The Business of Where

Sep 15, 2001 12:00 PM, By John Rockhold, News Editor

Mobile enterprises will be able to use location-based technology to improve efficiency, increase profits and … spy on employees.

Location-based services for mobile enterprises just make sense. Here’s proof positive: Marco Polo Delivery is a b-to-b enterprise operating 100 vehicles in a major metro area. Overtime costs are killing the company’s profit margin. Marco Polo’s wireless carrier suggests location-based services. Marco Polo signs up for a suite of applications, including maps and turn-by-turn directions, which use existing handsets. The services cut mileage, lower fuel expenses, save drivers time on each delivery and make dispatch more efficient. This saves each vehicle 30 minutes a day, 150 minutes each work week and more than 7,000 minutes a year. The entire fleet saves 700,000 minutes a year. With the time saved, each driver was able to get three to five more jobs done each day. Marco Polo’s overtime problem is gone, and profits are up.

This example may be a few years out, but it certainly makes sense — carriers will have location technology for E-911, and enterprises are a proven market for voice and data. Mobile enterprises, from field agents to fleets of vehicles, will be able to use location technology to enhance existing applications and create new employee services that increase productivity and improve efficiency.

The Marco Polo scenario assumes the overtime problem comes from inefficiencies in dispatching drivers and locating delivery stops. But what if the problem were rooted in the fact that several employees are prone to taking 3-hour lunch breaks? Or what if a local brewer discovered a huge disparity between the amount of beer sold and the amount that should be in inventory?

Hi Ho, Hi Ho, My Boss Knows Where I Go
Location technology already is drawing privacy concerns on Capitol Hill. In early July, Sen. John Edwards (D-NC) introduced the Location Privacy Protection Act of 2001. The bill would require location-based-services providers to obtain users’ permission before tracking them or sharing the information with other parties. The bill only addresses consumer location applications, but the fact that the bill exists speaks to the anxiety surrounding location.

In enterprise privacy news, the Privacy Foundation recently reported that 14 million U.S. employees, one-third of the online workforce, have their Internet and/or e-mail activities under constant surveillance by their employers (www.privacyfoundation.org). If enterprises already have gone that far, it may not be a jump for them to use location technology to monitor their mobile workers.

“The big-brother aspect that freaks consumers out — businesses love that,” said Larry Delaney, MapInfo (www.mapinfo.com) market director. Paranoia about being tracked may be enough to keep employees in check.

“Does the driver know if you know? Even if you aren’t looking, they don’t know you are not looking,” he said.

Instances where a driver delivers beer to his house rather than the local grocery store can add up to significant losses. Such was the case for one of @Road’s (www.@road.com) bottling customers, which include companies such as Anheuser-Busch and Pepsi Bottling.

“One of the bottling companies had an issue with theft and shrinkage, which is a huge problem,” said Roy Eder, @Road vice president of business development and corporate marketing. “So we have a switch that pings the Internet location manager (ILM) every time a (truck’s cargo) door opens, and that information is sent to our server.”

The ILM is the vehicle hardware for a GPS-based tracking system. At the end of the day, reports match the number of deliveries to the number of times the doors opened.

“If it doesn’t match up, then obviously they are stopping at their brother-in-law’s and dropping off a couple cases of something,” Eder said.

Location-based employee monitoring also could track how long the vehicle is parked for lunch or could determine whether the driver is running personal errands on company time. Even if an employee isn’t clocked in, some enterprises may not want company vehicles to be used for anything personal.

“Taking the truck out for side jobs if (employees) are not on company time creates a huge liability for the company,” Eder said. Especially if an accident occurs — average cost for a delivery-truck accident is $75,000, he added.

Location tracking won’t be limited to vehicles — any field worker with a location-capable wireless device could be monitored by his employers.

Humans are often more clever than technology. For example, a beer-delivery driver simply could slip a few cases of beer into the front seat during a delivery, have a brother-in-law meet him at a stop, damage the hardware in his vehicle or turn off his phone when he doesn’t want to be found. A foolproof solution may be impossible, but the more of a hassle it is to be delinquent, the less likely employees are to steal or slack off while on the job.

Enterprises’ Rights
To what extent do enterprises have the right to use location technology to track their employees and assets? And will wireless carriers be affected?

Employees rescind their privacy rights when they are given tools that are meant to make their work more efficient, according to Caroline Allison, a Strategis Group consultant (www.strategisgroup.com).

“If you are using poor judgment and taking three hours (for lunch) or delivering beer to your sister’s house and you’re on work time, then that’s grounds for your employer to dismiss you,” she said.

Jay Highley, Sprint PCS vice president (www.sprintpcs.com) of business marketing, said that typically “the corporation is responsible for the usage and the services that employees are using.”

Allison agreed.

“When a carrier handles an enterprise account, whatever the enterprise does with those cell phones (is up to the enterprise),” she said. “It’s out of the carrier’s hands at that point.”

Highley added that enterprises aren’t as worried about employee tracking as they are about figuring out where they can get productivity from location technology. Ultimately, though, it’s their business that’s on the line.

“They should have some rights to monitor and track usage (of their assets), because it is an expense that they are paying for,” Highley said. The important distinction to make is whether enterprises truly are looking over their employees’ shoulders or just keeping tabs on their assets. Eder said that this issue is coming up with mobile enterprises.

“We’re not tracking people, we’re tracking their assets, (ensuring) that those assets are being used properly,” he said. “It sounds nebulous, but it really is trying to reduce their expenses.”

Location’s Lighter Side
All big-brother talk aside, location has powder-keg potential with enterprises. With the technology coming sooner or later for E-911, carriers already are imagining the possibilities. Highley said Sprint PCS is working with focus groups and conducting research in potential markets. The key is not to drown your potential customer in talk of whiz-bang technology.

“If you don’t apply it for them, they have trouble understanding the value,” Highley said.

MapInfo is targeting enterprises, but doing so through carriers to jump-start the location market. Delaney said his company is talking with a large carrier that specializes in business customers. He added that one win could create a domino effect.

“Once a carrier deploys a high-profile location-based service, I don’t think the others are going to take it sitting down,” Delaney said.

Focusing on regional commercial fleets, @Road already has 6,000 customers for its tracking application. The company sells on its own but also works through partnerships with AT&T Wireless (www.attws.com), Cingular (www.cingular.com), Nextel (www.nextel.com) and Verizon Wireless (www.verizonwireless.com).

With an ROI from two weeks to two months, pitching location-based services to enterprises is best done by crunching numbers.

“Once we plug in all the numbers, they (enterprises) go, ‘Oh my God, why didn’t you guys show up earlier?’” Eder said.

Location accuracy will be the paramount concern for enterprises. Phase I E-911 technology — which determines cell ID and ranges in accuracy from 100 yards to 20 miles, depending on the density of sites — won’t help create new efficiencies. Mobile enterprises, particularly those in large cities, are going to want Phase II accuracy, which should fall between 50 meters and 150 meters.

Carriers may want to experiment with Phase II technology-based applications on the consumer side, where there’s less risk involved, before tapping the enterprise market, Allison added.

“When you are talking about enterprises, it’s got to be right (the first time),” she said. “So I don’t see them offering any solutions in the next two years.”

Nextel, the king carrier with enterprises, recently partnered with Darby Corporate Solutions (www.dcs.com) to make its GPS-based Diplomat vehicle-location service available over the carrier’s packet-data network.

For its Phase II technology, Nextel plans to implement assisted-GPS technology. The carrier doesn’t expect to start offering location-enabled handsets until October 2002, a schedule that might make Nextel late to market with its own enterprise location-based services. Given Nextel’s conundrum, Allison identified Sprint PCS as the carrier that could be on the cutting edge of location-based services.

Highley said location information will be integrated as part of the carrier’s Clear Wireless Workplace offer, Sprint PCS’ enterprise package. The carrier’s evolution to 3G will improve that offering, not make it a new solution, Highley said.

“There’s a lot of noise in the market around 3G, but that’s just techno-garble,” he said. “The real key is converting your technology into high-benefit services that are relevant to your customer.”

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Not Waiting on Carriers
The original business model for Cell-Loc (www.cell-loc.com), and its subsidiary Times Three (www.timesthree.com), was location-based services through wireless phones. With carriers’ delays in E-911 implementation and further examination of the fleet-tracking market, things have changed. Cell-Loc originally built a location network in cooperation with Telus Mobility (www.telusmobility.com) in Calgary, Canada, but went solo for a network in Austin, TX.

“We realized there is an enormous market in the enterprise area where cell phones may not necessarily apply,” said John Krpan, Cell-Loc COO. “You are not going to strap your cell phone onto your ship; you just want a radio signal.”

The company’s Beacon device works in an unlicensed band and is the size of a deck of cards, although it soon will shrink to microchip-size, Krpan said. The Beacon product will be the company’s main focus and can operate with or without carriers.

“Location applications aren’t front and center for them,” Krpan said. “If they want to run, we will, but we’re not going to wait for anybody.”