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NFC and other reasons CIOs need a next-gen mobile strategy -- now

If your mobile strategy is about devices or replicating what you do already, you are a first-generation CIO. Learn how to become second-generation.

Like many CIOs this year, Jeff Harvey, IT director at Regis Corp., has a major mobile deployment in the works. He's dispensing iPads to 1,000 regional supervisors at the company. For Regis, the undisputed heavyweight of the hair salon business (with more than 12,700 locations worldwide and annual revenue of $2.3 billion), the mobile strategy represents a leap forward. Not so long ago, many supervisors at the Minneapolis-based chain didn't use email at work, Harvey said. "This is a big step in increasing the flow of information."

There are very few times when we have a new technology that we haven't fully innovated to maximum potential.

What the iPad deployment is not is a second-generation mobile strategy, according to Gartner Inc. In fact, if your current mobile strategy revolves around dispensing smartphones and tablets, or hammering out a BYOD (bring your own device) policy, or replicating the company's Web offerings for mobile devices, or focusing on developing native apps, you're strictly a "first generation" CIO when it comes to mobile innovation. Not that there's anything so wrong with that, said Hung LeHong, research vice president on the Executive Leadership and Innovation research team at Gartner Inc.

"When we talk to first-gen CIOs, it's more tactical reaction than strategy: Users are clamoring to use iPhones so they have to figure out BYOD, or marketing wants something fast," LeHong told CIOs at the consultancy's annual CIO Forum this spring. These CIOs are responding to urgent business needs.

What this first-gen mobile approach fails to account for, however, are advancements in technology -- from near field communication (NFC) and visual recognition technology to objects with IP addresses -- that can optimize business processes and could make some business models obsolete in just a few years. A second-generation mobile strategy is not about devices or replicating services for mobile devices, LeHong stressed, but about finding mobile capabilities that the business was never able to do on the Web or a mainframe, or with client/server computing. And the time to do that is right now. "There are very few times when we have a new technology that we haven't fully innovated to maximum potential," LeHong said.

NFC is a standards-based wireless connectivity technology that enables two-way interactions over short ranges (about four inches) between electronic devices. It shares technology with radio frequency identification (RFID) tags and contactless smart cards, and allows users to perform contactless transactions, access digital content and connect electronic devices with a touch. Unlike RFID technology, where enterprises have determined how widespread (or not) adoption will be, the bellwether for NFC will be consumer adoption.

NFC-enabled phones can interact with objects -- notably, cash registers -- so consumers can tap to pay. Macy's, Bloomingdale's, Pinkberry and a host of other retailers are pairing with Google Wallet at select locations. McDonald's is testing cloud-based NFC payments in Austria. But use cases extend well beyond payment:

  • Hotels can send your room key to your phone, allowing you to bypass the front desk. BMW is using NFC technology that will enable drivers to book hotel rooms from their car, access their rooms using their car keys and receive special offers available only to BMW drivers. Just as mobile phones basically rendered the hotel room obsolete for long-distance calls, NFC could render obsolete room charges for movies, because the entertainment streaming on your small screen can be ported to the big screen.
  • Mobile network provider Orange is partnering with home health care providers to track and monitor home health visits by having nurses tap their NFC phones to a patient card or to an NFC mailbox sticker as they enter and leave a house.
  • NXP Semiconductors recently demoed an RFID- and NFC-enabled smart washing machine. Using an NFC-enabled phone, an authorized maintenance technician performs diagnostics on the washing machine, changing its status, updating firmware and launching an app that communicates with the manufacturer's service center.

The value of NFC in a mobility strategy

Rather than viewing NFC as a payment technology, CIOs should take advantage of its "pairing and sharing" capabilities. For example, BMW's NFC-enabled keys are not only a tool to open a car or hotel room door, but also a way to provide BMW customers with promotions and other added-value perks. How this technology will be adopted in specific industries is still up in the air. At the CIO Forum, for example, a CIO from a luxury hotel chain wondered whether hotels should start developing their own NFC keycards or whether there soon will be an industry-standard keycard adaptable to all hotels.

Security and privacy issues abound with this technology, of course, and there is always the possibility of consumer backlash. Although the NFC Forum, a nonprofit industry association formed in 2004 to advance NFC, is developing standards, Gartner's LeHong cautioned there is "no one standards body." CIOs will have to pair NFC standards with their industry's standards -- PCI standards in retail, the Health Insurance Portability and Accountability Act in health care -- to incorporate NFC into their mobile strategies, he added. As for whether an investment in NFC pays off? NFC will generate $74 billion in sales by 2014, Jupiter Research estimates. Last year, Gartner estimated that by 2015, 50% of smartphones will be NFC-based, but Gartner analyst Mark Diodati recently said he believes that estimate is conservative.

For more on next-generation mobile strategies, read our tip on recognition technology.

Let us know what you think about the story; email Linda Tucci, Senior News Writer.

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