Investing in Mobility

E-mail access, typically the first mobile application requested, could be considered a non-discretionary enhancement in certain industries (i.e., mobile sales/field force), though for most it is a discretionary investment. Confusing end-user demand for "cool" technology with real business value is a common mistake, leading to higher IT costs with little real payback. Nevertheless, IT organizations must also weigh the value of satisfied end users.

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 enhance 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. Here, ROI metrics might include the displacement of people (e.g., fewer call center customer service reps), an increase in productivity, elimination of duplicate process, and a merger of job tasks. Potential payback due to expense savings should be in the 12- to 18-month range.

Investments: Supporting Competitive Differentiation to Deepen Market Penetration. Investment and venture projects are typically B2C projects where the payoff is usually described in longer-term business metrics. Mobile commerce (see GNS Deltas 933, 26 Nov 2001, and 940, 14 Dec 2001) is still a nascent industry in the US, but mature in Japan and emerging in Europe. Typical metrics for investment-type projects include customer acquisition, increased customer wallet share (the share of a customer's business within the market), and increased customer intimacy, switching costs, and market share. Payback for investment spending, often through revenue or market share versus cost savings, should be 18-36 months.

Venture: Supporting Major InnovationInnovation to Broaden Reach Into New Markets. General Motors believes it could potentially get more income during the lifetime of a car from the telematics services sold though the use of a dashboard computer than from the sale of the vehicle itself. Mobil Oil is expanding the use of its wireless Radio Frequency Identification (see GNS Delta 815, 15 Nov 2000) "Speedpass" payment system to other merchants, starting with McDonald's. These types of investments are aimed at expanding revenue opportunities beyond 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 extensive testing and at regular intervals. Metrics for venture ROI include market share in new markets, incremental revenue, and customer attainment. ROI will generally be measured in two to three years. Alles zu Innovation auf CIO.de

As the technology improves, applications that have an unacceptable ROI should be reconsidered periodically, as aggregate project costs continue to decline 20%-30% annually.