How to calculate ROI on Enterprise Mobility Initiatives ?

In Enterprise Mobility by Satheesh4 Comments

ROI on Enterprise Mobility Implementation

One of the most asked questions by customers, who plan to implement Enterprise Mobility, is how do we calculate ROI on Enterprise Mobility initiatives ?  Also, this is probably the most thought question by a sales or pre-sales guy trying to sell Enterprise Mobility Solutions….Let me share some of my thoughts with some examples on how to calculate ROI on EM initiative…

How to look at Return on Investment ( ROI) in Enterprise Mobility  ?

Typically, ROI is a popular metric used to measure the performance of an investment. It is very contextual…For enterprise mobility initiatives, we can classify the benefits into two sections

  • Quantitative (ROI) benefits  :  Just from pure numbers perspective, they can be either cost savings or increase in revenue/ profit.
  • Qualitative benefits:  These are intangible and can be linked to increase in productivity, customer satisfaction, brand loyalty, etc. These may not directly contribute to bottom line, but will play major part in overall performance and strategic vision.

Quantitative – ROI measurement on Enterprise Mobility  Initiative :
For better understanding, let me take up an example of a company that specializes in providing services to equipment installed on the field. From an Enterprise Mobility standpoint, it is a typical field services application scenario.  Below are some high level steps in a typical field services business process.

Business Process Before Enterprise Mobility :

  1. A customer calls and registers a service ticket.
  2. The customer service representative allocates the ticket to a field service representative.
  3. The field service technician takes printouts of all the service tickets assigned to him and starts his journey to customer site..he may have to take directions to reach customer site as well, depending on the address.
  4. The technician arrives at customer site, manually checks the equipment and captures all the notes on papers. He figures out that some parts are damaged, which needs to be replaced. He takes the order manually on a piece of paper and comes back to office.
  5. The technician logs on to the ERP system and updates his service tickets with all the information he captured at customer site. He also orders the required parts using ERP system.
  6. After parts have arrived, the technician visits the customer site and replaces the required parts and fixes the issues with the equipment.  He captures all the details on paper and gets customer signature.
  7. After arriving to office, the technician logs on to ERP system and updates the system with all the information and details he captured at the customer site.

Process After implementing Enterprise Mobility :
After implementing Enterprise mobility, some steps are eliminated as we directly work on Mobile device. Below is a high level simplification. The benefits are mentioned at each step.

  1. No changes
  2. No changes
  3. No need to carry anything other than the Mobile Device. It will help the technician with all the directions using GPS  and any other information needed
    • Qualitative benefit  – User happy as it helps him with directions and reduces the overhead of carrying papers and technical catalogs
  4. No need to manually capture the data. The system can be queried directly and all the details can be captured in ERP system. No duplicate effort.
    • Quantitative benefit : User does not have to enter the information on papers, he works on the real time system…these are time savings, which increases productivity and saves operating cost.
    • Qualitative benefit : User is happy as there is no redundant task of capturing info and re-entering into the system. Increase in productivity.
  5. Orders can be placed on the mobile device at the customer site, including telling the customer inventory availability and when can they expect the issue to be resolved. Everything is done using Mobile device working on real time system.
    • Quantitative benefit : User time is saved as redundant task of capturing orders and again entering them in ERP system.
    • Qualitative Benefit : Customer is happy as he is updated in real-time about the availability of product and approximate time to fix the issue.
  6. No need to manually log the information. Everything is updated on Mobile device.
    • Qualitative and Quantitative benefits : Similar to above
  7. No need to manually update the system
    • Qualitative and Quantitative benefits : Similar to above

Lets do some Math now….

Before implementing Enterprise Mobility, let’s say that on an average each user process about 250 service tickets per year and they took about 2 hrs of time per ticket to manually capture the information and update the same information back in ERP system.   Let’s assume that the company has about 500 technicians and each user is paid about $20 an hour.

After implementing  Enterprise Mobility, the time saving per ticket is about 2 hrs as everything is done directly on mobile device in realtime. As the user process about 250 tickets per user, the time saving is about 500 hrs per user.  If we multiply 500 hrs with $20  ( 500 * 20), we get about $10,000 cost savings per user. As the company has about 500 technicians, we need to multiply 500  with $10,000 ( 500* 10,000)  to get cost savings of about $5,000,000.

Also, assume that the company spends about $1,000,000 in licensing and about $500 per device in first year.

Cost
Cost of Mobile Devices  (500 * 500)  $250,000
MEAP Licensing cost $1,000,000
Mobile Client Development and Implementation cost $ 500,000
Total cost $1,750,000

ROI in first year =  ( $5,000,000 – $1,750,000 ) *100 / $1,750,000  =  186 %

Some of above costs like client development and purchasing devices are not incurred in second and subsequent years, then the cost savings are even more and more ROI.

Also, from a qualitative perspective, users are very happy and their productivity increase…Also, customers are very happy as they get to be informed in real time regarding issue resolution and availability….

We can apply similar calculations for any enterprise mobility scenario and calculate ROI.

What are your ideas to calculate ROI on EM Initiative ?
Do you have any better ideas ?


Comments ( 4 )

  1. Abhimanyu Kumar Garg

    Good and easy to understand article to show how mobile application can increase the profitability and customer satisfaction by promoting software to Mobile Devices.

    1. Jurij

      Nice article explaining how to calculate ROI on Enterprise Mobility initiatives. If you want to read about the possible Enterprise Mobility Solutions for your company, visit us on:
      http://www.ixtentia.com/enterprise-mobility-solutions/index.html

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