A trickle into the enterprise

It might not be long before you see District of Columbia police officers reaching into their pockets and pulling out iPhones -- in the line of duty. The city is field-testing Apple Inc.'s phone and is considering distributing the devices to as many as 1,000 employees, including police officers.

"We're a big proponent of this technology," says Vivek Kundra, the district's chief technology officer. "One of my mantras is to introduce more consumer technology into the enterprise."

One reason for Kundra's enthusiasm is that, one year after its ballyhooed introduction, Apple is increasingly pointing its iPhone toward businesses . Apple's iPhone 2.0 firmware, due late this month, will support Microsoft Exchange Server, Cisco's IPsec-based VPN client, WPA2 Wi-Fi security and other enterprise-friendly technologies. ( The iPhone 2.0 beta gets hands-on test at major financial firm .

"It's clear they're aiming at the enterprise," said Michael Gartenberg, an analyst at JupiterResearch LLC and a Computerworld columnist. "You don't build in Exchange support for consumers."

In addition to the new features, Apple released a software development kit (SDK) in April that enables developers to create their own applications for the iPhone, whether they are iPhone-ready versions of existing enterprise apps or entirely new ones. Virtually any application that works on other devices will soon work on the iPhone. Some commercial software vendors, including SAP AG, have also said that they intend to build iPhone versions of some of their key applications.

"This could lead to sales of tens of millions more iPhones for Apple," says Gartner Inc. analyst Ken Dulaney. "Even if IT shops don't proactively solicit adoption, users will force them to take a look at it."

Gartner recently endorsed limited adoption of iPhone 2.0 by large organizations because of the device's new capabilities . However, Gartner's recommendation and the enthusiasm of IT executives such as Kundra won't necessarily translate into a groundswell of support for the iPhone in all companies.

"I have nothing against iPhone. It's great," says Manjit Singh, CIO at Chiquita Brands International Inc. "But we're a BlackBerry shop, and I don't think iPhone brings anything new to the table. It has a great user experience, but that's all."

While that type of sentiment is Apple's challenge, the rapidly growing consumer acceptance of the device is its advantage. Consumer adoption may well help accelerate acceptance of iPhone 2.0 in the enterprise, but not without IT managers giving close scrutiny to its capabilities, security, support, price and even durability.

App complication

Proponents claim that the iPhone's exceptional user experience will encourage mobile employees to make the most of new and existing mobile enterprise apps.

"For any application to be effective, people have to use it," says Vinay Iyer, vice president of marketing for SAP CRM. And since mobile applications are usually designed to increase productivity, the expectation by some, like Iyer, is that the iPhone will encourage mobile workers to embrace mobile applications, which in turn will make them more productive.

"Most vendors, like SAP, are probably in the experimental phase," Iyer says. "We're committed to the device itself, but the question is, what can we build as a native application, how do we support it, and how do we roll it out? Until those are figured out, we can't commit to a product release. Still, we see iPhone as a huge opportunity."

Many commercial software vendors have been mum about iPhone development using the SDK. But some, like NetSuite Inc. and Zimbra Inc., have committed to creating Web-based applications for the iPhone, and it's not a stretch to assume that they and others will jump on the iPhone SDK bandwagon.

Singh, however, isn't impressed with the argument that the iPhone will lead to higher adoption of enterprise applications among mobile users. "It's persuasive up to a point, but it isn't enough for me to start looking at the iPhone," he says.

Kundra says that ultimately, enterprises will invest in the iPhone only if their specific applications work well on the device.

"It may start in terms of people saying, 'Hey, this is the latest, greatest technology.' But that gets old very quickly," he says. "In the long term, you use the device only if there's value."

For instance, one important iPhone application for the District of Columbia will be in-the-field video training, now available via sources such as YouTube. Kundra notes that the iPhone is far more adept at playing that type of media than other smart phones are.

Avi Greengart, an analyst at Current Analysis Inc., adds that the iPhone's strong browsing capabilities will encourage enterprises to adopt the device for the same range of Web-based applications now available for laptop-toting road warriors.

"If enterprises decide there's a real need for a wide-screen Web browsing device that's used on the go by their employees, it really could be a game-changer," Greengart says. "With most other business-class phones today, even ones with HTML browsers, Web browsing is only for informational purposes."

Kundra also expects the device to be used for more meat-and-potatoes applications in the District of Columbia.

"Some applications will relate to public safety," he says. "Police officers can run criminal records on the iPhone when they're in the field. Also, a lightweight application would be good for [building] inspectors so they won't need laptops or [Panasonic] Toughbooks when they're at construction sites."

On the other hand, Singh says Chiquita's primary mobile application -- e-mail -- won't benefit from being accessed on the iPhone

"I do see some applications [for the iPhone] for a segment of users," he says. "You have salespeople on the road all the time who want to do something quick and dirty like add numbers to a spreadsheet. They'd be perfect candidates for iPhone because of its usability. But we don't have enough of a penetration of mobile devices, and e-mail is still our primary application."

Who buys the phones?

But whether a company embraces the iPhone might have less to do with applications and more to do with the company's buying habits. Does the organization centralize its hardware acquisitions or allow users to buy what they want?

Leah Frankum, senior systems analyst for the physician's team at St. Luke's Episcopal Hospital in Houston, falls into the latter category. She says that about 20 physicians are already accessing information such as patient records via the browser on their iPhones. "As long as the security is there, we don't care what they use," Frankum says. "Anything that helps them with their rounds is a huge benefit."

Gartner's Dulaney says that approach is becoming more common in virtually all industries. "A lot of our clients are moving to diversity [in device acquisition]," he says. "If users want to spend their own money and it doesn't compromise security, they're OK with that."

In contrast, there likely won't be many iPhones -- at least for now -- in organizations that have more centralized acquisition policies.

"Where IT provides the device, a lot of IT managers are reluctant to hand out iPhones," notes Greengart. "They'd be giving out a device that Steve Jobs has said is the best iPod ever. That's not the class of device many IT managers are willing to deploy."

And despite its popularity with some enterprise users, "the iPhone will not be truly secure and compliant without including third-party add-ons," says Jack E. Gold, principal analyst at J.Gold Associates LLC. "Apple likely will not fix this problem in the near future, making it a casual rather than a robust enterprise-ready device."

Another pivotal issue for enterprise iPhone adoption is support. Apple's ability and willingness to support the iPhone in the enterprise doesn't get uniformly high grades, despite the device's forthcoming enterprise-friendly features.

"From a corporate IT perspective, iPhone is still a consumer device," says SAP's Iyer. "If a company does decide to implement iPhone, whom do they turn to for Level 1 or Level 2 support? Do they turn to the carrier? Can they call Apple and get support if the application doesn't work on the phone? Will Apple have some [enterprise] support infrastructure? A lot of these issues still need to be addressed."

JupiterResearch's Gartenberg says Apple isn't really interested in becoming a mainline provider of tools for the enterprise. "We're not seeing an assault on the enterprise from Apple [with iPhone 2.0] any more than was the case when they switched [Mac microprocessors] to Intel," he says.

A related issue is Apple's exclusive arrangement with AT&T Inc. If users in the U.S. want iPhones, they can get them only from AT&T and Apple, and they can use them only on AT&T's network. That's a problem for some companies, but not for others.

"We're not tied to any one carrier," says Paul Limon, director of business applications at Zep Superior Solutions, an industrial cleaning products supplier in Atlanta. "For our users who travel extensively, they get AT&T. But those people who don't travel much, you could find, say, Sprint."

But companies with a more centralized approach to acquiring mobile devices and services won't be as flexible, Dulaney says. "It's definitely an issue for some companies that they'd be locked into AT&T," he says.

Cost of ownership

In the end, cost will be big factor in determining whether the iPhone will make a splash in the enterprise.

"The cost is prohibitive," says Limon. "A discounted BlackBerry device doesn't cost as much, and that's a barrier to seeing [iPhones] flourish in an enterprise."

However, Kundra is comfortable with the iPhone's total cost of ownership.

"The cost isn't trivial, particularly because it's taxpayer money," Kundra says. "But even at $400, when you take the cost of the device, which is a one-time capital expense, and compare it to, say, the service plans that go with it, that's not much."

In particular, using the Wi-Fi-enabled iPhone will allow some officebound employees to use voice-over-IP via office-based wireless LANs, which will save money, Kundra says.

"We found there's a large population [of employees] that spends 80% of their time on cell phones and 20% on land lines," Kundra says. "So next year, we're freezing phone costs and starting to close land lines."

Most important, though, is an expected improvement in productivity, he says. "That $400 unleashes a lot of productivity," Kundra adds.

Dulaney, however, says most smart phones, including the iPhone, are more expensive for field applications than many might think.

"A salesperson for Disney -- that's a perfect application for iPhone. But -- and I'd say this about a Windows Mobile device, too -- many field applications won't make sense for iPhone," he says. "Building inspectors drop things, for example. Those devices last about two years, and you need to look at repairs and bounce those numbers against ruggedized devices, which last four years."

Still, while enterprise iPhone adoption depends on issues such as applications, total cost of ownership, and how organizations acquire mobile devices and services, there is little doubt that more iPhones will be used by mobile workers in the future.

"There's definitely going to be a big uptick, because we'll see a couple of things happen," Gartenberg says. "With the SDK, you'll see more enterprise apps and more back-end management tools."

Though the device currently supports only slower cellular data speeds, he adds, "you factor in the availability at some point of 3G, and the future of the iPhone in the enterprise is quite bright."

Next: Photos: A look at iPhone's Rivals?

This story, "A trickle into the enterprise" was originally published by Computerworld.

Copyright © 2008 IDG Communications, Inc.

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