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Wireless ROI: How to Quantify Cost Savings and Productivity Gains
A wireless mobile solution that improves sales or service force productivity may not always be worth the investment. Without doing a return on investment (ROI) analysis before implementing such a solution, it is impossible to know the actual value the solution will deliver.
Posted Jun 2, 2000
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A wireless mobile solution that improves sales or service force productivity is always worth the investment. True or false? The answer is false. Without doing a return on investment (ROI) analysis before implementing such a solution, it is impossible to know the actual value the solution will deliver.

A wireless solution will likely offer major cost savings and productivity gains--two of the top areas for improving business--by enriching and speeding up sales orders with real-time information and revolutionizing mobile service teams with dynamic rerouting capabilities.

But many wireless solutions fail or fall short of expectations because organizations often fail to do an effective ROI analysis, which can signal trouble, before deploying new systems. Without a strong ROI analysis, there is no certainty that a particular wireless solution will actually be worth its salt, even if productivity increases. Technological changes often carry hidden costs and opportunities that must be addressed in order to make the overall wireless investment worthwhile.

With wireless technology changing so rapidly, ROI analyses have become an increasingly important way to forecast the total impact of a wireless solution and help integrate the system into back-end systems and other enterprise-wide technologies. Whether brief or extremely detailed, the analysis must list the total costs of the investment and the value of the benefits to be gained, resulting in a calculation of total savings and improved opportunities tied to a specific date or break-even point.

If done right, the ROI analysis will serve as a rehearsal, raising important questions early in the process, eliminating unpleasant surprises and maximizing the new technology's total potential. The ROI process also ensures that a wireless solution supports an organization's broader objectives. It also tends to get key management involved at the outset, giving wireless solutions wider backing within the organization, which enhances long-term success.

Alfred Powell, chief executive officer of BigDog Solutions, a Campbell, Calif.-based company that implements wireless solutions for a wide range of end users, says that CEOs are more motivated to put their enthusiasm behind wireless automation solutions for field and sales forces when they're presented with a good ROI model that provides a compelling business case.

The ROI Team
Typically, the moment for developing an ROI model comes when an organization has narrowed its choices down to one or two wireless solution options.

At that point, a committee should be formed of key players in those departments that will be involved in and affected by the mobile solution. Although it's important to sell top executives on the solution, the ROI analysis needs to come from the middle of the organization, with input from everyone from hands-on users to department and corporate leaders.

The project manager implementing the new wireless solution will likely be a member of the original ROI committee, so it's advisable to get someone involved who has the ability to communicate with people across all departments, advises Powell. "Choose someone [to lead the ROI analysis effort] who can champion the cause and get the best input from these various departments," he says.

The ROI team must create a schedule and meet accordingly to gather the information necessary to produce documents by certain dates. Established timetables should be followed because of technology's rapid changes. "You need to set guidelines for the qualification process and assume a sense of urgency in following through on responses, because you're wasting money otherwise," explains Casey Powers, president of mobile computing solution provider MobilePlanet in Chatsworth, Calif.

ROI 101
The first step in any ROI analysis is defining the goal of the wireless project. "In the early stages of developing the ROI, many companies oscillate between extremes," warns Powers. "It's important to keep a handle on ideas that will make costs escalate out of control, and also keep people from getting unrealistic ideas" about the solutions' capabilities.

ROI models need not be long nor formal, but they must be objective about the solution under consideration and include realistic assessments. It's important to keep things simple, sticking to essential issues and identifiable costs and opportunities. Be realistic about the scope of the wireless solution and "don't promise anything you can't deliver," Powers warns.

One aggravation facing ROI analysts is how far into the future the analysis, software and hardware decisions should extend. The window of planning is getting shorter, as technology rapidly changes and improves wireless hardware and the software that drives it. "Organizations should think in terms of six months, plus or minus the deployment cycle time, and [look for] vendors that can promise to keep applications current for five or more years," says Christopher Reitz, chief operating officer and executive vice president of Armonk, N.Y.-based Melard Technologies, a systems integrator and developer of software and hardware solutions for field forces.

Nuts and Bolts
It is important to identify goals for your mobile solution without bias toward any particular hardware or software. "Don't get steered to any particular solution before identifying what you want to achieve," warns Mark Willnerd, a product marketing manager with Extended Systems in Boise, Idaho, which provides wireless solutions for diverse types of companies.

Each company's ROI analysis should be unique, but there are some general guidelines. The document can be a spreadsheet or a text-based document, but either should be based on numbers relating to the positive and negative aspects of all values that can be quantified.

In general, the ROI must prove how a wireless solution will improve a company's bottom line by increasing efficiency, enriching information and improving the speed, quality and efficiency of sales and service calls while enhancing the company's accuracy and responsiveness.

Any reductions in personnel that might be achieved by implementing a mobile solution--including hiring fewer people in the future--must be factored in.

The actual acquisition cost of implementing the wireless solution must be included in the ROI, including its price, the cost of implementation with assistance, if necessary, from consulting firms or systems integrators and all back-end changes to existing software and hardware systems. Make detailed assessments of other costs associated with the deployment, including testing and training.

Intangibles Add Up
The biggest challenge to building an ROI analysis is measuring intangible factors that don't translate easily to a balance sheet, such as increased sales and marketing opportunities; expanded customer relationships; improved inter-employee communications; and reduced general hassles for personnel in everything from travel to performing repetitive tasks. In order to illustrate these benefits, ROI analysts can use research showing competitive comparisons, economic forecasts and future business trend models.

The fact that a wireless solution can enable employees to share information and cooperate more on leads and servicing customers is an essential part of any ROI analysis, "but if you can't put a number on it, you should include it in text form in the ROI [study]. Illustrate these advantages by describing how they will affect specific relationships and activities within the workforce," says Jan Loning, MobilePlanet's chairperson.

Time Equals Money
The biggest opportunity for improving business through wireless solutions involves sales and field force personnel's use of devices and information to save time. "If time is the crucial element you're looking to impact, you can break time into different categories to measure the value of a new solution," suggests Willnerd.

For example, "You can put a high value on the time a worker is making or taking orders," Willnerd says, "and perhaps you can put a lower value on the time he spends communicating with headquarters or talking to inside or outside sales team members and managers. Each part of the worker's day can be assigned a different value to develop an ROI analysis."

It is important to realistically assess the feasibility of the solution, particularly when dealing with mobile sales forces, says Tony Esposito, Princeton, N.J.-based middleware software developer Nettech Systems' vice president of sales. "There's the theory and then there's the reality of how salespeople will utilize new technologies."

Esposito cites examples in which sales forces refused to use new technologies, despite compelling ROI analyses, because there were perceived risks involved. "Salespeople depend on their habits for their living," he explains, "so it's very hard to make them change their habits. How they will respond and be compensated for making changes should definitely be factored into any ROI analysis."

Device Dilemmas
Because of their sturdiness and versatility, PC laptops are the most common tool of mobile field and sales forces today. However, a growing number of smaller, light hardware options and palm-size solutions are entering the marketplace, creating new dilemmas for ROI analysts. Reitz of Melard votes in favor of ruggedized laptops or new, customized hybrid devices designed for specific industries and functions, which have tough exteriors, waterproof features and muscular batteries. "Increasingly, laptops can be turned into wireless devices," admits Reitz, "but it's harder to take these small devices and give them all the capabilities of laptops."

Not everyone agrees. One dissenter is Sprint PCS, which considers itself at the forefront of developing new lightweight devices based on cell phones for mobile field and sales force personnel. "A whole new generation of handheld and palm-size tools are coming along that will do everything laptops can do, utilizing Web browsers to deliver information in any format to a small, highly readable screen," says Jay Highley, vice president of the Sprint PCS business customer unit in Kansas City, Mo.

Workforces with no computer expertise can be trained to handle the newest cell phone-based technologies, he adds. Willnerd of Extended Systems also believes that the days of fully outfitted PC laptops are numbered. "You can implement a wireless solution using a smaller device for about 25 percent of the cost of a laptop, and the device is practically disposable with all the advantages of a laptop," he says.

It's possible to classify hardware and support costs into categories such as online support, customer service, maintenance and repair costs in order to evaluate hardware for ROI analyses. In the wireless environment, it is also important to measure the cost, traffic volume and potential gaps in coverage of wireless transmissions, say experts. "Airtime for wireless has come down in cost, along with the cost of devices, which is good because hardware can be amortized over a shorter time period," says Loning of MobilePlanet.

The advantage of falling costs is that an ROI analysis does not need to prove the wireless solution's benefits over an extended period of time, which narrows the variables somewhat. However, if there is a serious gap in coverage for wireless communications in a sales or service force's territory, it must also be factored into the ROI analysis.

Run as many tests of a wireless communications system before implementation as possible, and factor the results into the ROI study. "Drive around the entire coverage area and test receptivity, data transfer and hardware components as close as possible to what your solution will use," Reitz says. "Before wrapping up the ROI analysis, take a step back and look at one part of the system; look at it in general and realize you'll be a lot more efficient if all the elements are working together and you've considered all those questions before deployment," says Reitz.

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