How to Estimate the ROI of Mobile Apps for Employees

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1 G How to Estimate the ROI of Mobile Apps for Employees Published: 8 January 2013 Analyst(s): Richard M Marshall Mobile apps transform business processes and reduce costs. Their development and operational costs are different from those of traditional apps, and, although some are well-understood, mobile apps are evolving around new form factors, so IT leaders should analyze ROI models to prioritize projects. Key Challenges It is often difficult to determine the ROI for employee-facing mobile apps that do not fall into well-defined categories, such as sales and field force automation. Mobile app creation is so different from other enterprise application engineering that the multidisciplinary costs of development and operation are often poorly understood. Cost savings from mobile projects are associated with process transformations, making them difficult to assess, especially because most organizations have not baselined the time and effort required by these processes. Recommendations Define cost models for the mobile architectures in use in your organization. Define project benefit metrics based on efficiency, effectiveness and error reduction. ROI models for different styles of app should be developed using the cost and benefit models, as mobile becomes an innovation driver and a major delivery platform for enterprise apps. Introduction Enterprise mobile apps are moving from their conventional roles in mobile worker support into new areas. Many of these new functions are driven by consumerization and the adoption of media tablets. Lacking existing models, it is difficult to determine appropriate budgets for these mobile projects, or to know where best to direct further investment. Hence, it's difficult to assess the

2 economic value of a mobile app or service. Gartner will help you develop a framework for analyzing costs, and assessing the potential revenue, cost savings and intangible benefits derived from mobile app deployment. This will support the creation of a strong business case. Analysis Understanding Mobile Applications Costs Organizations often have several mobile apps, typically in the well-established areas of sales and field force automation. However, familiarity with mobile apps on personal smartphones and media tablets is driving wider demand for mobile access to enterprise systems. Styled like consumerfacing apps, these new mobile enterprise tools often lack well-understood economic models. This situation is likely to continue for several years, as the market evolves, so IT leaders need to extract common elements from potential architectures and to understand their costs. Consumer-style mobile app or website development is a multidisciplinary activity, involving many skills that are likely to be new to many organizations. Mobile apps also require opening up enterprise resources that would traditionally have been protected on secure networks, which will affect a potentially wider range of IT systems than might be first anticipated. The development costs of a mobile project can be broken down as follows: Staffing Whether internal or outsourced, you will need new development skills. Many projects start out with an internal staffer who has a personal interest in mobile; however, largescale professional mobile development requires specialists. Consumerization has pushed user expectations of mobile apps to high levels, and IT departments will have to respond. Engaging designers experienced in working with touchscreens and multiple form factors will help employees engage; however, the market for such skills competitively pits IT teams against consumer-facing apps developers. This is likely to raise the cost of development in the short term, as will the need for regular training and skills refresh required by the rapid evolution of mobile application development platforms, technology and expectations. Tools Native mobile development uses new languages, APIs and paradigms, while hybrid and cross-platform tools use evolving HTML5 components. You may have to select a new vendor if you are not already delivering mobile apps, because conventional application development tools are insufficient (see "Magic Quadrant for Mobile Application Development Platforms"). Testing Limiting deployment to certain approved devices will reduce the scale of testing required for enterprise deployments. However, mobile testing remains a complex, multifaceted activity. Most organizations do not allocate a sufficient budget for good mobile test coverage (see "A Guide to Mobile Testing Tools and Services"). Devices App quality is greatly enhanced by being developed and tested with frequent use on actual devices, rather than on emulators. Hence, development teams need to acquire Page 2 of 8 Gartner, Inc. G

3 devices from the range they're looking to support. We recommend limiting that range to cap this cost (see "Use Managed Diversity to Support the Growing Variety of Endpoint Devices"). Integration The lack of suitable integration points is one of the most common issues encountered in mobile development. This may be exacerbated by the need to expose APIs to public networks, if the mobile apps are to be used outside the corporate network (as is the case for most field workers). If this becomes an issue, consider the use of middleware platforms to open up systems. Additional costs may be incurred from the opening and securing of back-end systems that may be amortized as part of a general move to multichannel delivery. In addition, containerization or virtual private network solutions may be required to provide private connectivity. Mobile app operational costs also differ from those of traditional enterprise offerings. The following are some of the likely costs: Licensing Many mobile app platforms and packages have associated volume-based licensing fees. These fees can grow rapidly with app scaling, and we advise organizations to ensure that there are appropriate break points in the pricing, when anticipating large deployments. Confirm the scaling with your vendor, and ensure that it's covered by your contract. Cloud Cloud services are now an important option for most mobile app development platforms providing middleware. Although this is a low-cost route for small volumes, it can rapidly become expensive with service growth. Again, ensure that your vendor puts the scaled pricing in your contract. Mobile Data Costs Enterprise mobile apps designed to be used outside the corporate Wi-Fi network create a hidden cost, whether on owned devices or as part of a bring-your-own-device program. Apps on those devices will incur data charges, especially while roaming, which are reclaimed via expenses or a different cost center. These costs must be taken into account in the overall operational cost. Enterprise solutions, such as Tangoe, help manage and control these expenses. Efficient design of apps and middleware can help reduce data costs, and we recommend that this be factored into architectural design. Infrastructure A move to on-premises use of mobile devices will cause both a jump in use of Wi-Fi and the need to extend coverage to all areas where the apps are to be used. Implementation of mobile apps in new departments means extending support into areas of facilities not previously covered, such as warehouses and workshops. However, the impact does not always stop there, as moving devices outside of the corporate network and including extra cloud services create an overall increase in bandwidth demand from the data center. Organizations must factor in the cost of potentially upgrading most aspects of their networking bandwidth and equipment to ensure sufficient headroom to provide quality of service in an expanding market. Support and Training As the range of supported systems and device types expands, additional support staff and training will be required. Support staff may also need access to new devices for familiarity training. Gartner, Inc. G Page 3 of 8

4 Updates With mobile comes an expectation of regular updates, as well as the need to support and test under the regular revisions of mobile operating systems. Therefore, apps should not be thought of as one-off developments, but ongoing work streams. This may require a significant rethinking of application development processes and governance. By 2015, four times as many mobile apps will be developed as traditional PC apps today. Before they become overwhelmed by demand, organizations must plan around these new cost models. Calculating Benefits, Cost Savings and Revenue The ubiquity of mobile means that it can have many touchpoints between organizations and their staff, creating many opportunities for benefits. Three good overarching measures for mobile projects are efficiency, effectiveness and error reduction. These "three Es" can be applied to most projects to derive specific metrics. Efficiency Mobile can help organizations be more efficient with resources and assets: Eliminating Hardware For some roles, the mobile device can replace a more expensive piece of equipment. This may involve swapping a laptop for a tablet, or replacing custom hardware with a cheaper consumer device. Field assets such as kiosks can be eliminated completely. Bring-your-own-device programs can eliminate the cost of employee devices; however, there are many other associated costs, and economies are not guaranteed. Eliminating Paper Handling and Printing Direct data entry on a low-cost consumer device can continue the elimination of paper at much lower cost than previously possible. Selfupdating, digital, searchable catalog apps also remove the need to print and ship paper catalogs. These costs can readily be calculated by reviewing print costs. Reducing Service Visits Mobile apps integrated with enterprise assets, such as continuously operating plant or vending machines support remote monitoring. This reduces downtime and field service visits. Economies can be measured by tracking improvements in field staff movement. Cutting Internal Communications Costs Self-service via mobile apps enables employees to establish work patterns, resolve issues and get answers to questions from anywhere at any time, reducing the load on administrative staff and contact centers. Additional economies can be achieved by lowering telecom costs by transferring activity from voice to data, offering better staffing metrics, and eliminating end-of-day and end-of-shift workload peaks. Using Idle Time Mobile apps can enable both people and machines to use otherwise idle time. and writing up visit notes while traveling are classic examples, but there are many more. Mobile monitors on equipment can use idle time too for example, dispensing machines reporting on purchase patterns, as well as outages. New Metrics Because mobile apps live with their users, you can start gathering new metrics that were not previously available. For example, a sales media tablet app helping financial services representatives explain complex products can gather additional information, such as Page 4 of 8 Gartner, Inc. G

5 travel times and routes and dwell times on particular product features. These could enable sales managers to allocate territories better and help product managers to define better sales pitches. Effectiveness There are many ways in which mobile apps can enable employees to be effective in their roles. Mobile is perhaps the most pervasive example, enabling staff to respond, while in transit and after hours: Process Transformation Mobile apps enable business process re-engineering in ways that were not previously possible for example, enabling maintenance crews to receive their work orders directly without having to collect a paper roster from an office. However, the difficulty of implementing the changes (rather than the apps) should not be underestimated. The benefit is only available in the longer term, once the pain of adoption has been passed. Metrics must take into account long-term impacts, rather than looking for short-term gains. Driving Revenue Sales and field force automation have well-defined metrics, such as calls per week and time to repair, which predict increases in revenue. Revenue benefits can also come from other uses. Enhanced digital catalogs can increase sales by enabling sales staff to help customers understand available products better and more quickly. Replacing conventional point-of-sales technology with tablets can support a more personalized sales experience, as well as create cross-sell and upsell opportunities that were not previously possible. Work with your business peers to estimate the revenue improvement by employee and multiply. The peremployee approach forces a more realistic estimate than the common top-down wave-of-thehand estimate, and it forces developers to target specific user behaviors for improvement, rather than making vague guesses. Intangible Operational Improvements Enterprise mobility has the power to affect how processes and customer interactions happen, beyond simply changing the steps taken. Mobility can change the nature of the interaction for example, using a media tablet with a customer, instead of a laptop, changes the relationship between salespeople and prospects. These kinds of changes are often the most transformative, but require innovative rethinking of the process that is being mobilized. The intangible value of such apps may exceed the numerical value and may need to be assessed, using different key performance indicators for example, increasing the amount of time spent face-to-face with clients, rather than the number of sales calls. Error Reduction Error reduction is achieved through the elimination of intermediaries: Reduced Cycle Times Mobile apps allow information to flow through an organization more quickly: Orders can be taken, processed and fulfilled more quickly, allowing for faster billing and better cash flow. A simple way to assess the impact of this is to measure how much time people waste waiting for information and converting a portion of that data into improved productivity. Direct Data Entry When employees can key, photograph or scan data directly into a mobile device, there is no risk of miscommunication, and this eliminates the need for paper to be Gartner, Inc. G Page 5 of 8

6 scanned or keyed, or for information to be dictated over the phone. Intelligent forms can further reduce error by automatically providing information choice based on context, such as location or situation. Automated Parts Control Mobile apps provided to field staff can ensure that they are carrying the correct parts for the assets on which they will be working at the start of day, reducing return-to-base requirements. Mobile apps built into high-value assets can provide a manifest of parts needing replacement before the service agent leaves the depot. Automated Process Active mobile workflow automation, as well as advanced approaches, such as augmented reality, enable workers to operate correctly, without missing or repeating steps. The same high-value asset's internal monitoring can reduce the amount of time the maintenance agent needs to locate a fault, guiding them via an augmented-reality view of the equipment. Always Up-to-Date Reference Material Replacing paper with media tablet apps ensures that employees are always working off the most up-to-date reference material. Even when paper updates are sent out, there is no way to ensure that they have been filed and the original content has been destroyed. With an app, employees are directly connected to the master copy at all times. This is not a comprehensive list of potential opportunities. Work with the business and end users to uncover other business processes that could be improved through effectiveness, efficiency and error reduction. Processes that are data- or communications-centric may be opportunities. Your industry sector can determine which of these aspects will apply to your case, so pick the aspects that apply to your apps. Building an ROI Case Mobile apps are set to become a major focus of enterprise application development. Creating bestpractice cost and benefit templates for each of a small number of typical mobile architectures will be an essential planning exercise. Identifying a small number of tools and vendors enables costs to be estimated, and the metrics derived from the three Es can be used to assemble a case based on derived benefits and values. Plugging project-specific values into your templates makes the calculation process fast and explicit, calling out issues to watch for in assessing the economic benefits for each new mobile app. Consider including intangible value, as well as hard ROI, because both can be a part of the business case. Mobile value may exceed ROI, for example in compliance. We consider there to be four levels of mobile app importance. Page 6 of 8 Gartner, Inc. G

7 Table 1. Mobile Value Hierarchy Level Critical High Medium Low Description Legal or compliance for example, lone worker support or utility outage coverage Net new revenue for example, improved or direct sales apps Cost savings for example, removal of catalog print costs Soft targets for example, first-mover advantage Source: Gartner (January 2013) Use this hierarchy to test the value proposition of each app as part of your business case. Mobile has the power to move from a cost center to a driver of business innovation. Realizing this key role in business transformation requires integration with existing IT budget cycles. Using the best practices in this research is a major step toward that goal. Recommended Reading Some documents may not be available as part of your current Gartner subscription. "Magic Quadrant for Mobile Application Development Platforms" "A Guide to Mobile Testing Tools and Services" "Predicts 2013: Application Development" "Building Brilliant Business Cases" "Use Managed Diversity to Support the Growing Variety of Endpoint Devices" Gartner, Inc. G Page 7 of 8

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