Return on Investment, or ROI as it is popularly known, is the primary factor influencing investment decisions in many enterprise mobility projects. Nonetheless, understanding ROI and the associated elements, such as Total Cost of Ownership (TCO), are keys to the success of your client’s enterprise mobility venture. Very often a hindrance to the adoption of enterprise mobility is the difference between the potential ROI and the perceived ROI. As I’ll explain in this article, these perception differences arise primarily out of wrong ROI modeling and over-reliance on hard ROI statistics.
No ROI model fits all!
ROI rests on dynamic variables that depend on factors ranging from duration of the project, coverage of the project, scale of implementation, scope of the project, who executes the project, and the effectiveness of execution. Returns do not typically show a straight-line relation with time. Over time, returns are bound to change because of the interaction of several factors that include changing business dynamics, evolving maturity around using the new technologies, and the impact of other evolving technologies. The primary returns in mobility may also change with time, thereby making the ROI calculation difficult. For example, the investment in mobility may result in a reduction in costs in the first year and increased revenue the next. Also, accurate ROI makes sense only if TCO is clearly understood by the client. TCO should be seen as more than just the cost of a particular solution. As the use of mobile services evolve and lead to higher returns, TCO may also increase because of the added burden of higher support and operational costs of newer applications. It is possible (and consultants need to realize this) that this increase in TCO may more than offset the returns estimated by ROI.
Once ROI considerations have led to the adoption of an enterprise mobility solution, the next step is enabling effective monitoring of ROI. Fundamental to ROI monitoring is benchmarking all the critical processes involved in order to measure improvements. Associated with benchmarking, of course, is metrics. Often organizations are unable to assess the financial value of an improvement in a business process because of the unavailability of relevant metrics.
Hard ROI can lead to wrong strategic decisions
Mobile technologies can have several side or “soft” benefits such as knowledge management, increased collaboration, organizational cohesion, and higher levels of employee satisfaction. All these benefits can have significant impact on the health of an enterprise. For example, an important decision made at a right time can have significance in terms of competitive advantage, winning a contract, or preventing a crisis from happening. Similarly, higher employee satisfaction can have benefits ranging from increasing productivity to lower employee turnover.
These and several other softer benefits are not conducive for hard quantification, but at the same time hold clear strategic importance. Nonetheless, your client will largely rely on hard ROI statistics in making investment decisions related to mobile IT. More than 75 percent of enterprises, according to Gartner, will be unable to prove ROI because of their failure to articulate mobility’s quantitative and qualitative benefits. Thus, decisions that are made from a hard ROI based model may not strategically be the best decision for your client. Whereas hard ROI is a driver for adoption of mobile technologies, softer returns need to be driven by strategic plans. Most of the mobile IT initiatives today are driven for operational impacts. In the future, this way of thinking needs to change to include both tactical (primarily operational) and strategic initiatives.
Execution: Realizing the ROI
While an enterprise mobility strategy should include elements related to enterprisewide collaboration, execution of the strategy invariably needs to start with small pilot testing. Often, dividing a large project into small scale projects is a smart execution strategy, as it not only helps in minimizing the risks, it also helps in ramping up the necessary IT skills needed for large scale mobile IT implementations. An important part of execution is the careful sequencing of pilots based on prioritized plans.
Effective execution should also ensure that the project is yielding the optimal results. Often, in spite of the potential of a solution to deliver value, mobile solutions may provide less than optimal results because of simple factors such as culture, usage habits, or a lack of support and training. Realization of optimal ROI depends on the user satisfaction with the service. Hence user satisfaction should be effectively and regularly monitored, especially during the initial roll-out period.
Providing a clearer path
There is an interesting relationship between ROI and the execution of any enterprise mobility project. Clearly, how a project is executed has a visible impact on the overall ROI. At the same time, however, ROI considerations are often used by a client as the sole driver in mobility projects. It’s only when we combine the strategic implications with the tactical aspects of traditional ROI calculations that we can help our client’s make better decisions about an investment in mobility technology.