The iPhone trickles into the enterprise Page 2 of 2

Who buys the phones?

But whether a company embraces the iPhone might have less to do with applications and more to do with the company’s buying habits. Does the organization centralize its hardware acquisitions or allow users to buy what they want?

Leah Frankum, senior systems analyst for the physician’s team at St. Luke’s Episcopal Hospital in Houston, falls into the latter category. She says that about 20 physicians are already accessing information such as patient records via the browser on their iPhones. “As long as the security is there, we don’t care what they use,” Frankum says. “Anything that helps them with their rounds is a huge benefit.”

Gartner’s Dulaney says that approach is becoming more common in virtually all industries. “A lot of our clients are moving to diversity [in device acquisition],” he says. “If users want to spend their own money and it doesn’t compromise security, they’re OK with that.”

In contrast, there likely won’t be many iPhones—at least for now—in organizations that have more centralized acquisition policies.

“Where IT provides the device, a lot of IT managers are reluctant to hand out iPhones,” notes Greengart. “They’d be giving out a device that Steve Jobs has said is the best iPod ever. That’s not the class of device many IT managers are willing to deploy.”

And despite its popularity with some enterprise users, “the iPhone will not be truly secure and compliant without including third-party add-ons,” says Jack E. Gold, principal analyst at J.Gold Associates. “Apple likely will not fix this problem in the near future, making it a casual rather than a robust enterprise-ready device.”

Another pivotal issue for enterprise iPhone adoption is support. Apple’s ability and willingness to support the iPhone in the enterprise doesn’t get uniformly high grades, despite the device’s forthcoming enterprise-friendly features.

“From a corporate IT perspective, iPhone is still a consumer device,” says SAP’s Iyer. “If a company does decide to implement iPhone, whom do they turn to for Level 1 or Level 2 support? Do they turn to the carrier? Can they call Apple and get support if the application doesn’t work on the phone? Will Apple have some [enterprise] support infrastructure? A lot of these issues still need to be addressed.”

JupiterResearch’s Gartenberg says Apple isn’t really interested in becoming a mainline provider of tools for the enterprise. “We’re not seeing an assault on the enterprise from Apple [with iPhone 2.0] any more than was the case when they switched [Mac microprocessors] to Intel,” he says.

A related issue is Apple’s exclusive arrangement with AT&T. If users in the U.S. want iPhones, they can get them only from AT&T and Apple, and they can use them only on AT&T’s network. That’s a problem for some companies, but not for others.

“We’re not tied to any one carrier,” says Paul Limon, director of business applications at Zep Superior Solutions, an industrial cleaning products supplier in Atlanta. “For our users who travel extensively, they get AT&T. But those people who don’t travel much, you could find, say, Sprint.”

But companies with a more centralized approach to acquiring mobile devices and services won’t be as flexible, Dulaney says. “It’s definitely an issue for some companies that they’d be locked into AT&T,” he says.

Cost of ownership

In the end, cost will be big factor in determining whether the iPhone will make a splash in the enterprise.

“The cost is prohibitive,” says Limon. “A discounted BlackBerry device doesn’t cost as much, and that’s a barrier to seeing [iPhones] flourish in an enterprise.”

However, Kundra is comfortable with the iPhone’s total cost of ownership.

“The cost isn’t trivial, particularly because it’s taxpayer money,” Kundra says. “But even at $400, when you take the cost of the device, which is a one-time capital expense, and compare it to, say, the service plans that go with it, that’s not much.”

In particular, using the Wi-Fi-enabled iPhone will allow some officebound employees to use voice-over-IP via office-based wireless LANs, which will save money, Kundra says.

“We found there’s a large population [of employees] that spends 80 percent of their time on cell phones and 20 percent on land lines,” Kundra says. “So next year, we’re freezing phone costs and starting to close land lines.”

Most important, though, is an expected improvement in productivity, he says. “That $400 unleashes a lot of productivity,” Kundra adds.

Dulaney, however, says most smart phones, including the iPhone, are more expensive for field applications than many might think.

“A salesperson for Disney—that’s a perfect application for iPhone. But—and I’d say this about a Windows Mobile device, too—many field applications won’t make sense for iPhone,” he says. “Building inspectors drop things, for example. Those devices last about two years, and you need to look at repairs and bounce those numbers against ruggedized devices, which last four years.”

Still, while enterprise iPhone adoption depends on issues such as applications, total cost of ownership, and how organizations acquire mobile devices and services, there is little doubt that more iPhones will be used by mobile workers in the future.

“There’s definitely going to be a big uptick, because we’ll see a couple of things happen,” Gartenberg says. “With the SDK, you’ll see more enterprise apps and more back-end management tools.”

Though the device currently supports only slower cellular data speeds, he adds, “you factor in the availability at some point of 3G, and the future of the iPhone in the enterprise is quite bright.”