on your system will increase. If you are running to a tight budget with small capacity machines then you are at risk."
An increase in Web traffic could also place more strain on the company's data storage systems, particularly when multimedia messaging services hit the market.
Security is also high on the to-do list when implementing a mobile e-business system. Some suppliers, such as Computer Associates, now allow companies to adapt their existing security policies for the mobile world.
But, overall, progress in m-commerce is patchy. The financial services sector, for example, is much more advanced than the public sector. In particular, many financial services companies are rolling out Wap banking services.
However, they could soon face competition from telecoms companies. A European Commission directive will allow non-banks to become electronic money institutions from from as early as summer 2002. They will be able to issue payments in electronic money - in effect, telecoms providers could become virtual banks.
Earlier this month Vodafone signed an agreement worth more than £6m with e-commerce supplier Brokat Technologies to provide its customers with secure mobile payment capabilities.
IT managers would also be wise to keep an eye on overseas developments in mobile e-business.
The Japanese alternative to Wap, NTT DoCoMo's i-Mode, has made a huge impact since its launch in 1998. By last year i-Mode had more than 12.5 million users and revenues of $3.8bn. Based on alliances with content providers, customers can subscribe to i-Mode and download computer games or data services. "i-Mode is mostly interesting for its business model rather than its technology," says Brown. "NTT DoCoMo has about a 70% market share."
Brown adds that NTT DoCoMo is keen to move i-Mode into Europe but stresses that it is not designed to operate on the European network standard, GSM.
With the economic downturn and uncertainty over the arrival time of 3G products, companies may be tempted to sideline plans to invest in mobile technology. However, such a move could be short-sighted.
For many companies - particularly those in retail, logistics and financial services - SMS, Wap and location-based technology are becoming valuable business tools. And while constructing a mobile strategy is not without its challenges - particularly concerning integration with other business channels - companies need to start sketching out their business plans now. Like it or not, the future of e-business will be mobile.
Case study: TNT- keeping everybody informed of a package's progress
Express distribution and logistics company TNT has embraced mobile technology to improve customer service and internal communication.
It has installed a combined Wap and SMS gateway from wireless infrastructure supplier Anam. The Wirelesswindow software allows customers to track the progress of their packages through text messages.
Customers can check on the location of international parcels by sending their consignment number, via SMS, to TNT. The company immediately sends back a text message reply, giving information such as current status of the parcel and estimated delivery time.
TNT staff can also use the Wap gateway to access company information and e-mails when out of the office.
TNT began its search for a mobile e-business package earlier this year with a clear list of requirements. The technology had to channel SMS and Wap traffic into TNT's existing infrastructure and integrate with an in-house XML gateway for linking to back-office systems.
"We trawled the market for a solution to channel SMS and Wap traffic into our infrastructure," says Darryl Armstrong, groupware and messaging manager at TNT Express. "TNT provided both levels [for customer service and internal employees]."
The Wap and SMS gateway was installed within one day. It runs on a Microsoft NT platform and is integrated with TNT's XML gateway. The SMS service is provided by BT Cellnet.
TNT also plans to introduce a PDA-based service that connects to its XML gateway. This will allow handheld users with Internet connections to receive services such as price quotations and pick-up requests by connecting to a TNT Web site.