Mobile Computing Business Cases
Developing a business case for a mobile computing project
is a serious and complex exercise. It requires analysis of both costs and benefits from undertaking
such a project. First of all, there are a number of ways in which you can
evaluate IT investment. While some of the methods are qualitative,
most financial officers want quantitative analysis. In fact, in a
recent press article, John Berry, an independent consultant suggested
four different approaches:
Treetop : These metrics,
primarily financial, look at high-level impact of any investment,
including It on the profitability of the corporation. We do not see
any difference from our suggested approach.
Pure Cost: Different consulting
companies have suggested TCO (total cost of ownership) and other
acronyms like Gartner's NOW (Normalized Cost of Work Produced.
TCO emphasizes support and other hidden costs.
Holistic Approach: Balanced
scorecard approach to any IT expenditure. This balanced scorecard
aligns a project's accomplishments with corporations key strategic and
performance goals by measuring several indices (e.g. financial,
customer, customer retention, internal operations, employee morale,
Financial ; Most important
attribute that considers tangible costs and benefits in terms of
reduced costs and tangible benefits that can be translated into dollar
MobileInfo's Recommended Approach
: Ours is a hybrid approach that takes a holistic view of management
decision-making process i.e. Cost and Benefit Analysis combined with
other intangible decision-making criteria that is assigned a given
amount of weight in the overall decision matrix. We suggest that
this criteria and weight should be decided by the senior
management. This is the methodology that we have described and
advocated in our "Systems
Investment (ROI): a general-purpose phrase defining the
business value of a mobile computing project. In more specific
financial terms, it means the profit or difference between
benefits and costs divided by the total investment in dollar
terms. It is generally a percentage figure. In traditional
terms, products generate revenue and one uses that number to
define ROI. In IT project terms, it is really the benefits or
cost savings by a specific initiative divided by its capital
cost over a period of time.
Net Present Value (NPV):
Cash inflows (benefits) less cash outflows (investment or
project costs) expressed in present dollars, allowing for
interest costs of the capital requirements.
Internal Rate of Return (IRR):
rate at which the present value of cash inflows equals cash
outflows.- or rate at which net present value is equal to
zero. The IRR must be higher than a predefined management
policy in a particular industry. This takes into account
expenditures on other competing initiatives in a specific
Payback: It is the
period that it it will take for an investment to pay for
Costs and Benefits Analysis
While costs of hardware and software for these projects are less difficult
to estimate, application development, application integration, and wireless network
usage costs are far more difficult to predict. Estimation of benefits is
even more difficult effort because many of the potential benefits from
mobile computing and wireless applications result from mobile
gains, business process changes (elimination of sub-processes), superior customer service and competitive advantages.
We suggest taking a careful systems engineering cum business
analysis approach to developing a business case in an iterative fashion i.e. a preliminary
cost-benefit analysis based on rules-of-thumb estimates should be undertaken
first and if it appears promising, a detailed refined analysis
with more accurate estimates should be undertaken.
For a detailed analysis of the subject, please refer to
Chapter 4 of "Mobile Computing - A Systems
Integrator's Handbook" by Chander Dhawan and published by McGraw-Hill.
Since the book is presently out of print, you may buy a soft copy of
this from this site. The soft copy is included when you buy the
templates described below.
For mobile computing solution costs, click on
Mobile Computing COSTS.
For mobile computing solution benefits, click on Mobile
Business Case Template
For obtaining a mobile computing template (in the form of an
EXCEL spreadsheet), click here. Please note that there is a
small charge for this service - the cost is well worth the time it will save you.