Measuring the return on investment of a mobile solution (ROI)

Posted by Nicolas Huet_ on Dec 5, 2014 1:15:00 PM

Measuring the return on investment of a mobile solution

Although mobility, in the broad sense, is a market that has been evolving for many years, it is only recently that mobile innovation solutions started flowing into the enterprise market.

Since this avenue is relatively new, many decision makers still have the perception that mobile solutions are mainly consumer oriented. They are still struggling to think of them as an enterprise solution.

 

Therefore, many lines of business managers (marketing, sales, finance, operations) have not yet become aware of the benefits of mobile innovation and their impact on solving business problems  Ideally, the decision to move forward with any solution, mobile or otherwise, will be based on an estimate of the return on investment (ROI) and we frequently discuss this point with our clients as it pertains to mobility.

 

Elements to be taken into account in calculating the ROI of a mobile solution

The investment


Cost for the application development
Cost for the solution deployment (purchase of terminals, training ...)
Cost for integration: integration allows the use of existing data, that the company has already accumulated.

 

The benefits


The benefits can be measured in several ways, depending on the chosen solution and its impact.

Cost savings related to productivity or efficiency

•  Significant reduction in clerical or manual work
•   Reducing the training time required to perform a task
•  Reduction of the cost of errors due to human manipulation (eg order taking or data entry)

Increased revenue / sales / profits

•  Order taking efficiency and reduction in order processing time
•  Sales analysis tool and pitfall resolution
•  Enhanced customer experience
•  Cross-channel sales opportunities
•  Reduction in lost opportunities

 

A Proof of concept, the ROI calculation tool of choice

Certain elements, less tangible, make the ROI of mobile applications more complicated to calculate beforehand. We have to make estimates of gains related to these elements. Given this difficulty, carrying out a proof of concept becomes the vital solution to obtaining clear ROI estimates, not based on estimates but rather on actual figures.

A proof of concept consists of identifying a clear and precise business problem for which a solution will be put in place without necessarily making a significant investment. The proof of concept will demonstrate whether or not there are obvious gains, even on a small scale. This "test" is used to make more informed decisions about the larger scale implementation of a solution that will address the business problem more globally.

For lines of business managers that must increasingly demonstrate the ROI of the investments they make, the proof of concept is the best way to reach their goals.

Moreover, most large-scale problems can be solved by the introduction of a series of small solutions without necessarily having to go through the development or deployment of a solution in need of a large initial investment.

 

Concrete examples of the ROI calculation of a mobile solution:

Present has had the opportunity to carry out projects for clients from various verticals. Here are some typical cases.

•  Canadian pharmacy chain

We conducted a study in a large Canadian pharmacy chain on the processes surrounding the ordering and receiving of medications with external suppliers.

Pharmacies order and are delivered medication every day. This results in a daily effort for order placing and reception of goods. This process is mainly done by hand by the pharmacist and/or the laboratory technicians and the cumulative work represented, at best, an hour a day.

By making a calculation based on the average annual salary of $ 60,000 for a lab technician (or roughly $30/hour), multiplied by the number of stores, multiplied by the number of days in the year when there is reception of merchandise, we arrive at an astronomical sum: more than $1.5 million per year spent on an inefficient process.

In this case, a mobile solution, supported by portable barcode scanners will reduce the daily process to 10-15 minutes per branch. The investment for the development of this solution would come in at between $50,000-$60,000, and would result in a reduction of operating costs of over $1million per year!


•  Food Distribution

In another case, Regitan an important player in the world of food distribution was trying to solve a business problem experienced during their trade shows.

This event, where a number of significant customers are invited to come and meet suppliers resulted in a tremendous amount of clerical work. The orders that resulted from the trade show were all taken on paper forms. The effort required to enter the sales orders into the system after the fact was significant and very expensive.  The implementation of a mobile solution eliminated all manual interventions.

If we solely take into account the resource savings per event, the initial investment for the mobile solution will be paid off within 3 trade shows. The other benefit resulting from the use of the mobile solution is a much more quick and efficient order taking process. This had the effect of allowing Regitan to exceed sales targets for the tradeshow.

You can find more details on how Regitan, winner of the NACDA 1st prize in its category, increased its volume of sales order with the implementation of a mobile application in this article.

 

Keep in Mind

Lines of business leaders today are caught in the crossfire: demonstrating the ROI of their actions and doing more with less. Although the justification of investments is a key concern for companies, the reality of users and consumers demands means that the cost of inaction is already beginning to be more significant than the investment needed to implement mobile solutions. There is a gap that has already begun to widen between companies that have seized the beginning of the mobile wave and those that have not yet made the leap; the former are growing and expanding, while the other will often show signs of stagnation. 

 10 reasons your business needs mobile capabilities now

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Topics: Mobility

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The right use of technology addresses business challenges and drives business growth in all areas of an enterprise.  We hope this blog will offer insight into developing strategies and tactics to enable you to identify those key drivers of growth and keep pace with and anticipate the rapid technology change of today.

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