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z Features Mobile Campus z Strategy 05/01/04

The Wildcard in the ROI Game: TCO
By Craig Settles

Total cost of ownership (TCO) is popping up more frequently in discussions and articles about ROI for mobile applications. TCO is what it costs you for a mobile or wireless application beyond the stated costs for hardware, accessories, software and wireless connectivity—and quite often, it’s the cold water thrown on the mobile party. First an application is installed amid promises of reduced costs and improved productivity; then comes the TCO surprise, when the system is evaluated and falls short of its promised benefits. Often, the blame lies in the little surprise costs that pop up from the very beginning of an implementation. To put things in perspective, consider that the cost of a mobile device “represents just 25 percent of the TCO for a mobile implementation,” says Kristi Urich, director of field service industry marketing for Intermec Technologies. Much of the TCO, Urich explains, is for support: maintaining devices‚ running operations in the field and managing spare units. There’s also end user downtime in the field while they manipulate data or try to troubleshoot and fix problems. Many companies are not considering the full TCO, which is to say, the costs beyond deployment. Start With the Obvious Let’s start by looking at the most obvious contributors to TCO. Any vendor worth doing business with should help you calculate their costs. Some vendors will have factored these costs into their pricing plan. You will likely have education costs, regardless of how easy a vendor tells you its application is to use. Even if end users can pick up and run a mobile app within five minutes, the people installing and supporting the back end of any major software deployment will need to be trained on these products. Besides costs for instructors, manuals and time in classes, people need time to learn how everything works. People will have ongoing questions, so whether they’re on hold with the vendor’s customer service reps or calling your IT staff, this is lost productivity time. Once you calculate the education costs, determine if the vendor or your IT people can create intranet content that’s easy to navigate and will facilitate quick learning and review. While software vendors appear to be making things simpler, the more features they offer on a mobile device, the greater the learning curve will be. Software programming for in-house apps, customizing “off-the-shelf” apps, upgrades (both the price and the effort to physically upgrade devices) and support all contribute to TCO. There are also costs for new security software, for upgrading existing security programs to support mobile access, and for managing passwords on mobile devices for current and future employees, and even those who leave the enterprise. Almost daily there’s news about software tools and features that facilitate both development and deployment of mobility software. These capabilities should be part of any vendor requirements list you create, and the pilot project should allow you to assess how well these tools control costs. The Understated TCO Factors Change of management: This is one of the more deeply hidden costs of mobile deployments. New technology that significantly alters the way people work demands that you adequately prepare to deal with the resulting changes or face possible operational struggles that eat up time, cause employee resistance and otherwise negate some or all of the anticipated benefits of mobility. For example, shifting more data access to the field can result in more decision making by people not accustomed to this role. If you don’t spend time and money preparing them for this new responsibility, they could make bad decisions that are costly. Deploying mobile devices that offer the benefit of greater accountability for management can produce a fear of intrusion and micromanagement among employees that discourages them from using the technology. Your TCO then includes the cost of unused products. Effective mobile applications for field service and salespeople can dramatically increase the amount of free time that home office staff have because driver dispatch or forms processing tasks are eliminated. If you don’t plan ahead of time for reassigning them to other beneficial tasks, you risk the cost of idle workers. Back-up hardware: Mobile devices are subject to damage, theft, irreparable technical glitches and eventual obsolescence, plus the overhead and productivity loss when replacing units. The longer it takes to replace, the greater the productivity loss. The larger and more far-flung your mobile force, the greater the overhead. Though it may take 6 to 12 months before you can measure what your replacement rate will be, you should probably budget to order 5 to 10 percent more devices than the number of people you plan to equip. Configure these devices so they’re ready for same-day or overnight delivery. This upfront expense should save many downstream costs. Hardware standardization: If you deploy new PDAs or phones to users who already have devices, they face the onerous task of re-inputting all of their contact data unless you enable them to sync new devices with their existing data. If you don’t plan for this, your TCO can suffer from a) lost productivity while each person re-keys hundreds of contact records; or b) users’ outright rejection of the device and any apps associated with it. Even if you equip employees with the same devices initially, Intermec’s Urich believes that having mixed devices is inevitable. “The market life of mobile devices is 11 months,” she observes. “So by the time you start replacing units three or four years later, the new devices will be different than the originals.” Enforcing organization-wide hardware standards is also hard because different workers might require different devices. One way to resolve TCO pain is with software. Try to find applications that can shoulder most of the workload for enabling multiple operating systems and devices to access and use back-office data. Keeping TCO in Check With thoughtful planning and an effective pilot project, you can find ways to control or remove factors that contribute to high TCO. Control frequency of access: Always on, anywhere/anytime access is oversold in some quarters because many mobile workers just need to connect a couple of times a day to receive and send information. You have no wireless connection charges if employees sync data via a cradle and desktop or laptop, or relatively small charges if they wirelessly connect just two or three times a day. Because your TCO rises if wireless access increases, use your pilot project to nail down connection costs and your negotiating skills to get a predictable rate plan. If you can’t get a one-rate, all-you-can-use data plan, design your applications to send the minimum amount of data possible. Connection charges can be expensive if workers travel into areas not covered by one carrier (roaming or multicarrier costs) or need coverage in rural areas that require satellite service. Keep an eye on new hardware that enables devices to autodetect the fastest and cheapest wireless network in an area and switch connections to it. Technology independence: You can reduce TCO by designing mobile apps to be as technology independent as possible. Many applications facilitate workers’ ability to collect, process, send and/or receive text data, and often not in huge quantities. Subsequently, you don’t need devices with the latest bells and whistles or blazing fast wireless connections. While the backend software driving the mobile implementation may be complex, the data being transmitted shouldn’t be. So if mobile workers will be doing the same text, data-oriented tasks today that they’ll be doing six years from now, build a functional app for a basic device. Then you only need to buy new hardware when devices stop working. Multiple vendor management: You can minimize both TCO and management headaches if you appoint, hire or subcontract someone to deal with the various vendors, carriers and service providers involved with most mobile implementations. Planning, technology compatibility, project delivery times and billing are some of the areas where potential hidden costs are multiplied exponentially when you work with different providers. One last thing to keep in mind about TCO—it’s a direct spawn of Murphy’s Law. If technology deployments can cost more, take longer to complete and uncover the unexpected, they will. Your best defense is proper planning, followed by a good pilot project—all insured by perpetual vigilance.• Craig Settles is president of and can be reached at [email protected]