Analysis: How Do You Measure the Return on Mobility?
"What's the business case?"
That's what Charles Nettles, chief technology executive at McKesson Corporation, wonders about wireless as he recalls the presentations he attended at last month's Cellular Telecommunications and Internet Association conference. "I never heard a solid business case. Everyone is so focused on consumers that they're a long way from understanding the value to the enterprise."
The adoption of mobile technology is driven by employee demand, not top-down corporate strategy at 55 percent of the companies we surveyed. The motivation, say experts, is the convenience of anytime, anywhere access and communication. But only one of five respondents report a clear, measurable return from their mobile investments, while one of four believe the benefits haven't been worth the bother. How can CIOs justify the business value of mobile applicationsespecially wireless ones?
It's difficult to quantify the value of wireless laptops, PDAs and cell phones, in part because they have become so integrated into how users work. "People who experience life in wireless mode have a hard time coming up with a hard ROIbut they also have a hard time giving their wireless devices back," says Thomas Koulopoulos, president of Delphi Group, a Boston-based IT consultancy. Nevertheless, says Jack Gold, vice president of mobile and pervasive computing at META Group, "because budgets are tight, most companies I talk to are attempting to justify this stuff."
One way CIOs justify wireless technologies is speedthe ability to get fast information when it's needed for timely action, such as closing a deal or resolving problems, according to Delphi's Koulopoulos. Often, executives base this on anecdotal evidence or anticipated benefits, rather than a hard ROI. At Converium, a global reinsurance company based in Zurich, Switzerland, underwriters and executives sought wireless access to contract and claims information for support when negotiating with clients. Converium's top executives didn't need to see hard numbers, according to Andrei Chivvis, the firm's global chief information officer. They were already convinced that negotiators could work out better deals if they could verify client assertions and back up their own points during negotiations.
At companies that do require hard numbers and use wireless to carry out a top-down business strategy, the technology's speed is being linked to measurable benefits. Crossmark, a sales and marketing services company in Plano, Texas, compares client sales, and its own revenues and costs, before and after the wireless upgrade of its SalesTrak system, says executive vice president John Thompson. The new version not only provides sales data about the products it represents for its clients, but also alerts field reps to stores where products are selling poorly, so they can quickly make support visits while avoiding expensive, pointless trips to stores where sales are strong.
Measuring business value is a cornerstone of McKesson's wireless initiatives. Following an experiment with wireless e-mail, Nettles launched a far-reaching wireless program to build applications that allow truck drivers to register receipt of deliveries upon arrival at their destinations, help traveling sales reps sell health supplies to pharmacies, and deliver competitive intelligence to mobile staff. "We won't do anything without real ROI," says Nettles, so all these initiatives, some of which are still under development or awaiting approval, require hard measures of business value. For example, the bar code reader should result in fewer disputed invoices, so payments will be held up less frequently. Nettles will measure any wireless version of its pharmaceutical sales application by how much it improves customer satisfaction and retention rates. He is even putting together a set of measures to track the value of wireless e-mail by evaluating its effect on workflow and decision- making. "Statistically validating wireless e-mail is tough, but we won't shrink from that duty," says Nettles. Where possible, he will conduct controlled experimentssuch as comparing groups of employees who have the system with similar groups that do not.
It's not clear yet whether all of McKesson's wireless applications will produce hard benefits. But Iain Gillott, head of iGillott Research, an Austin, Texas, market strategy consultancy, says other companies have been able to find such benefits: savings from improving and speeding processes (such as saving gasoline by avoiding unnecessary trips), reducing costs due to error (such as incorrect orders), and avoiding hidden costs of alternative technologies (like hotel dial-up charges).
What's the business value of mobility? That question has to be answered application by application. But the value can be found by digging below the veneer of convenience, and looking for improvements in business processes and the impact on strategyjust like any other application.
This article was originally published on 04-01-2003