Davos Notebook

The future of business: mobile technology

By Guest Contributor
January 26, 2011

By Bill McDermott and Jim Hagemann Snabe, who are the co-CEOs of SAP AG, a business software maker. The opinions expressed are their own.

Over the next few days at the World Economic Forum in Davos, as business and political leaders debate what do to improve the world, they should champion and enable further growth of mobile technology as a vehicle that removes barriers, promotes inclusiveness and opens opportunities for those who would otherwise not participate in the digital economy.

Mobile phone applications and software help businesses across all sectors of society find solutions to their problems. Today we heard of an agreement at Davos that will result in solar-powered cell phone towers in India. That’s progress in exactly the right direction. And we need even more of it. We need to create more mobile software applications, have more innovation in mobile technology and more support from political leaders across the globe.

There are 4.6 billion mobile telephones on the planet, and even the poor buy them. Why? Mobile phones have become the cornerstone of global economic development. As an example, let’s consider how mobile technology made a dramatic difference in a remote corner of South Africa, where there are no shopping malls, no paved roads and rural communities depend on small “spaza” shops — informal convenience stores, which are often run out of homes.

A mobile phone software pilot project now lets shop owners replenish stock by using an application on their cell phones to communicate with an intermediary person who gathers all the spaza requests, orders supplies in bulk, and makes sure they are delivered to the shops. This project is a real game-changer, as any spaza shop owner will tell you.

Previously, many of them had to shut their shops to travel to the nearest wholesaler, often a half day’s trip away, forgoing hard-earned income and profit. Now they use their cell phones to order goods and will soon be able to pay for them using mobile payment applications for those who don’t have bank accounts.

In Ghana, mobile phone-based software applications have improved the lives of 1,500 impoverished rural shea nut pickers. This network of women is organized into 83 groups, with each group’s leader possessing a mobile phone, through which the women can get local market price information via SMS. Once they sell their produce, they also get a view into the global supply chain for shea butter. A Stanford University study found that the new technology has significantly improved the women’s income — anywhere from between 59 percent and 82 percent.

In Asia, Bangladeshi fishermen in remote villages can find better prices for their catch by calling around on their $20 mobile phones rather than having to travel to the nearest market and hoping for the best. And there are many more stories to tell.

Studies have shown that introducing 10 new mobile telephones per 100 people in the developing world can add between one half to one percent to a country’s GDP growth rate.

There are some 4.6 billion mobile telephones on this planet, but the real impact of mobile communications is yet to come. As software companies get more involved in mobile communications, we will see leaps similar to those that transformed the computer industry. The explosion in software benefited businesses, streamlined processes, improved efficiency, and enabled completely new business models. Remarkable prosperity followed, not only in the developed world but all across the globe.

SAPSnabe_CeBIT_Spaza_Shop

We are on the cusp of a similar boom – this time, with mobile phones. Mobile devices will soon take the place occupied by desktops as businesses keep innovating mobile software platforms to deliver and change the way businesses and consumers operate.

Today, most mobile telephones are basically chatting devices. Although smartphones give us a sense of what is possible. As more services get added through software, new worlds open up. Think of the Apple iPhone. It’s a mobile software machine.

Thanks to the continual drop in semiconductor prices and displays, people everywhere will soon have access to smart phones. Just as the $20 mobile device was inconceivable 10 years ago, we will soon see smart phones at price points we cannot envisage now. Smartphones will outsell PCs by the end of 2011, according to the research firm Gartner.

Few technologies have unleashed the remarkable global change that mobile telephones have in such a short time. It makes the world “flatter.” It also enables transparency, which is the basis for sustainable business. Transparency prevents risk, spurs growth, unlocks creativity and empowers the individual – which should be our shared goal in this highly connected world of today. In the new reality after the financial crisis, leaders in both business and politics around the world need to acknowledge the transformative power of mobile technology for social and economic development.

Information technology can be a game-changer. It can improve the standard of living in emerging communities, bring people together and — yes — bridge the digital divide. In developing countries, often the only way to participate in the digital economy is through mobile handsets. We believe in the power of IT as a driver of social innovation, whether it’s through education or by enabling better access to economic opportunity.

This world will not get more productive because we can watch videos on mobile phones — but if we leverage mobility for business processes and real-time information we can change the world.

Photo: Co-CEO of SAP AG Jim Hagemann Snabe meets Christina Marule, owner of a Spaza Shop in South Africa (Credit: SAP AG).

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