The Building Blocks of Mobile ROI
May 2004 - By Daniel Taylor


In 2003, companies all over the world procured millions of laptops, Tablet PCs, PDAs and smartphones. Mobility is upon us, and enterprises everywhere are adopting devices, software, services and architectures to make their organizations more mobile and more effective.

Historically, organizations have embraced new technology to gain a competitive advantage, but today those advantages are becoming more and more incremental. IT once provided a new set of capabilities to enterprises, but today, IT investments are considered a cost of doing business.

Given years of productivity improvements from desktop computers, messaging software and productivity suites, many IT organizations are skeptical that they will see the same returns to scale from mobile technologies. On top of this, mobility is a complex workplace trend that encapsulates mobile workers, supply chains and extended enterprise organizational concepts. Not only are IT organizations tasked with connecting traveling workers, sales teams and field service professionals, but they are now responsible for integrating solutions in conjunction with corporate partners, suppliers and even customers.

ROI Defined

The IT industry has come to use the term return on investment (ROI) to stand for all of the business reasons for an IT investment. An ROI model encompasses a set of financial cost models that weigh the net present value (NPV) of an IT investment in terms of anticipated returns in the form of above-the-line improvements in revenues or below-the-line cost reductions. ROI is always expected to be positive.

As a result, technology vendors have learned to express the benefits of their products in terms of ROI. Whether it is increased worker productivity, reduced time to market, improved customer service or lower management costs, every technology can be described as having a measurable ROI. But with broader adoption of enterprise mobility, ROI is not as clear as it used to be. Mobile workers have choices about when and where they work. These workers choose their applications, prioritize their day and work whenever they need to.

Successful investments are backed up by measurable benefits, and as an industry, if we assert positive outcomes we must measure the results to determine how successful we actually are. This increasingly complex set of requirements is the basis for Mobile ROI—a methodology for anticipating, piloting and measuring return on investment in mobile technologies for the distributed and extended enterprise.

Defining Corporate Objectives

IT has developed to a point where, when properly implemented, virtually every type of product or technology can deliver a positive ROI. Because there are so many architectures and combinations of technologies, IT management is challenged to determine the appropriate solution for its workforce.

For this reason, many successful mobile enterprise solutions start with a clearly defined set of corporate business objectives. Sometimes these objectives can only come from top management, and it is common for the business unit and other line-of-business managers to spearhead mobility initiatives. For example, when Intel decided to transition much of its workforce to laptops connected to wireless LANs, the decision involved many levels of management.

Business objectives can take many forms. In the mobile enterprise, increased productivity is one of the most common of these objectives. However, cost reduction, improved customer support and supply chain efficiencies are frequently mentioned as objectives supporting investments in enterprise mobility.

In addition to business objectives from top management, another set of objectives can be found within key user communities by understanding the ways they use corporate IT resources. One member of the industry organization that I represent, the Mobile Enterprise Alliance (MEA), initiated a mobility project, and the IT team had anticipated that the biggest market for mobility within the company would be its salesforce. After researching users’ accounts and usage patterns, the project team discovered that the salesforce was actually fairly small, and the largest cohesive group of mobile workers fit into the “day extender” category. These workers use a virtual private network to access corporate resources early in the mornings and late into the evenings.

Identifying key business objectives is an important start to building an ROI model. Many business objectives develop new levels of importance when measured in comparison to worker communities and their usage patterns. Sometimes a small benefit to a large group can provide a better ROI than a large benefit to a small group of workers.

Using a Hypothesis to Develop a Cost Model

Whether a financial model uses ROI, internal rate of return (IRR), cost-benefit or payback to express a project, Mobile ROI models usually involve some form of cost modeling that compares the NPV of investment and ongoing expenditure commitments to the business benefits anticipated by the project.

Business benefits are usually expressed in dollars and require a basic supposition about increased corporate revenues, a greater number of productive work hours and other ways in which a mobile solution either makes or saves money.

Just as the true costs of implementing a solution can be modeled but are otherwise unknown until the project is complete, the anticipated benefits of an ROI model are merely a conjecture built around a hypothesis of how and by whom a mobile solution will be used.

In other words, the additional 1.6 hours per week of productive work time that we presume will be the result of a particular project may, in fact, be something else altogether. For example, instead of using an 802.11b hot spot to check e-mail, a traveling worker may use the connection to do some online shopping. An RFID solution may improve package tracking, but management costs may be far greater than anticipated, outweighing projected benefits and sending ROI into the negative.

Anticipated benefits become real benefits when a project goes into pilot or production, and management can measure usage patterns and worker performance.

Pilot & Implementation

Roughly one-third of MEA members have told us that they are increasingly using pilot programs as a way to test project benefits. By rolling out services to limited user communities, larger organizations are able to take advantage of an internal market for mobile solutions. Users are given multiple service choices, each with its own device and access method.

An important part of a pilot program is pricing. If price is no object, users will take any service; but having a price point for internal billing purposes helps users to make smarter decisions about which services are worth their budget and energy. This creates an internal marketplace that helps IT organizations to best understand the requirements of their workforces.

Measuring Performance

Pilot programs help provide an early understanding of how well mobile solutions are accepted and employed by the enterprise at large. Beyond this point, management and IT organizations should have a comprehensive plan to measure how well a mobile solution meets the original set of corporate objectives. For example, if a project is expected to improve worker productivity, does it? If a project is designed to shorten sales cycles, are those cycles shorter?

In addition to business objectives, there are a number of ways to measure the performance of a mobile solution:

Specification: Does the solution perform the way it was designed to? Are there any application, device or network performance issues that create problems with usability?

Management: Does the solution require more or less management than anticipated?

Training and support: Have user training and support slowed adoption of the solution? Do users require more or less support than anticipated?

User satisfaction: Does the solution meet user expectations?

User community: Are sufficient numbers of users adopting the solution? Is this more, less or the same as anticipated?

Usage patterns: Are workers using the solution in the ways anticipated by the project? How does their usage deviate from expectations?

Business objective: Is the organization seeing the desired outcomes from the project?

The MEA is seeing an increasing number of case studies where enterprise IT managers are surveying prospective users at the beginning of a project, during the pilot phase and at the end of the project. This appears to help focus project outcomes on successful business objectives.

Closing the Loop

Mobility can mean many things to an organization, and the primary significance of mobile technologies should be that enterprises of all sizes and in all sectors of the economy can improve the ways in which they accomplish organizational objectives.

Central to this is the ROI model that is more than just a spreadsheet. Mobile ROI is a methodology that presumes a set of benefits to mobility. Pilot programs and enterprise-wide measurement schemes make Mobile ROI both successful and positive by focusing IT departments on corporate goals. Today’s implementations are a test-bed for the future success of mobile solutions, and the next set of investments in mobility are hinging on a sound model for Mobile ROI. •

Daniel Taylor is managing director of the Mobile Enterprise Alliance (www.mobileenterprise.org), an international group that promotes the benefits of workforce mobility to enterprise IT managers, business managers and knowledge workers.

 


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