Mobility: Fueling the Digital SurgeAccenture Mobility Insights Report 2014Spotlight on China

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Mobile, cloud, social media, and big data—once considered hot technology trends worth exploring—have moved well beyond the stage of experimentation. They are proven tools that have given birth to an age where technology has become the foundation of any successful business—a prime driver of market differentiation, business growth, innovation, adaptability, collaboration and profitability. In short, every business is now a digital business, and those in which the full C-suite understand the benefits of digital are those that will be most successful.

To better understand how companies currently view and use digital technologies—especially mobility, one of the key enablers of the digital business—Accenture surveyed nearly 1,500 C-level executives at companies in 14 countries around world (including 100 executives in China).

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At a high level, our research enabled us to draw three key conclusions about Chinese companies’ experience with and views on digital technologies and mobility:

Chinese companies believe digital technologies hold substantial promise and will be increasingly important to their business in the coming year.

Respondents overwhelmingly view their investment in digital technologies as a strategic investment that can help them engage with customers and grow, not merely an “add-on” to their current IT landscape. Furthermore, Chinese companies are far more likely than their global counterparts to consider all five major digital technologies priorities for their business.

Mobility, a key enabler of the digital business, is a major, strategic area of focus for Chinese companies, much more so than companies elsewhere.

Chinese companies were far more likely than the global sample to view all mobility priorities as important, as well as to consider connected products relevant to their business. More than half of Chinese companies reported having an enterprise-wide mobility strategy and having the CEO involved in mobility strategy development.

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Chinese companies appear to be making greater progress in mobility than their global counterparts, but still have work to do.

Chinese companies are more likely than other companies to have made progress on key mobility priorities, and less likely than others to report critical shortcomings that make it difficult to capitalize on mobility. Still, nearly three-quarters of Chinese companies lack formal metrics that enable them to measure the effectiveness of mobility initiatives; do not have a formal process for understanding how mobility can benefit their business; or have trouble keeping pace with

new mobile advancements and adopting them to improve the business. Furthermore, Chinese companies face a number of app-related challenges—with the most common being issues related to discoverability, performance, and user experience—that prevent greater app usage.

In the following sections, we explore these findings in more detail.

Digital Technologies Hold Great Promise for Chinese Companies

Chinese Companies Are Clearly Focused on Mobility

Chinese Companies Appear to Be Making Greater Progress in Mobility

Conclusion Methodology

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Contents

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Digital technologies hold great promise for Chinese companies, and are overwhelmingly viewed as a strategic investment

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Digital technologies have massive potential to transform the ways in which companies create revenue and results via innovative strategies, products, processes and experiences. But do Chinese companies recognize that potential and, more important, are they mobilizing to capitalize on it? According to our research, the answer is a resounding “yes.” In fact, Chinese executives exhibited much greater enthusiasm for digital technologies than executives elsewhere in the world.

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Of the major digital technologies—which include mobility, social media, big data analytics, the cloud, and connected products—mobility has risen to the top in terms of importance to Chinese organizations. Eighty-seven percent of Chinese executives in

our survey considered mobility among their top five priorities for the coming year, and 59 percent said the technology was in the top two (Figure 1). However, not far behind in importance for Chinese executives were big data analytics and cloud.

Overall, Chinese respondents were more likely than their global counterparts to consider all of these digital technologies among their top-five priorities.

Furthermore, Chinese respondents overwhelmingly view their investment in digital technologies as a strategic investment (79 percent), and one that is geared to helping their companies grow profitably.

Figure 1 Percentage of respondents saying main digital technologies are a top-five priority.

85%

72%

87%

77%

Mobility Analytics

77%

65%

Connected Products

81%

61%

69%

60%

Cloud Social

China / Global

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The most commonly cited outcomes Chinese respondents want from their mobility investments were using digital to build an entirely new business or service, boosting overall enterprise profitability, and increasing sales in existing markets. Chinese respondents were unique in that they were far more likely than their global counterparts to expect digital to help them build a new business and improve profitability, as well as to enhance the quality of their offerings.

As digital technologies continue to evolve, companies are looking to gain a foothold with a new slate of emerging tools that can help them build on the investments they have already made. Chinese executives were far more likely

than others to consider the vast majority of these tools part of their digital/IT agenda in the next three years. That is especially true of low-energy components , open APIs and developer programs, and wearable computing (Figure 2).

Business executives’ strong interest in digital technologies is consistent with evolving trends across the Chinese market, where a predominantly young demographic is enthusiastically embracing new technology and driving the growth of Chinese technology companies such as Alibaba, the online marketplace Taobao, and WeChat® from Tencent. More specifically, digital technologies are having an impact on a number of practices across Chinese society.

Figure 2 Percentage of respondents likely to consider these emerging technologies as part of their digital/IT agenda in the next three years.

China Global

Low-energy components and connectivity standards 71% 44%

Wearable computing (e.g., smart watches, exercise devices)

61% 39%

Natural User Interfaces (augmented reality, voice recognition, motion-based, etc.)

55% 37%

Open APIs and developer programs 65% 38%

Geo-fencing (e.g., location- based services)

58% 35%

Open source development platforms 45% 33%

Wireless charging 32% 32%

Near field communication 45% 31%

Software defined networking 41% 25%

Indoor analytics (indoor location services)

30% 15%

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One example is the explosion in mobile commerce typified by China’s “Singles Day,” during which young Chinese people celebrate their single status. Singles Day is similar to “Black Friday” in the United States, the day immediately following the Thanksgiving Day holiday during which retailers offer a wide range of discounts and promotions. The promotions Chinese firms offer during Singles Day have been a major driver of e-commerce, especially mobile commerce

The most recent Singles Day in 2013 broke e-commerce records in China, generating more than 30 billion yuan (US$5 billion) in sales, much of which were made by consumers shopping with smartphones.1

Another example is the Chinese tradition of hongbao, or “red envelopes” used to convey gifts of money to friends and relatives during New Year. In 2014, WeChat’s New Year Red Envelope feature within its messaging app proved very popular, with more than five million users taking advantage of it. One of the app’s major attractions was the option to send a lump sum to a group of friends and allow the system to randomly disburse the money to the group (which could result in some receiving the majority of the funds and others receiving nothing). Besides being an engaging way to connect with users, the app had a very practical benefit for WeChat: The feature required users to have linked their bank accounts to their WeChat

profile to send or receive money, which means future e-commerce transactions will be quicker and easier to execute because users’ bank details are already stored in WeChat’s system.

As they seek to engage Chinese consumers more deeply, companies also are increasingly integrating both online and offline sales channels to deliver a seamless, more compelling customer experience. For instance, Metersbonwe, a leading fashion retailer in China, delivers a digital in-store shopping experience via a tablet application. The app enables customers on site to browse for and send goods to the fitting room, find relevant information on products (such as apparel availability by size and color),

and ultimately pay for their purchases online through WeChat or Alipay™ instead of having to wait in line at the checkout.

Finally, wearable technology such as Google Glass™, as well as fitness/exercise-measuring technology, is also growing strongly, at the same time as smartphone growth finally flattens out in China. The fourth quarter of 2013 marked the first time in more than two years that sales of smartphones in China declined. Although China is still the world’s largest smartphone market, the country saw the number of smartphones shipped fall to 90.8 million units, down from 94.8 million in the previous quarter.2

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Chinese companies are clearly focused on mobility and consider a wide range of mobility priorities important to their business

Given mobility is a key enabler of the digital business, it should come as no surprise that mobility has been an area of strong focus among Chinese companies—and in many ways, much stronger than companies based elsewhere.

Figure 3 Companies ’ mobility strategy

We do not have a mobility strategy and have no plans to develop one

We do not yet have a formal mobility strategy but are working on developing one

We have a formal mobility strategy for specific business units or functions

We have a formal enterprise-wide mobility strategy

2%

0%

China Global

56%

43%

40%

43%

4%

11%

China / Global

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Six in 10 Chinese companies (compared with four in 10 companies globally) indicated they have aggressively pursued and invested in mobile technologies across their business and consider mobility a key part of their business strategy.

In virtually all Chinese companies in our study, mobility initiatives have been guided by a formal mobility strategy—either one that spans the enterprise or strategies developed for specific business units or functions (Figure 3). Chinese executives were more likely than their global counterparts to report having an enterprise-wide strategy. Furthermore, Chinese companies are much more likely to involve a wide range of executives in the development of their mobility strategy, with the CIO (76

percent) and CTO (72 percent) being the most commonly engaged. The CEO is involved in strategy development in more than half (56 percent) of Chinese companies, the largest percentage among all countries covered by our survey and 20 points higher than the global average.

In addition to strategy, the mobile application is another critical factor in the success of mobility, and it is an area of strong focus among Chinese companies in our survey—much more, on average, than organizations elsewhere. Chinese executives cited many objectives they hope to accomplish in relation to their mobile apps in the next 12 months. The three most commonly named were implementing new features that take advantage of the latest

Figure 4 Connected products most relevant to companies’ business priorities

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technologies (such as geo-location, social and payments), making apps more accessible by implementing an enterprise mobile app store or catalog, and growing their overall mobile presence by launching new apps.

Chinese respondents also are increasingly interested in connected products, which are already penetrating—and, in some cases, transforming—many businesses and industries. Judging from our survey, Chinese

executives are just as enthusiastic about connected products as they are about other technologies. They appear to be especially interested in connected home electronics, appliances, and home automation and security solutions, but they

also were much more likely than executives globally to say all the connected products we asked about are relevant to their business priorities (Figure 4).

Connected vehicle solutions

55% 46%vs

Connected building/plant solutions

58% 46%vs

Connected home electronics, appliances, & home automation and security solutions

65% 38%vs

Wearable, sensor-based devices

50% 32%vs

Video monitoring, motion sensor devices

59% 31%vs

Smartphone/tablet-attached peripheral devices

51% 28%vs

Gesture-based interface control devices

48% 27%vs

Environment-aware devices for field operations

51% 24%vs

Unmanned vehicles/flyables

16% 21%vs

China / Global

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Chinese companies appear to be making greater progress in mobility than their global counterparts, but still have work to do

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While the preceding data show there is considerable interest in and enthusiasm for mobility, most organizations globally still have much work to do to make mobility a core and beneficial element of their business. In fact, our survey found that most companies’ efforts to date have not lived up to expectations due to a number of strategic, organizational and operational challenges that have made it difficult for companies to take full advantage of mobility’s promise.

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This, however, is not as true for Chinese companies, which are less likely to struggle in areas that many other companies elsewhere find difficult—although many still have work to do to improve the return on their mobility investments.

For instance, as illustrated in Figure 5, Chinese companies reported having made much greater progress than others toward the mobility priorities that are important to their business. In fact, a majority of Chinese executives—compared with, on average only slightly more than four in 10 respondents globally—said they have made at least good progress across all of these

Figure 5 Stated progress toward key mobility priorities

ENTERPRISE China Global

Improving asset reliability and maintenance through mobile technologies 70% 44%

Improving management decision-making and approvals 68% 44%

Improved ability to better track orders, assets and inventory 67% 45%

Accelerating the sales cycle with improved access to systems and data 67% 41%

Monetizing data from connected products 66% 45%

Improving field/customer service with instant data access and processing 64% 44%

Informing business strategy through insights from mobile data 63% 42%

Empowering workers to communicate and collaborate 61% 43%

CONSUMER China Global

Generating deeper customer insights through mobile analytics 75% 47%

Driving revenue through customer engagement on mobile devices 74% 39%

Developing new mobile-specific products or services 71% 43%

Providing access to new markets 62% 42%

Opening up new sales or marketing channels 61% 41%

Driving revenue through transactions on mobile devices 61% 43%

Percent citing progress as good (a rating of 6 or 7 on a scale of 1=no progress and 7=extensive progress)

Figure 6 ROI generated from mobility capabilities in the past two years

>200%101-200%26-50%10-25%<10%Don't know/can't

measure

51-100%

0%

10%

20%

30%

40%

50%

60%

1%

14%

51%

22%

12%

0%0%

4% 5%

21%

35%

26%

8%

2%

China / Global

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priorities. This is especially true for generating deeper customer insights through mobile analytics, driving revenue through customer engagement on mobile devices, and developing new mobile-specific products or services.

Consistent with the preceding is the fact that a large majority of Chinese executives—far more than respondents globally (78 percent versus 46 percent)—described their overall adoption and deployment of mobile technologies as effective.

Yet despite claiming significant progress, Chinese companies are no more likely than their global counterparts to report having generated significant ROI from their mobile capabilities in the past two years. As shown in Figure 6, 12 percent of Chinese companies—compared with 8 percent of companies globally—have experienced an ROI of 100 percent or more (meaning, their capabilities have already paid for themselves, and more). And a nearly equal percentage of both groups said their ROI exceeded 50 percent.

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The lack of progress in mobility among respondents globally can be attributed, in part, to pervasive shortcomings in their organizations. Such shortcomings are not as prevalent among Chinese firms in our study—in fact, Chinese executives were consistently less likely to cite all of these shortcomings as present in their organization. Still, that does not mean Chinese firms have no work to do. In many cases, at least half of participating Chinese executives indicated their company faces a particular challenge, while in others, as many as seven in 10 believe their organization falls short (Figure 7).

Figure 7 Internal shortcomings preventing companies from making greater progress in mobility

China Global

Lack formal metrics to measure the effectiveness of mobility initiatives 77% 86%

No formal process for determining how mobility can benefit the business 75% 81%

Have not developed/redesigned business processes to incorporate mobility 74% 70%

Don’t keep pace with mobile devices etc. that could improve the business 72% 73%

No clearly defined, centralized ownership of mobility initiatives 68% 72%

Don’t use external experts to complement existing in-house skills 63% 69%

Lack a robust methodology for developing and managing mobile apps 62% 66%

Security technologies and practices not extended to cover mobility 56% 66%

China Global

No blueprint for adoption and deployment of mobile capabilities 56% 67%

Lack the right talent and skills to plan and execute mobility initiatives 52% 70%

Current budget is insufficient to fund mobility initiatives 49% 66%

Current systems unable to smoothly accommodate mobility 48% 64%

Senior leadership is not highly engaged with mobility initiatives 44% 61%

Company doesn’t truly understand the benefits of mobility 32% 62%

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The most prevalent shortcoming for both Chinese organizations and companies globally appears to be a lack of formal metrics that enable companies to measure the effectiveness of mobility initiatives. Seventy-seven percent of the former and 86 percent of the latter indicated they do not have such metrics.

Another common shortcoming relates to determining where and how mobility can have the greatest impact. Three-quarters of Chinese executives and eight in 10 executives globally said their organization doesn’t have a formal process for identifying, evaluating, and prioritizing ways mobility can benefit their business.

Below the preceding were a number of shortcomings that are present in about seven in 10 Chinese companies as well as companies globally—including the inability to keep pace with new mobile devices, systems, and services, and adopt them as necessary to improve the business; no clearly defined, centralized ownership of mobility initiatives and related technology projects within the organization; and failure to have developed new, or redesigned existing, business processes, workflow, and roles to better incorporate mobility services.

In 50 percent to 60 percent of Chinese companies, skills challenges and shortcomings related to the actual rollout of mobile capabilities are likely preventing organizations from making greater progress. These include a lack of internal and external skills necessary to properly plan and execute mobility initiatives; current systems and infrastructure that cannot smoothly accommodate new mobile technologies; lack of a robust blueprint to guide adoption and deployment of mobile capabilities; no formal and robust methodology for developing mobile applications that spans development, testing, distribution, and updating; and difficulty extending the company’s security technologies and practices to cover its mobile capabilities.

Of course, in any large-scale initiative there’s also the question of money: Do we have enough to meet our objectives? That is no different in the case of mobility. Nearly half of participating Chinese companies, and 66 percent of respondents globally, believe their company does not dedicate sufficient budget to fund its mobility initiatives.

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The least-prevalent shortcomings among Chinese companies are lack of engagement among senior leadership in mobility initiatives and lack of understanding across the broader organization of how mobility can benefit the business. Still, even the former issue is common in just under half of Chinese companies and the latter is prevalent in one-third. Having a sufficient understanding of the power of mobility, and getting senior leaders engaged in the discussion, are fundamental to making any progress on the mobility front.

While the preceding show that Chinese companies are less likely to struggle with many of the internal shortcomings that companies globally do, that is not the case when it comes to developing and maintaining mobile apps specifically. In general, both groups indicated they face a number of app-related challenges, with the most common among Chinese companies being discoverability issues (lack of traction or adoption of apps by the target audience), performance issues (crashes and bugs that lead to bad customer reviews), and user experience issues that dissuade customers from using the app.

Chinese companies’ struggles with apps are unique in that they, in large part, may be attributed to the dominance of the Android operating system in China (it commands approximately 90 percent of the market). In many countries, Apple’s iOS App Store and Google Play make up a significant portion of the app market. However, China is one of few exceptions.3 In China, third-party app stores are particularly popular due to the large number of smartphone users who own an Android device that can’t connect to Google Play. Because these users can’t access traditional app stores, China has experienced an app-store revolution, producing more than 200 alternative stores.

China’s smartphone hardware ecosystem is also extremely diverse and competitive, which has forced China’s smartphone manufacturers to customize the Android OS based on their brand-specific hardware platform (such as modifying the interface to suit each device’s screen size, touchscreen capability, camera functionality and other features) to differentiate their products.

This OS and application fragmentation is resulting in a host of compatibility issues that make system upgrades and testing difficult, as well as frustration and confusion among consumers—which, in turn, prevent a broader adoption and use of apps within China.

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Conclusion

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Our survey shows that Chinese executives clearly are very interested in mobility and their companies appear to be having greater success than their global counterparts in adopting and deploying mobile technologies. That is especially important given that the Chinese population—particularly younger consumers—have enthusiastically embraced mobile and other digital technologies as a central part of their lives.

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However, Chinese companies still need to do more to drive further adoption of mobility and generate a greater return on their mobility investments. Developing and using formal metrics that enable them to measure the effectiveness of mobility initiatives is one area on which Chinese companies should focus, as is developing a formal process that enables them to determine how mobility can most benefit their business.

Chinese companies also need to solve the Android-related challenges that plague the app marketplace and impede mobility adoption. Among the important steps they must take are determining the right combination of devices and app stores that will ensure the greatest reach and coverage for their organization; establishing the processes and infrastructure necessary to deliver standardized, high-quality tools and platforms while keeping costs under control; and making the required changes to their contact centers to provide better technical support to customers when applications do not work as planned due to lack of compatibility across platforms.

Through these and other actions, Chinese companies will be able to build more robust mobility capabilities, and make those capabilities a core part of their operations. In the process, they will be more likely to benefit from the promise of this increasingly important growth-generating technology—and take greater strides toward becoming a digital business.

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Methodology

Accenture’s mobility study was designed to explore how companies are applying digital technologies—especially mobility—to improve various aspects of their business. To that end, we conducted an online survey of senior executives between December 2013 and January 2014. A total of 1,475 executives, including 100 from China, completed usable surveys.

Chinese executives’ titles spanned the C-suite with the majority serving in a technology-related role. Respondents’ companies represented 10 industries and were predominantly large: Forty-three percent have annual revenues of between US$6 billion and US$20 billion, and 26 percent reported sales of between US$1 billion and US$6 billion.

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References1 “Mobile Apps Play a Big Role in Online

Shopping Bonanza,” Dahlia Peterson, contextChina, November 19, 2013, http://contextchina.com/2013/11/mobile-apps-play-a-big-role-in-online-shopping-bonanza/

2 “Asia/Pacific (Excluding Japan) Smartphone Shipments by Sub-Region, 2011Q1-2013Q4,” IDC, https://www.idc.com/getdoc.jsp?containerId=prSG24678814

3 “Google Play Dominates Downloads, But App Store Wins on Revenue,” Angela Moscaritolo, July 31, 2013, PC Mag, http://www.pcmag.com/article2/0,2817,2422553,00.asp.

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Contents | CoverTrademark References

• Google Glass™ wearable computing device is a trademark of Google Inc.

• WeChat is a registered trademark of Tencent.

• Alipay is a trademark of Alibaba.

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Disclaimer: This report has been prepared by and distributed by Accenture. This document is for information purposes. No part of this document may be reproduced in any manner without the written permission of Accenture. While we take precautions to ensure that the source and the information we base our judgments on is reliable, we do not represent that this information is accurate or complete and it should not be relied upon as such. It is provided with the understanding that Accenture is not acting in a fiduciary capacity. Opinions expressed herein are subject to change without notice. May 2014 | 14-3104