Where's BI?

My favorite location-based service doesn't have much smarts built in. It's the Clapper device that, after a clap or two, sounds off to lead me to my mislaid keys ... or my lost smart phone. Location-based services (LBS) fed by business intelligence are just now taking hold in North America. ABI Research estimates that there will be 1 million subscribers here by the end of 2005, up from 380,000 LBS users last year. By 2010, that should jump to 15 million, says the market research firm. Of course, today there are, what, 150 million or more users of cell phones, PDAs and other mobile handheld units?

These tiny numbers disappoint some people who had expected LBS to skyrocket after the Federal Communications Commission mandated that carriers build location-finding technology into their systems. That's because many people thought that companies like Starbucks would create LBS navigational aids to lure wandering consumers into their nearest store. Who knew their real strategy was to put a coffee stand on every corner on the planet so we'd never have to search for one?

Seriously, though, as ABI analyst Ken Hyers points out, those opt-in consumer programs that mix BI-based marketing gimmicks with GPS-capable handsets never got off the ground because they would have "become very annoying very quickly to consumers."

Consumers, says Hyers, will be happy with limited LBS capabilities for the foreseeable future, such as GPS-tracking tools to keep tabs on where your teenagers are hanging out. Those programs won't require much back-end intelligence.

But GPS-enabled handsets and BI are working in concert for corporate IT. For example, Hyers points to Nextel Communications, which merged with Sprint in August. Since 2003, the company has been focusing on how to add value to GPS-enabled devices, and it now offers about 100 applications to business that leverage location and application intelligence. One of them, the XORA GPS TimeTrack service, lets you link your payroll application to the time and place of mobile workers. Instead of architects or a job-site foreman having to complete timesheets at each location they visit in the course of a day, their Java and GPS-enabled handsets know where they are and how long they've been there and complete the forms for them automatically.

Companies like Dunkin' Donuts use traditional BI tools from GeoVue Inc. to help predict the best neighborhoods to locate their shops. Naturally, they base their decisions on complicated analysis of complex data sets such as local population demographics, traffic patterns and nearby competitors.

But GeoVue CEO Jim Stone tells me that GPS technology is adding a new element to the straight BI data crunching. Users, he says, apply GPS to "field-validate geographical data." That is, market analysts visit potential sites, pinpoint locations with GPS devices that have integrated cameras, snap a few photos and add visual information to the overall business intelligence.

Stone also mentioned another factor that BI experts are analyzing: transients. Transients are those potential customers who glide by retail outlets from time to time but can't be factored into traditional demographic data. They often comprise a significant volume of business, particularly when your stores are located near interstate highways and major thoroughfares.

For those businesses that are located near big highways, Stone says, it's easier to use BI to calculate transients' propensity to stop and shop. But if your chain operations are primarily tucked into neighborhoods, he says, it's much trickier to use standard BI analysis to predict those customers' value to your business. For example, he says, it's virtually impossible to determine how many transients are passing by your stores (or potential locations for your stores). And even if you did know how many transients there were, their demographic breakdown would be problematic.

And that brings me back to LBS and consumers.

With GPS being built in to every handset to comply with government regulations, it won't be long before carriers can potentially gather data on where their customers travel every day. By tracking movements of individuals, detailed transient data will be possible. And because specific demographic information can be tied to each handset, this could be a BI gold mine. Plus, it's all passive: No annoying messages are being sent to users' devices. Market researchers will have better information on where to locate retail outlets.

Needless to say, there are scary, Big Brother-like concerns raised by this possibility. Of course, if I lose my Clapper, I'll never find my cell phone, so it won't be an issue for me.

Mark Hall is a Computerworld editor at large. Contact him at mark_hall@computerworld.com.

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