Total Cost of Ownership - The Wildcard in the ROI Deck
by: Craig Settles

Total cost of ownership (TCO) is popping up more frequently in discussions and articles about ROI for mobile applications. TCO is what it costs you for a mobile or wireless application beyond the stated costs for hardware, accessories, software, and wireless connectivity.

Quite often TCO is the cold water that someone throws on the party after an application has been installed amid the promises of reduced costs and improved productivity, then evaluated later to validate those promised benefits. Or, more likely, TCO is the torture of a thousand paper cuts as little surprise costs pop up from the very beginning of an implementation.

To put things in perspective, consider that the cost of a mobile device “represents just 25% of the TCO for a mobile implementation,” states Kristi Urich, Director, Field Service Industry Marketing for Intermec Technologies Corp.

Urich explains that much of the TCO is for support, sustaining devices’ operations in the field, and managing spare units. There’s also end user downtime in the field while they manipulate data, or try to troubleshoot and fix problems. Many companies are not considering TCO, and those that do are not identifying costs beyond deployment.”

Don’t overlook the obvious

Let’s start by looking at the most obvious contributors to TCO. These are the usual suspects, and any vendor worth doing business with should help you calculate their costs. Some vendors will have factored these costs into their pricing plan.

You likely will have learning costs regardless of how easy a vendor tells you their application is to use. Even if end users can pick up and run a mobile app within five minutes, the people installing and supporting the backend of any major software deployment will need to be trained on these products.

Besides costs for instructors, manuals, time in classes and other formal training expenses, people need time to learn how everything works. People have on-going questions, so whether they’re on hold with the vendors’ customer service reps or calling your IT staff, this is lost productivity time.

Your pilot project should include calculations for learning costs. Once you figure out what these are likely to be, determine if the vendor or your IT people can create intranet content that’s easy to navigate and facilitates quick learning/review. Luckily software vendors appear to be making things simpler, but the more features vendors cram into mobile devices, the greater the learning curve.   

Software programming for in-house apps, customizing “off-the-shelf” apps, upgrades (both the price and the effort to physically upgrade devices) and support contribute to TCO. There are also costs for new security software or upgrading existing security programs to support mobile access, and managing passwords on mobile devices for current, future and soon-to-be-departed employees.

Almost daily there’s news about software tools and features that facilitate both development and deployment of mobility software. AppForge in Atlanta is one of the veterans in this area. These capabilities should be part of any vendor requirements lists you create, and the pilot project should assess how well these tools control costs.

The sometimes forgotten TCO factors                       

Change management. This is probably one of the least talked about costs of mobile deployment. But new technology that significantly alters the way people work demands that you adequately prepare to deal with the resulting changes or face possible operational struggles that eat up time, cause employee resistance and otherwise negate some or all of the anticipated benefits of mobility.

As an example, shifting more data access to the field can (or maybe should) result in more decision-making by people not accustomed to this role. If you don’t spend time and money preparing them for this new responsibility, they could make bad decisions that are more costly.

Deploying mobile devices that offer the benefit of greater accountability for management can produce fear among employees of intrusion and micro-management that discourages them from using the technology. Your TCO then includes the cost of un-used products

Effective mobile applications for field service and sales people can dramatically increase the amount of free time that home office staff have because driver dispatch or forms processing tasks are eliminated. If you don’t plan ahead of time for reassigning them to other beneficial tasks, you risk the cost of having people lounging around or firing them.

Back-up hardware. Mobile devices are subject to damage, theft, irreparable technical glitches and eventual obsolescence, plus the administrative overhead and loss of productivity while replacing the units. The longer it takes to replace a unit, the greater the productivity loss. The larger and more far flung your mobile force, the greater the admin overhead.

Though it may take six to 12 months before you can gage what your replacement rate will be, you should probably budget to order 5% to 10% more devices than the number of people you plan to equip. Configure these devices so they’re ready for same day or overnight delivery. This upfront expense should save a lot of downstream costs.

Hardware standardization. If you deploy new PDAs or phones to users who already have devices, they face the onerous task of re-inputting all of their contact data unless you enable them to sync new devices with their existing data. If you don’t plan for this, your TCO can suffer from a) lost productivity while each person re-keys hundreds of contact records, or b) users’ outright rejection of the device and any apps associated with it.

Even if you equip employees with the same devices initially, Intermec’s Ulrich believes that having mixed devices is inevitable. “The market life of mobile devices is 11 months,” she observes. “So by the time you start replacing units three or four years later, the new devices will be different than the originals.” Enforcing organization-wide hardware standards is also hard because different workers’ mobile needs require different devices.

One way to resolve TCO pain points is with software. Try to find applications that can shoulder most of the workload for enabling multiple OS’ and devices to access and use the same back office data. You also want software tools that facilitate multiple device management.

Keeping TCO in check

With thoughtful planning and an effective pilot project, you can find ways to control or remove factors that contribute to high TCO. 

Control frequency of access. Always on, anywhere/anytime access is oversold in some quarters because many mobile workers just need to connect a couple of times a day to receive and send information. You have no wireless connection charges if employees sync data via a cradle and desktop or laptop, or relatively small charges if they wirelessly connect just two or three times a day.

Since your TCO rises if wireless access increases, use your pilot project to nail down connection costs and your negotiating skills to get a predictable rate plan. If you can’t get a one-rate, all-you-can-use data plan, design your applications to send the minimum amount of data possible.

Connection charges can be expensive if workers need to travel into areas not covered by one carrier (roaming or multi-carrier costs) or need coverage in rural areas that carriers don’t cover (satellite service). Keep an eye on new hardware being announced that enables the devices to auto-detect the fastest and cheapest wireless network in an area and switch connections to that. Long term, this offers sizeable TCO benefits. 

Technology independence. You can reduce TCO by designing mobile apps to be as technology independent as possible. Many applications facilitate workers’ ability to collect, process, send and/or receive text data, and often not in huge quantities. Subsequently, you don’t need devices with the latest bells and whistles or blazing fast wireless connections.

While the backend software driving mobile implementation may be complex, the data being transmitted shouldn’t be. So if mobile workers will be doing the same text data-oriented tasks six years from now that they’re doing today, build a functional app for a basic device. Then you only need to buy new hardware when devices stop working, not because you’ve locked into obsolete feature sets.

At some point, you may have to decide if it makes sense to ditch the PDA for a laptop if the amount and quality of data and images you need to input or view is high. The size of PDA screens, keyboards, storage space and battery lives are limited and will be for some time. If your applications will constantly hit or break this technology ceiling, your long-term TCO may benefit by putting more money in small laptops with wireless access.

Multiple vendor management. You can minimize both TCO and management headaches if you appoint, hire or sub-contract someone to deal with the various vendors, carriers and service providers involved with most mobile implementations. Planning, technology compatibility, project delivery times and billing are some of the areas where potential hidden costs are multiplied manifold when you work with different providers.

One last thing to keep in mind about TCO – it’s a direct spawn of Murphy’s Law. If technology deployments can cost more, take longer to complete and uncover the unexpected, they will. Your best defense is proper previous planning, followed by a good pilot project, and insured by perpetual vigilance.