With Bryan Wang, VP and principal analyst

How much would it cost to establish a taxi dispatching system in a city of 20 million people, with nearly 66,000 taxis jamming the roads? Consider that Singapore, with a population of  about 5 million, has spent tens of millions of dollars to build a customized system with screens and sensors installed in almost every taxi and a large-scale call center to support it.

Now with the wide availability and affordability of smartphones, entirely new innovative approaches that are light on infrastructure can be employed to reduce cost and time-to-value. A good example is a mobile application recently launched in Beijing called Didi Taxi that works like this:

  •  Passengers and drivers download the app. There are two versions, currently available on both iOS and Android. Drivers download the app to accept orders; passengers download the app to order taxis.
  • Passengers bid for taxis through their mobile phones. When a passenger opens the app, they see their current location on the map and the density of available taxis nearby based on the GPS tracking on both passengers’ and drivers’ devices. Passengers then use their voice to specify their exact location and destination, and — most importantly — how much extra on top of the metered fare they are willing to pay (normally ranging from $1 to $3).
  • Taxi drivers confirm the booking. The system automatically broadcasts the message to all nearby taxis (within either a 1 km or 2 km radius) based on the density of nearby taxi drivers using the app. The first driver to respond within 90 seconds will get the order. If no drivers respond, the message goes out again to all drivers in a larger radius.
  •  Seal the deal. Once confirmed, taxi drivers receive the passenger’s phone number and will typically call the passenger directly to confirm the order and pickup location.

This is certainly not the most efficient way to book a taxi, especially compared with more automated systems such as the one in Singapore. But it is quick, transparent, and cheap. The developer behind Didi Taxi does not currently charge for the service, but has the option to do so in the future or add banner ads to the app. It may even license the app to large taxi companies elsewhere in China.

As of the end of February 2013 — just six months after launch — more than 12,000 Beijing taxi drivers (or 18% of the total taxi population) were using this mobile app, with more downloading it every day. Consumerization of IT and BYOD trends make the success of Didi Taxi possible. The increasing penetration of smartphones in China (35% of all mobile subscribers in 2012 were using smartphones) is the foundation for app developers and infrastructure and operations (I&O) professionals to deliver improved services via mobile apps at a much lower cost.

With more organizations leveraging high smartphone adoption to develop mobile applications and services for their own employees or their customers, proper management and security of these applications is increasingly important to I&O professionals, especially for transaction-based applications. Nevertheless, the Didi taxi case shows how innovative mobile apps can help I&O professionals bypass more expensive and prolonged projects when they apply ingenious solutions to leverage the infrastructure already in place.

Sometimes, a “quick and dirty” mobile app can be immensely effective, even when the app itself isn’t particularly elegant or sophisticated.