Mobility has emerged as the most disruptive technology in the enterprises today. Businesses are deploying enterprise mobile apps in earnest resulting in a unique interaction between people, process and products. As per a recent survey by Zenprise, 74.7% of decision-makers said they have or will deploy mobile apps to support their line-of-business activities in the next 12 months. However, deploying line-of-business or customer-facing applications requires high amount of upfront investments and substantial recurring expenses every year. As the global economy continues to stagnate, thereby exerting financial pressure on businesses, decision makers are taking a hard look at their mobility expenditure and are asking questions like “How much these mobile apps are benefiting the company?” or “How to calculate the ROI of mobile apps to justify the expenses?” and so on.
In our cover story, this month, we take a look at the process of calculating ROI for enterprise mobile apps by looking at various approaches to measure benefits and costs incurred in deploying mobile apps.
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To calculate the ROI of a mobile app we will first need to ascertain two components : benefits and costs.
Benefits: The benefits arising out of deploying enterprise level apps in an organization can be classified into qualitative and quantitative benefits.
The qualitative benefits may be impossible to measure but form an important consideration in getting the bigger picture of deploying an app. To measure quantifiable benefits, a step-wise approach could be illustrated by the following example –
Sample Benefit Analysis
A mobile app for field service technicians providing access to real-time information on customer complaints, tickets raised/solved and other details can offer benefits in-
• Travel savings: Real-time information on devices will also help technicians in reducing their travel time. They don’t need to make needless trips to central office and can plan their schedule so as to minimize their travel. Reduction in travel time not only increases work-time of technicians but also saves on fuel costs.
• Resource management- Your existing staff has more work-time now and also can now handle more tickets with the same resources.
Step-wise approach to measure benefits
Increase in productivity of the work force has emerged as a major benefit arising from deploying enterprise apps. Various studies suggest that workers have been able to gain additional work time by using mobile apps. Let’s assume that a technician in a manufacturing unit gains 30 minutes of additional productivity per day owing to mobilized environment in his workplace.
So, if the pay per hour of a technician is $50 then the productivity gain for the organization would be
Productivity gain per day = ($50/2) $25 per day per worker.
Productivity gain per month (22 working days) per worker = $25*22 = $550
If there are 100 technicians operating in the unit,
the cumulative productivity gain per month = $550*100 = $55000
Using this approach, the equation can be extrapolated to the entire organization.
Benefits, no matter how high, must be weighed against the expenses incurred in deriving it. And therefore it is also equally important to look at the costs involved in deploying a mobile app / enterprise mobility strategy and to see whether the benefits-costs equation is profitable.
Costs: The total cost of ownership for an app can be classified into: upfront costs like licensing, app development, hardware procurement etc., and recurring costs involving data plans, maintenance, up-gradation, training for new users and IT administration.
The upfront costs in owning a mobile can be significantly higher while recurring costs will be lesser but will spread over the years. Also, the total costs involved in deploying an app will vary significantly depending on the scale, scope and functionality of the app. However, calculations (provided in the table below) based on a study by Forester for a BlackBerry solution deployment provides us with some indications on the type and the range of costs involved across various deployment stages.
Costs Of BlackBerry Solution Deployment Captured In The TEI Analysis
|Cost Category||Reactive deployment stage||Proactive deployment stage||Integrative deployment stage||Cost Drivers|
|Blackberry Enterprise Server||$48||$100||$45||Variances are driven by the number of BlackBerry Enterprise Servers, whether the organization has separatetesting,production,orback-upservers, the cost of each server, and the maintenance fees.|
|BlackBerry smartphones||$639||$739||$741||Costs vary due to the number of BlackBerry smartphones supported and corporate liable device policy.|
|User support||$66-$73||$71-$75||$171-$206||User support costs increase along with the number of mobile applications deployed.|
|End user training||$52-$77||$231-$254||$240-$289||Costs driven by the number of users and the number of mobile applications available to users.|
|Voice and data plans||$2,363||$2,459||$2,079||Voice and data plans are the key driver of costs across all deployment stages.|
|Mobility applications||$0||$72||$193||Costs driven by the number of mobile applications beyond email|
|Total three-year cost per BlackBerry smartphone||$3,168-$3,200||$3,672-$3,699||$3,470-$3,552|
|Average annual cost Per BlackBerry smartphone||$1,056-$1,067||$1,224-$1,233||$1,156-$1,184|
Source: Forrester Research, Inc.
Calculating mobility TCO can be a challenge in the absence of a standard model or a popular formula. Moreover, a major part of the costs vary depending on the functionalities of the app created, platforms to be supported, scale of users and the mobility strategy adopted by the organizations. The study by Forrester Research Inc. puts the average annual cost per BlackBerry user to be in the range of $1,056 to $1,184 per user per year in all deployment stages.
So continuing the scenario used for calculating benefits where we saw a productivity gain of $25 per day per user or $6500 per user per year and assuming costs to be the average of the range provided above i.e.
($1056 + $1184) /2= $1120, we find that the
ROI= Productivity gains/costs
= $6500/ ($1120)
As discussed above, upfront costs like licensing, app development and device procurements etc., will not form part of expenses in the following years and only recurring expenses like data plans, user training (depending on new users added) and app maintenance costs etc., will be incurred leading to lowering of cost per user and further increase in the ROI of the app.
Quantifying ROI for an enterprise app is challenging but is something that can be very useful in decision-making and can play a large part in developing mobile strategy for future deployments. Although a good part of the benefits derived from an enterprise app remains intangible and hence difficult to quantify, but various case studies, precedents and data available can help decision-makers to judge and justify their investments in deploying an enterprise app.
Tags: enterrpise mobility