Mobile project ROI- How to determine the return on investment of a mobile application
Step 2: Identify the problem you are solving
Now that the current process has been analyzed, one can identify the processes the
mobile solution will improve. For a mobile solution these improvements fall into three
broad categories:
Operational process improvement
- Decreased data entry time/increased efficiency
- Improved consistency of process and data
- Better data accuracy
Improving access to information
- Extending dynamic data to the field (GIS/ Inspection & Maintenance History,
etc…)
- Providing access to necessary information to complete a job (not just access to
data a worker can carry) i.e. codes, procedures, etc…
- Real-time communication
Eliminating paper
- Eliminate overhead costs of paper work orders, maps, etc…
- Delays due to paper process
- Data accuracy
- Speed up billing (Improved cash flow is a financial hot button)
It is important to remember that it is about the process, NOT the technology. The most
advanced technology in the world will not provide any benefits if it is not applied to
efficiently improve a process.
Step 3: Benefit Analysis
While the ROI analysis will produce hard numbers, an even stronger case for the
approval of the project can be made by presenting the additional benefits it will provide
the entire company. The benefits come in 3 levels:
- Primary benefits provide a direct and measurable cost savings.
- Secondary benefits deliver less tangible, but nonetheless clear improvements.
- Tertiary benefits offer benefits beyond the department or function deploying the
mobile solution.
Examples of what falls under each of these categories are as follows:
- Primary benefits
- Reduction in hard costs within the department
- Less paper
- Less overtime
- Reduce contractors/temps/staff
- Handle more calls/functions per day
- Increase billable time
- Decrease vehicle mileage/fuel costs
- Secondary Benefits
- Increase consistency of work
- Reduce soft costs
- Increase level of customer service/satisfaction
- Fewer repeat calls
- Improve employee satisfaction/retention
- Tertiary Benefits
- Impact of enterprise to reduce costs/increases productivity as a result of
the mobile project
- Enterprise data integration reduces manual entry costs and pitfalls
- System consolidation (mobile platform) reduces burden on IT
Step 4: Calculate ROI
Now that the current process has been analyzed and improvements the benefits of the
mobile project identified, it is time to calculate the return on investment. The steps are
relatively simple, but this is a good point in the process to see if it is possible to get some
help from the finance department in working with the numbers and in presenting the data
in a format management is familiar with.
From the interviews with participants and information available within the organization,
determine what the cost of the current solution is. This will include hard costs for
materials such as paper, log books, and map that are used in field work. This also
includes time, which can be both a hard and soft cost. Data entry time that is used to
support the “as is” solution is a hard cost. Data lags or incomplete data in the field are
inefficiencies that can be addressed to provide a hard benefit.
Take the estimated costs and savings associated with the mobile project and plug this data
into an income statement to calculate an ROI analysis. The income statement will show
the financial impact of the project in terms that senior management will understand.
Begin with the cost of the system including hardware and software. The cost structure
will be different if the company lease hardware instead of buying it, but that is easy
enough to work into the project income statement.
Do not forget to include the ancillary expenses that are necessary to implement the
mobile solution. While it is tempting to just use the cost of the hardware and software,
those people reviewing the proposal will also want to consider the ancillary expenses.
These include:
- Spare units
- Cables and cradles
- Batteries
- Accessories and cases
- Service contracts
- Installation fees
- Custom programming and interface development
Financial analysis is about comparing costs to savings. Once these have been tallied up,
you can address savings. Some areas of saving from a typical mobile project include:
- Labor savings from eliminating data entry, and the additional savings of
more accurate data.
- Savings from cutting overtime costs.
- Improved efficiency that results in a field worker being able to handle
additional tasks in a day produces hard savings
- You may also save money on fuel or mileage based on the type of mobile
solution you deploy. For example, if workers are paid for their mileage at
a rate of 36 ½ cents per mile. If you can save 5 miles per day, that’s an
additional savings of $438 per year, per worker.
Please note that the intangible benefits have not been addressed. These are difficult to
work into the income statement, but will play into making the overall case for the mobile
project.
