Finding the ROI in mobile computing technology

Avoid the cost drains and change-management pitfalls that can dilute the ROI of mobile computing devices.

2011 may go down as the year enterprises got serious about smartphones, tablets, and other mobile computing technology. 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 LL...

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ERP vendors are responding with mobile extensions to their applications, and in some cases going even further. Prototypes of broader technology 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 mobile computing challenges.

 #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 mobile computing 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 departments for supporting, maintaining and securing mobile devices. Rapid advances in mobile technology 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.

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