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New ROI metric for mobile deployment

Mobile deployments often evade traditional ROI calculations. Now two Gartner analysts offer a new way to do the math.

ORLANDO, Fla. -- Wireless deployments are often hard to pin down with traditional return on investment (ROI) calculations, but two Gartner Inc. analysts presenting at the Gartner Wireless & Mobile Summit 2005 this week said the value of wireless projects can be easily understood by using the right metrics.

My CIO says that in order for there to be a productivity increase, there has to be some cash outlay.

Joseph Pinto,
director of network services, Ann Taylor Stores Corp.

Gartner analysts and vice presidents Phil Redman and Bill Kirwin said that businesses must begin wireless projects by finding a metric to define their success.

"You have to tie IT spending to a business metric so you have something to measure it against over time," said Kirwin.

Wireless deployment -- particularly email -- can be useful for small and medium sized businesses as they work to maintain contact with a growing customer base, said Redman. Since many smaller businesses lack large IT departments, they may get the best value by outsourcing their mobile deployments.

"If they outsource the technology, someone else handles it and managing the technology does not become an issue," said Redman.

Still, SMBs should provide their mobile outsourcing partners with specific metrics to define their expectations, he said.

Too many IT departments skip this first step and sabotage themselves. Without defining a metric from the start the project can never be properly evaluated, Redman said.

There are a number of businesses processes that can benefit from mobile technology and show tangible improvements, Redman said. Companies can see improved accuracy when information is entered electronically on a hand held device instead of jotted on paper, only to be later entered in a database. Often payment or billing cycles can be increased because information is more quickly entered into databases. But finding the right metric requires a keen understanding of the business process, Redman said.

Businesses can also help maximize gains by keeping spending to a minimum. Not all mobile applications require wireless connectivity, Redman said. Often periodically synching up a device with the corporate network is sufficient and can result in significant savings. Businesses should also ensure they are employing the right device for the job.

VOI, ROI and your CIO

Redman estimated that wireless PDAs cost $4,422 a year over two years to purchase and manage. The total cost of ownership for a mobile phone on the other hand is much lower, $1,272 per user per year over two years.

Redman uses a two-year time frame to judge ROI since the pace of change is so fast in the wireless industry. Most mobile devices are out of date in two years and applications change significantly over that period of time.

Nonetheless, Redman admits that getting hard ROI for some mobile deployments is simply not possible. Instead businesses have to choose softer metrics that considers gains in efficiency.

Joseph Pinto, director of network services for the New York City-based retailer, Ann Taylor Stores Corp. said that many of his organization's IT projects including their push to create a more mobile workforce do not fit into a traditional ROI calculation.

Whether a customer walks into a store in New York City or San Francisco, Pinto says the company wants to know about that person's buying habits to add value to the customer experience. "But there is no way to quantify if the person made a purchase because of that," he said.

Pinto said that a value on investment (VOI) approach makes more sense to his CIO, especially when it comes to mobile deployments. "My CIO says that in order for there to be a productivity increase there has to be some cash outlay," Pinto said.

That is not to say that Ann Taylor is charging into its wireless strategy without a plan. The company is doing its best to measure what can be measured.

So is E.I. Du Pont De Nemours & Co. (Dupont) as it deploys Research in Motion's Blackberry wireless email devices. Mark Rowan, mobility manager for Wilmington, -based Dupont said that he does everything he can to project ROI. Most experts expect that users will save 47 minutes a day or 4 hours a week because they can send email whenever they need to with mobile email.

Rowan cut that figure in half, but he is still unsure about whether that time saving really adds up to increased productivity. So is Redman. If he finished his email faster, Redman said that it often just generated more messages. Maybe he'll take off work earlier instead of doing more work. It is hard to judge if there really is any productivity gain.

But Rowan is not deterred. He knows there are benefits even if they are hard to quantify. "With us, it's not a question of whether we'll deploy, it's a question of when."

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