META Report: Invest in Mobile With
An Eye Toward ROI

Extending applications to support mobile employees will consume considerable resources

during the next few years. Given the extensive vendor hype surrounding mobile

(particularly wireless) applications and technology immaturity, IT organizations must

establish business value, control project risk, and ensure acceptable return on

investment. Global 2000 IT organizations must prioritize projects based on an

overall portfolio management approach to maximize overall spending.

Currently, 15%-20% of organizations have

some mobile projects underway. We expect this number to rise to 65% by 2005. During

2003/04, we believe pressure from business users will drive IT organizations to

migrate these applications to wireless connectivity – with a concomitant increase in

cost and complexity. Initially, applications will focus on high-transaction-value

business-to-employee (B2E) activities, migrating to business-to-business (B2B) in 2003

and to business-to-consumer (B2C) in 2004, as the cost of deployment lessens.

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Technical constraints to mobile application

development include slow networks, lack of coverage, immature devices, and a confusing

and largely undifferentiated market for mobile application servers. Software tools and

mobile application servers from top-tier Web application vendors will likely catch up to niche vendor offerings

in 2002/03, providing simpler and more seamless integration of mobile devices to

existing applications, and at lower overall cost. By 2005/06, we expect enterprise

application vendors (e.g., SAP, PeopleSoft, Oracle) to have fully mature mobile

options, which will limit the market for small mobile middleware vendors. Through

2003/04, given the technology risk and rapid rate of technological change, IT

organizations will need to look for rapid ROI from mobile investments (i.e., over

12-18 months).

IT groups should segment mobile application

investments into five key categories:

  • Core/Operational Expenses:

    “Keeping the lights on.” Few mobile applications are truly a core expense except for

    those in industries such as services, logistics, and delivery, where highly mobile

    personnel must stay connected in real time or near real time. However, some

    investments in mobile applications that replace existing business-critical systems

    could be considered core (e.g., e-mail for mobile professionals). Replacing custom or

    specialized wireless devices with off-the-shelf, rugged products during normal

    replacement cycles should be considered a core expense. Key metrics for

    core/operational expenses are cost savings over more traditional technology and a

    better strategic fit with future plans.

  • Non-Discretionary Enhancements:

    Supporting organic growth. A non-discretionary project focuses on enhancing

    core “run the business” processes and productivity. Mobile projects that replace paper

    forms improve information accuracy, reduce latency, and eliminate duplicate processes

    (e.g., customer site insurance applications). Metrics for non-discretionary

    enhancements include an increased number of tasks completed per day (more

    sales/service calls per day); reduced information latency (i.e., information gets into

    the system immediately versus not being available for days); reduced inventory (better

    real-time sales and delivery information); increased accuracy (e.g., elimination of

    double-entry keying); and reduced age of accounts receivable (e.g., faster billing

    information). E-mail access could be considered a non-discretionary enhancement in

    certain industries (e.g., mobile sales/field force), though for most organizations it

    is a discretionary investment.

  • Discretionary Enhancements:

    Supporting basic business growth. Beyond the expenses for basic “keep the lights on”

    functions, businesses must also invest in enhancements that facilitate business

    growth. Mobile applications that provide enhancement of customer self-service,

    line-busting (e.g., roaming check-in at airports), telemetry for remote diagnostics,

    and real-time dispatch of jobs could be considered discretionary enhancements. Metrics

    for ROI in this category might include the displacement of people (e.g., fewer call

    center customer service representatives), an increase in productivity, faster response

    to customer requests, elimination of duplicate process, greater customer loyalty, and

    a merger of job tasks. In some cases, these expenditures might be driven as a

    competitive response to market pressure. Mobile business intelligence applications to

    support field-oriented management typically fall into the discretionary category.

    Potential payback due to expense savings should occur over 12-18 months.

  • Growth: Supporting

    competitive differentiation to deepen market penetration. Growth/investment and

    venture projects typically have longer term payoff (three to five years). Typical

    metrics for investment-type projects include customer acquisition and increased

    customer wallet share (the share of a customer’s business within the market) as well

    as increased customer intimacy, switching costs, and market share. Payback for

    investment spending is often through revenue or market share versus cost savings, and

    should take place within 18-36 months. These projects typically involve customers in

    either a B2B or a B2C environment.

  • Venture: Supporting major

    innovation to broaden reach into new markets. Implementations of telematics in the

    automotive industry (i.e., wireless services, often location-based, delivered to

    vehicles to provide improved comfort, safety, productivity, or mobility) have the

    potential for significant revenue (by 2005/06). Wireless identification systems

    already in use in some gasoline stations are also examples of venture applications

    (e.g., Mobile/Exxon SpeedPass radio frequency identification tags). These types

    of investments are aimed at expanding revenue opportunities beyond their traditional

    markets. Pioneers in these wireless technologies have the potential for significant

    rewards, but only if they control the risk inherent in exploration. Venture projects

    must constrain risk by implementing disciplined project management and by testing

    extensively and at regular intervals. Metrics for venture ROI include market share in

    new markets, incremental revenue, improved customer attainment/loyalty, and reduced

    customer churn. ROI will generally be measured over three or more years. Companies

    must view such projects as ventures that are similar to a new company startup and

    should manage these efforts according to a business plan established upfront. Many of

    these programs are started as pilots with a select group of users (e.g., regional,

    specific business unit, top 10% of customers), with the programs then being expanded

    once the bugs are out and the business or market plan is fine-tuned.

After segmenting wireless projects

(including proposed projects) into the above categories, IT organizations must adjust

the overall portfolio to fit the business strategy. For example, a struggling company

in a poor economy may choose to severely limit or eliminate all but core and

non-discretionary projects. On the other hand, a company in a fast-growing industry

must have some growth/investment and venture projects, regardless of economic

conditions, if it is to meet future growth targets.

Business Impact: Organizations must adapt

project portfolios to business strategy and fund discretionary, investment/growth, and

venture projects based on growth expectation.

Bottom Line: Most Global 2000 companies

should focus on core and non-discretionary mobile projects with rapid payback (over

12-18 months). Venture and growth/investment projects (if any) should be viewed and

managed as part of a strategic effort to target company growth.