Process & Strategy: Minimize TCO To Maximize ROI

By  Craig Settles — September 04, 2009

In the latest installment of our ongoing Process & Strategy Series, industry analyst Craig Settles asks leading enterprises and government organizations for their top tips around managing the total cost of ownership of your mobility deployment.

Check out other installments in this series:

TCO: Don't Let Hidden Costs Undermine Your Mobility Investments

You can't have good return on your mobility investments without understanding and controlling total cost of ownership (TCO).

TCO is everything it costs you to buy, deploy and manage a mobile application, on top of the price of devices, software and initial services. TCO encompasses those stealth expense items in your ROI equation, some of which you won't see until well after deployment.  Once the infrastructure is in place and devices are in the hands of your users , it's often too late to do anything but suck up the costs.

Any TCO estimate is a best-effort calculation. "Our TCO was greater than we expected and we had even expected things to cost more than initially promised," recalls Dan Heykoop, EVP of trucking company Budway Enterprises Inc. "We ended up having a programmer on this for eight months when we thought it would only be two [months] given what simple data we needed."

The unexpected is what typically drives up TCO. Examples include:

  • An upgrade to the software that the mobile devices are being used to access creates an incompatibility with the devices.
  • Greater-than-expected demand for additional applications requires the purchase of new servers.
  • The service, support and upgrade of devices and apps of an acquired company places new demands on IT teams, helpdesk and managers.

The good news is that many of the elements and expenses of deployment and mobile application use that contribute to your TCO can be eliminated or contained if you become aware of them during the pilot.

 

Throwing light on TCO

In the initial planning stage, estimate TCO based on information gathered during vendor sales presentations, talking with others in your industry who have implemented similar applications and getting feedback from people within your own organization. Evaluate the costs associated with the technology, as well as the cost of changes resulting from the application.

Brian Sawyer, an Operations Manager within the Lands Division of the Alberta, Canada provincial government says, "We had to overhaul protocols and processes we've had for a long time.  We have to engineer a new security procedure to do this. Unfortunately, it's more than just buying a software application. IT and managers are devoting a lot of time to this."

Pilot projects test TCO estimates and uncover new costs. "After a six- to eight-month pilot, we looked at what kind of issues were going to arise when we rolled this out to 300 field people," says Sawyer. "There were things we hadn't anticipated when we started the pilot."

TCO issues aren't insurmountable, so long as organizations make sure personnel get their minds around solutions that can keep costs in line. Managers and IT teams need to create a list of questions that they want the pilot project to answer that tie directly into TCO.

Here are just a few examples of the types of questions to consider during the pilot phase:

  • Will durable carrying cases reduce device replacement costs?
  • What additional accessories, such as batteries or a storehouse of spare devices, will this solution require?
  • How much training and support will our workers need?
  • Has the pilot project brought to light new features that will be added to the final application? If so, how much will these additional features add to the TCO?
  • Are the data that workers are expecting to access via this mobile solution -- for instance, customer names and addresses -- accurate and up-to-date, or will additional costs be incurred in cleaning up these data?

Particularly beware of application creep. Create a paper trail between the project team and their managers. Teams that do not do this open the door to unintended features creeping into the application. A project that should cost $100,000 ends up with a $140,000 TCO. Document every request for a new feature and ask managers to sign off on the additional expense. Forcing the sign off keeps costs in check and minimizes sticker shock.


Keeping the lid on TCO

How well the business and the IT sides communicate during the pilot and beyond also controls TCO. Business managers can see the changes that mobile applications bring to day-to-day operations. Supervisors who ride with workers on field assignments can pick up on little things that cumulatively have a big TCO impact.

"We initially failed to budget for backup accessories, such as batteries," says Steve Vitolo, Law Enforcement and Judicial Programs Manager with the Oregon Department of Transportation. "Once you put mobile devices in the field, you find you shouldn't buy consumable grade products for law enforcement because officers are hard on equipment. Saddlebags on motorcycles are black and the heat becomes so great that eventually units fail because the batteries get too hot."

Executives usually spot the major contributors to TCO. But to find -- and address -- the subtle things that matter, insist that department managers set up formal procedures for getting continual feedback from mobile workers during the pilot. Focus on what happens when a change, glitch, replacement or other cost these workers identify is scaled across the organization upon full deployment. A mere 20 minutes spent in extra training time because of poor documentation is very expensive if 1,000 people get the application.

Encourage managers to tap their colleagues to gather additional information that can resolve TCO issues. Vitolo recommends they "find someone in a similar agency who's been running the application for a couple of years. This person can tell you everything you may ever see. Every state has that one guy who knows it all by having done it all."

IT also has a role in managing TCO. "IT should insist on getting clear service level objectives that are aligned with corporate strategy," says Oliver Tsai, Director of Information Technology at Sunnybrook Health Sciences Centre. "Your ability to control costs is only as good as the clarity of these objectives. Overall, our TCO was far less than we expected since there was practically zero user training, which speaks to the product's functionality."

IT should follow the digital trail from where data are collected to where they are finally stored. Identify everyone who touches, or should touch, these data throughout the organization. Bring them together to discuss and refine your mobile application plan. This exercise defines ways to integrate technology, share data and streamline procedures.

Finally, sort out the true capabilities of any mobile technology you plan to purchase. "Give honest consideration to what features the system you're evaluating really has available," says Heykoop of Budway Enterprises. "Separate promise from reality. What does IT have to add or change in-house, and how much time is all this going to take?"


Craig Settles is a wireless business strategist, marketing expert, author and speaker. His blog on business mobile application strategy can be found at http://roisforyou.wordpress.com

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