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The Wisdom of Starting Small

The Wisdom of Starting Small

As a Senior IT Executive with Celanese Chemicals, William Schmitt is used to being the invisible man at the dozens of industry and technology conferences he has attended over the years. "Chemical companies don't normally talk about leading-edge stuff," Schmitt says with understated humor. "We listen and ask questions, but other people usually pass us by."

Not anymore. At a technology conference in Durham, N.C., in late November, Schmitt shook hands with crowds of IT executives who peppered him with questions about his latest project. The reason for his new visibility: wireless. Celanese is one of a handful of old-line manufacturers that are taking initial steps toward hooking their remote sales force into their ERP systems to provide constant, real-time company information over mobile phones, Palm devices and other wireless gadgets. "The use of SAP and wireless in the same sentence stirred up tremendous interest," says Schmitt, who oversees the SAP system for the U.S. arm of Frankfurt, Germany-based Celanese Chemicals. "The notoriety is a big change for us."

While the initial hype surrounding the wireless Internet has calmed - and predictions for mass consumer adoption have largely fallen flat in the United States - wireless applications have a new focus: smartening up the business side. Companies such as United Parcel Service and FedEx, whose employees have used wireless radio devices for the past decade, have led the charge by launching wireless applications that allow consumers to track packages and find information on the nearest package drop-off locations. Now, many companies are turning their attention toward finding ways to improve productivity and streamline customer outreach. Many observers agree that wireless holds tremendous potential for helping workers - be they doctors, home-care nurses, real estate agents, sales managers or utility reps - conduct business more effectively outside the office. But thus far, only a few companies have ventured into this brave new territory. Celanese and MGM Studios in Santa Monica, Calif., for instance, are providing their sales force with wireless access to their companies' ERP systems and allowing employees to check pricing and order status with cell phones and PDAs. Doctors, including those at HealthFirst Medical Group in Portland, Ore., use wireless devices to access surgical schedules and patient information.

It's too soon for most early movers to show actual savings from their investment in wireless technology, but the promise for improving customer service and boosting the bottom line is substantial, experts say. At Celanese, for example, salespeople can check availability on a specific chemical, thereby assuring that the company doesn't lose a lucrative sale, Schmitt says. Without such instant information, a salesperson might not be able to promise the customer that he could ship it right away.

Recent statistics show a growing interest in wireless business applications. By 2004, 65 percent of Global 2000 companies are expected to offer their mobile workers wireless access in order to perform critical applications, according to a recent study by Gartner in Stamford, Conn. But as with consumer applications, businesses interested in wireless face a slew of hurdles that include security concerns, spotty coverage across the country and a tangle of technologies that make choosing devices and standards a complicated guessing game. What's more, wireless Internet access is comparatively slow. Today's digital cell phones access data at 9,600 to 24,000 bits a second, a fraction of the speed of broadband or even the average dial-up modem. Accessing a website on a wireless device can take minutes, instead of the seconds most PC users are used to.

For all of these reasons and perhaps because the consumer applications haven't lived up to their promise yet, companies seem to be taking a measured approach to the technology. Many are looking at the potential return on investment instead of blindly jumping into the fray. Car rental company ANC Rental in Fort Lauderdale, Fla., for example, is in the process of updating wireless handheld devices that employees have used to check in rental cars for the past decade. But ANC officials are carefully analyzing the potential ROI from implementing wireless devices that can serve as location devices in their cars. "We need to guard against deploying technology for technology's sake," says Rickie Hall, ANC's CIO.

Although wireless may not yet be useful for everyone, experts predict that competitive pressures will dictate the adoption of wireless strategies by most companies. And IT leaders need to get moving now. "Companies need to get started with pilot wireless programs, if only to educate themselves," says Phillip Redman, a research director at Gartner. "Then, when the technology is really mature and costs less you'll have the architecture in place."

Money on the Run

Fidelity Investments was one of the first major U.S. companies to aggressively promote a wireless offering to its customers. Still, when Joseph Ferra was developing a wireless strategy for Fidelity Online Brokerage two years ago, he sensed skepticism from the financial powerhouse's top management. "They asked me, 'Shouldn't we be waiting for a faster network or a cheaper device?'" says Ferra, sitting at a table strewn with gadgets in his 26th-floor office, overlooking Boston's skyline. "My answer was always an emphatic no. We need to get out there now, establish ourselves, evolve with this technology and then be able to dominate it."

Ferra, a senior vice president at Fidelity who has led the brokerage's ambitious wireless effort since its 1998 start, no longer gets those kinds of questions. The brokerage was the first in the United States to offer wireless trading, and its services are now prominently displayed on all of the most popular devices, including Research in Motion's BlackBerry pager, the Internet-enabled Palm VII, Sprint PCS phones and Verizon networks. Although Fidelity is not revealing numbers related to its wireless initiative, the company has obviously invested a substantial amount to building wireless technology and marketing that strategy. Fidelity started by offering wireless services to only its wealthiest and most lucrative clients.

Fidelity's wireless initiative emerged when its technical group developed an automatic system to alert technicians to computer program bugs. "We thought, If we can do this for internal folks, we could also alert our customer base to market conditions," Ferra says. Two years later, Fidelity launched its first "instant broker" service, sending account balances and quotes to clients by pagers.

By 1999, the company was offering real-time stock quotes and allowing actual trades via wireless devices. As an early mover, Fidelity struggled with technology roadblocks such as problems with the speed of the network and security concerns. When the company first looked at encryption, it found little on the market that could guarantee end-to-end security for financial transactions. At the time, true end-to-end security required that encryption be embedded in the device, which slowed down transmission speeds and increased prices. Finally, using technology from Certicom, a Hayward, Calif., wireless security company, Fidelity, working with Bell South, helped Research in Motion develop an encryption system that compressed messages so that they could be sent securely and rapidly. By proposing the additional security measures, Fidelity was able to gain an exclusive display on the BlackBerry device.

Fidelity's massive IT organization, which makes up one quarter of the company's 32,000 employees, has allowed the company to experiment with new technologies before they become mainstream. The company spends US$2 billion a year on technology, far beyond the US$500 million spent by its closest competitor. The Fidelity wireless site is embedded in several devices, which means its service is easier to use than many of its competitors. Fidelity officials hope that their prominence will help them bring in new customers as well as retain current clients.

"Wireless is the second coming of the Internet," Ferra says. "If you don't have a wireless offering in the future, it will be very difficult for you to compete in this industry."

Ferra's zeal may be a bit premature. While Fidelity leads the click-and-mortar brokerages with 81,000 wireless accounts, that's only a small fraction of its total 16 million retail accounts. And a recent survey by Gomez Advisors in Waltham, Mass., shows that 74.2 percent of "active" Web bankers were not interested in wireless financial services. "People can live without wireless trading," Gartner's Redman says. But, he adds, that brokerages are obligated to launch wireless offerings to keep high-end customers.

Fidelity wouldn't argue with that premise. "It isn't always about volume; it's the type of customer," says Steve Elterich, president of Fidelity's e-business unit. As hordes of competitors - including Charles Schwab - rush to catch up, Fidelity is forging ahead with wireless to maintain an advantage by offering personalized services. And the company is starting to install wireless LANs in its offices as well as wireless gateways at employees' homes so that they can access company information quickly.

Even so, the data offered to wireless clients needs to be carefully chosen so that it does not inundate the user. "The wireless Internet is not the Internet wireless," Ferra says. "This is not about taking Fidelity.com and squishing it on to a device."

Let There Be Light

For the past 25 years, Florida Power & Light's (FPL) repair crews, while crisscrossing the Everglades, have kept in touch with its Miami home base using handheld radio devices. Communicating over the utility's private radio network, they have responded to emergencies during storms and asked for directions from dispatchers.

The proprietary radio system has worked well. But new wireless technologies with faster transmission speeds promise to improve the operations by providing added information about a crew's whereabouts. So FPL is investing about US$35 million to upgrade its voice and data wireless infrastructure and will also purchase mobile equipment for each van, which will allow dispatchers to automatically determine each vehicle's location. At the same time, FPL is expanding its wireless strategy to include serving some of its 7 million customers, by installing "smart" meters that will allow the company to take electricity usage readings and monitor power quality over wireless networks. "We're trying to use wireless to extend our reach," says Dennis Klinger, FPL's vice president and CIO. "The fact that our computer systems know where our vehicles are and what their capabilities are means our customers get better services." When FPL crews are busy during a severe storm or hurricane, for example, dispatchers are often left scrambling to arrange repairs during widespread power outages. With the new system, they can more quickly find crews close to trouble spots and determine if the vans have the right equipment on board to do the job.

Although Klinger and his colleagues aren't talking about ROI just yet, they are convinced that new wireless technology will pay off by increasing the efficiency of the utility's workforce. "If we can get the right people to the right place for our customers, the chances are that we will be able to make repairs and service the customer more rapidly," Klinger says. By the end of March, FPL repair crews will be using entirely new mobile radios, and by the end of the year they will have all new data equipment, including specially outfitted rugged laptops with wireless modems.

When it comes to meter reading, the investment in wireless technology seemed harder to justify, at first. Florida's mild climate means the utility can cheaply hire meter readers to visit customers year round. Still, the utility must read some meters more regularly in order to comply with regulations governing rate analysis, meaning that they have to install costly phone lines to take daily and weekly samples. In addition, the utility believed that by automating the meter reading process it could improve its service to high-paying commercial customers.

Two years ago, a team of FPL executives convened to examine using wireless networks to take these frequent readings and replace the utility's aging Solid State data recorders, which measure the amount of energy a customer is using and are read by human meter readers or by telephone lines. The group was just about to give up on its search for a wireless meter reading device when they heard from friends at Duke Power Co. in Charlotte, N.C., about a simple but efficient wireless device that could be installed right on the meter. Now FPL is in the process of replacing several thousand meters with wireless devices from SmartSynch of Jackson, Miss., which encases its intelligent systems in devices made by Siemens. The meters can be read wirelessly using Skytel's two-way pagers.

After installing SmartSynch's computer system and a Windows NT server, FPL can automatically record meter data on a regular basis. The system not only takes wireless meter readings but can also alert FPL and customer personnel of power interruptions 24 hours a day. At 2 a.m., for example, the system can send pages to a customer's electrician, says Ed Brill, FPL's power quality business manager. "He'll get the specific information, and he can decide what to do. Sometimes, a problem can be corrected before a customer knows of the problem."

Despite their enthusiasm, Brill and his colleagues acknowledge that wireless technology still poses some serious challenges. Gaps remain in coverage where they have to install a phone line to read a meter. By December, they had installed more than 200 wireless meters out of a planned 4,000. And although SmartSynch has laid out architecture that would allow FPL to install its smart meter technology for residential customers, FPL can't yet justify that investment. "For the moment, the percentage of customers with wireless meters is small," says Ed Malemezian, data collection manager for EDMPro, a division of FPL. "But by gaining this experience with wireless, we feel we're ahead of the game."

A Chemical Reaction

Celanese Chemicals doesn't consider itself a technology trendsetter; after all, it's in an old economy business, making chemical solvents like those that go into paint. Like many in the industry, Celanese only recently started warming up to e-business, receiving its first order over the Web in September. Salespeople build careful relationships with clients and are reticent to pull out laptop computers when they're in the middle of a negotiation. "We're old-fashioned," says Schmitt. "Normally, we're conservative and really cautious."

When it comes to wireless technology, however, Celanese stepped out of character and pounced at the opportunity for a pilot run. Before wireless had even crossed its mind, Celanese decided to buy software from Haht Commerce of Raleigh, N.C., in February 2000 to allow its salespeople to check product availability, pricing and order status from the company's SAP R/3 system over the Web. Almost by accident, Schmitt noticed that one of the features of the software contract was wireless. "That planted a seed," he says.

With help from GadgetSpace, a Raleigh, N.C., company, Celanese launched a pilot project last October to allow its 35-member sales force and 25 customer service employees to get information from the SAP system via wireless devices. GadgetSpace, a spinoff of Haht, takes information from SAP, already available to the Web browser (in HTML or XML), and translates it into a format designed for a handheld device, using handheld devices markup language, wireless markup language and HTML.

Initially, salespeople tested the service over almost every device available, including the BlackBerry pager, Hewlett-Packard pocket PCs, Palm V with an OmniSky modem, Palm VII and Sprint PCS phones. The early results, although anecdotal, were largely positive. "One of our guys had never seen a PDA before this, and he learned it in two hours," Schmitt says.

Schmitt stresses that he doesn't view wireless as a primary means of getting information regularly. But it could have an impact on the company's business. Celanese Chemicals receives 50,000 orders a year, and each one is sizeable-total yearly orders reach almost US$1.5 billion. At a holiday party, Schmitt says, a saleswoman received a phone call from a customer and was able to answer the question right on the spot. "It wouldn't take many lost orders to pay for a program like this," he says. In addition to finding customer information, salespeople can go into the SAP system and track the location of tank cars carrying chemicals to customer destinations.

In the coming weeks, Schmitt expects to choose one device and wireless Web service. For the moment, he's leaning toward the pocket PCs that can run on Windows CE. While he is optimistic about the pilot's outcome, Schmitt does express some concern about security. Even if the system is password protected, he expects that some devices will be lost. "Our top security concern is that we'll leave them in a hotel or rental car," he says.

Because wireless was an added feature on an Internet software package, cost was in the tens of thousands instead of hundreds of thousands, Schmitt says. Once the overall system was installed, each wireless device cost between US$500 to US$1,000 to purchase and outfit with the correct software, not including the additional cost of maintaining the service. "If the system saves just one order, it will practically pay for itself," Schmitt says. The system was also quick to install because the company had already puts its SAP system on to the Web.

Schmitt doesn't expect that wireless will change his business substantially. "This is not mission critical - it's supplemental," he says. But after years of working in obscurity, he admits that he is enjoying the attention Celanese is suddenly getting from colleagues and competitors around the country. "It validates the work we do," Schmitt says. "It's confirmation that we're working on the right stuff."

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