Increasing ROI with mobile computing

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2 Adopting into the enterprise can increase productivity and help stakeholders make more accurate, faster decisions based on real-time information. However, in order to avoid the cost drains and changemanagement pitfalls that can dilute the ROI of mobile computing devices, manufacturers must address these challenges in advance. In this E-Guide, learn how manufacturers can overcome four key challenges, and find out how one company adopted mobile applications to streamline product delivery. By Alan Joch, Contributor 2011 may go down as the year enterprises got serious about smartphones, tablets, and other. Surveys suggest a significant percentage of companies are deploying or will deploy mobile apps on smartphones this year. In addition, manufacturing will be one of the top three verticals for driving the adoption of enterprise applications for tablets in 2011, predicts the New York-based consulting firm Deloitte LLP. ERP vendors are responding with mobile extensions to their applications, and in some cases going even further. Prototypes of broader frameworks promise a future in which mobile devices, business applications, supply chains, warehouses, e-commerce sites and business intelligence systems coalesce in one big ecosystem. But before that happens, manufacturers are asking a fundamental question: How do we launch a mobile strategy that will deliver a concrete return on investment (ROI)? There still aren t any hard-and-fast formulas in this rapidly evolving mobile environment, but consultants say manufacturers can begin by addressing these four key challenges. Page 2 of 8

3 #1: Understand the business need The way to look at these devices is to first ask, What is it I m trying to accomplish, then decide how mobility can help you do that, said Jack E. Gold, president of J. Gold Associates, an analyst firm based in Northborough, Mass. The productivity payoff will be most obvious for people whose jobs keep them on the move --traversing shop floors and warehouses or visiting customer sites. The right mobile solution will keep them connected to enterprise databases and applications and allow them to update records in real time -- when a forklift operator picks an order, for example. By contrast, desk-bound workers or those at a fixed location on a manufacturing line may be better served by less-expensive PCs and terminals. #2: Avoid hidden costs Smartphones and tablets alone don t increase productivity -- they must be paired with sophisticated business applications. Unfortunately, building or buying those applications can be costly (and no, consumer-oriented app stores won t be much help). Deloitte estimates that companies spend a minimum of $5,000, and sometimes hundreds of thousands of dollars, to develop custom tablet applications, depending on their complexity. First look to an existing vendor for a new mobile extension to the core ERP system, which will reduce some development expenses. But even this option may not be cost free. Many manufacturers customize their applications to address the unique characteristics of their business processes, and these customizations will require costly additional coding for mobile access. No matter who writes the code, if the application doesn t accommodate the small format of devices, decreased productivity may eliminate any ROI potential. Gold advises companies to solicit user feedback early and often throughout the software development process. #3: Factor in on-going expenses As with any new hardware and software, mobile solutions represent a bigger investment than just the acquisition costs. New demands will be placed on IT Page 3 of 8

4 departments for supporting, maintaining and securing mobile devices. Rapid advances in mobile also will translate into frequent refreshes for hardware and software to take advantage of the latest innovations. And don t overlook end-user training costs just because tablets are easy to use. Familiarity with personal devices means people know how to navigate menus and interact with touch-screens, but companies must budget for basic training that teaches how to update customer records or track materials that are on their way to a distribution center. #4: Prepare for disaster Another potential ROI buster is the rough nature of manufacturing environments. Portable devices get dropped, they get lost, and forklift trucks roll over them, Gold pointed out. Ruggedized tablets are one answer, but these versions may lag their general-purpose counterparts by several months, and ruggedization is expensive. Deloitte says reinforced versions are three to five times more costly -- and at least twice as heavy -- as standard devices. Some mobile analysts advise manufacturers to stick with off-the-shelf models. Early availability will help companies benefit from productivity advancements more quickly, and even if a tablet has close encounters with a forklift, manufacturers can burn through perhaps five replacements before matching the cost of one ruggedized computer. But Gold encourages enterprises to look closely at ruggedized hardware. When a device breaks, it s not just the cost of replacing it, it s also worker downtime, he said. Gold estimates that the financial impact of lost productivity may be two to four times the initial cost of the hardware. The costs add up very quickly, he warned. Page 4 of 8

5 logistics management By Lauren Gibbons Paul Many manufacturers opt to use transportation services from third-party logistics suppliers to outsource their logistics needs. For a sizable minority, however, owning their own fleet -- whether trucks or airplanes -- is the best way to go for maximum control and quality assurance, and mobile logistics management applications help to manage these fleets. Source: ARC Advisory Group survey of 60 supply chain professionals, 2011 According to experts, mobile devices, including smartphones, have become the premier tools for manufacturers looking to stay connected and manage their supply chains while on the move. Truck drivers began using a variety of apps on their iphones for things such as locating gas stations with the cheapest gas prices and the best places to eat on the turnpike. Page 5 of 8

6 Rather than relying on third-party logistics (3PL) or transportation personnel to use their own smartphones while on the job, manufacturers are now investing in consumer handheld devices so their truck drivers can do everything from capturing delivery information to tracking assets to executing transactions, experts say. Luckily, building a business case for supplying drivers with the newest mobile has become almost trivially easy as costs per smartphone or tablet number in the hundreds, rather than thousands, and the potential uses just keep growing. "These devices are important if you have a private fleet," said Evan Armstrong, president of Armstrong & Associates, a consulting and analyst firm in West Allis, Wis. "Now you can use a $400 smartphone or an ipad to capture delivery information. And the cost of these solutions keeps going down." Coming as they did from the consumer space, these devices are not as hardy as traditional handheld units used in delivery applications, but they can be made more rugged with the use of cases and other protective gear. As with any handheld device, said Armstrong, "there will always be battery failures and user errors." Transportation professionals who participated in a 2011 ARC Advisory Group survey said they were most interested in using smartphones for a variety of supply chain applications (see chart). According to Steve Banker, supply chain management service director for Boston, Mass.-based ARC Advisory Group, transmitting proof-of-delivery and barcode scanning top the list of desired functions, as does track-and-trace functionality for orders, shipments, assets and mobile workers. Banker has seen a wide variety of useful logistics-oriented and deliveryoriented smartphone apps come on the market recently. For example, Banker recalled one small vendor that introduced a Software as a Service routing solution for private fleets. This is the first routing solution that uses "real-world" average speed data, according to Banker. Page 6 of 8

7 This routing solution -- accessible on smartphones -- bases its fleet plans on road statistics, which include average speeds across five-minute intervals, on any day of the week. It provides quarterly updates on the average speed on a section of road by the time of day, said Banker, which point the way to more useful mobile apps that can help manufacturers with private fleets cut costs and provide better customer experience. A recent federal ruling prohibits truck drivers from using their smartphones while moving. "That seems like common sense," said Roz Wilson, senior business analyst for Delcan Corp., an international engineering, planning, management and company. "The ruling does not prohibit the hands-free aspect. And there are a lot of apps being developed to be used in the dashboard." Smartphones are becoming ubiquitous due to the fact that they are costeffective, easy to use and can facilitate tracking, communication and process execution. Experts predict that with enhanced productivity -- packaged in a form factor that is easy and convenient to use -- mobile logistics management applications will stick around in transportation for the long haul. Page 7 of 8

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