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Wireless Projects – How to Obtain a Return on Investment Now
Wireless Projects – How to Obtain a Return on Investment Now

With investment budgets under intense pressure, the focus is firmly on productivity improvements to gain rapid return on investment (ROI). In addition, competitive pressures are making customer service and customer retention priorities. To address these requirements, organizations are turning to wireless solutions to harness existing IT investments and deliver improved efficiency, reduced inventory, improved productivity, and maximum profitability, within short time frames.

Two key technologies – pervasive devices and mobile digital services – now provide significant potential for tangible business benefits. IBM, for example, saves $200 million annually in reduced real estate costs alone due to mobile working. But to maximize wireless ROI successfully, you need to be aware of the other parts of the solution: the infrastructure to provide a secure, robust, and available service to manage the high volume of data and transactions carried over these networks; an understanding of the organizational impact that can result; and the integration of the technology, people, and processes.

Another key aspect to remember is that mobile digital services are everywhere: the wide area network provided over GSM, GPRS, and UMTS by the mobile operators; the local area network for wirelessly connecting to the Internet and your office systems while in the office or in public access areas such as airports and hotels; and the personal area network that allows devices to talk to one another wirelessly when they are in the same proximity.

This article will outline the role wireless technology can play in increasing revenue and controlling costs, and point out the key factors for achieving success. We will address key business areas for wireless deployment and provide a guide to achieving ROI.

Understanding the Wireless Potential
ROI in wireless can be achieved from both cost control and revenue increase.

The ongoing deployment of wireless solutions and equipment to employees has benefited IBM with reduced costs and a considerable return on investment. Wireless solutions have given IBM a five-year savings of US$800 million, including a two-year recovery period of project expenses. It has also provided savings of more than 30 minutes of field service engineer time per day or about three weeks per year, and field service engineer calls to dispatch have fallen by 81%. This has led to a reduction in dispatch head count by 41% and a total reduction of call-management head count by 1,400.

In a tough economic climate, focusing on cost control becomes a key objective. The broad range of wireless technology available today can underpin a wide array of cost-control options.

British Overseas Tobacco's implementation of a wireless solution connecting back-end systems among 12 branch offices and the deployment of wireless field sales tools has shown:

  • Improved and more accurate control of their entire sales process
  • 5% increase in sales visits
  • Increased sales and reduced costs as a result of better inventory control

    On the other side of the economic equation, organizations are maximizing profitability, and wireless solutions are playing an important role in:

  • Increasing the efficiency of the sales force
  • Improving interactions with business partners and suppliers
  • Enhancing customer relationships
  • Developing new products and services
  • Delivering new and innovative customer services

    Many wireless solutions will deliver a combination of cost-control and revenue-increase benefits. Areas of benefit include improved:

  • Employee productivity
  • Service quality
  • Business processes
  • Asset management
  • Customer services

    Here's how wireless technology can support core objectives and deliver significant business benefits.

    Business Areas Delivering ROI
    The benefits of wireless solutions to sales and engineering field forces are well documented, but areas such as warehouse management offer further opportunities for business development.

    Savings can be achieved by implementing wireless for field-based employees in sales/support by:

  • Maximizing the investment in existing infrastructure through provision of existing information to staff in real time. For a little extra investment, greater benefits can be extracted from existing assets.
  • Reducing total cost of ownership by providing the most appropriate wireless devices. Many mobile employees today have laptop PCs, but a wireless PDA may provide everything they need at a fraction of the cost, and reduce support costs too.
  • Improving communication for mobile and remote workers – such as delivery drivers. This helps to improve scheduling and responsiveness to customer demands. This can reduce overall costs (e.g., savings on fuel by rerouting because of traffic problems, cancelled deliveries, and so on) and improve customer service by being able to respond more quickly with information and delivery.

    There are several distinct business areas that can deliver ROI from wireless deployment:

  • Sales  
  • Customer services
  • Field service  
  • Production services
  • Human resources  
  • Asset management

    Senshukai Co. Ltd, a leading Japanese catalog sales house, recently implementated a wireless e-commerce system that has returned a respectable return on investment in sales since 2001.

    Philip Morris Singapore Pte Ltd, the Singapore arm of Philip Morris, the largest consumer packaged goods company, wanted an IT solution that would offer its sales force realtime access to their main office database. The implementation of a wireless solution has led to sales reps having accurate product and inventory data available at their fingertips, which has translated into better and more timely information being passed on to customers.

    Remote synchronization allows diaries and contact databases to be updated, delivering a significant travel-time saving, enabling staff to utilize "dead time." This is estimated to represent a 30% gain in salesstaff efficiency.

    Real-time information lets sales staff review credit status, status of last order, issues, etc., prior to visiting, and answer customer questions on pricing, inventory, and delivery times immediately. One study showed a 9% increase in sales conversions.

    Real-time direct access to corporate systems eliminates back-office input of sales information, while integration with billing systems increases speed and accuracy of invoice generation, reducing bad debts. The estimated 70% saving in input time enables administrative staff to focus on more profitable or productive business activity.

    Wireless solutions can directly reduce costs by reducing remote access and cellphone charges and by replacing existing paging services. Indirect cost reduction is achieved by increasing productivity, improving customer responsiveness, enhancing customer satisfaction, and improving employees' "work/life balance."

    LVM Versicherung, a German insurance company, adopted a wireless solution for their field operatives that returned a faster delivery of data and has allowed the potential for telecomputing within the company.

    Chase-Pitkin Home and Garden, USA, within the first six months of installing its wireless solution, recorded significant increases in the average number of sales calls per day and sales per salesperson.

    Dynamic scheduling enables organizations to optimize task allocation, rescheduling routes in real time to meet customer demands, while in-field data capture significantly improves the quality of information fed back into billing and customer service systems.

    Access to parts information and best practices, along with remote diagnostics to resolve minor faults, reduces completion time and the number of visits per problem.

    In a study conducted by IBM across 25,800 employees, flexible working practices delivered clear benefits:

  • 71% reported a positive influence on productivity
  • 69% noted increased morale
  • 68% enjoyed increased job satisfaction
  • 63% cited increased loyalty
  • Work/life issues were reduced from 50% of employees to 33%.

    Source: Global Work/Life Survey 2001

    "IBM is at the cutting-edge of reinventing how, where, and when employees work. In effect, we are shaping the workforce and workplace of the future for employees. The right outcome of this effort is the effective management of IBM resources, facilitating the best possible manager – employee relationships, and providing value to our customers and shareholders." – Ted Childs, vice president, Global Workforce Diversity, IBM

    Wireless provides a huge opportunity to facilitate new working practices and improve morale. Flexible working practices are proven to increase productivity and reduce absenteeism. Additionally, companies report increased loyalty and a reduction in staff turnover, as well as an ability to attract new, skilled personnel.

    Wireless solutions have helped the People's Insurance Company of China improve the effectiveness of their customerservice claim process. What was once a three-day task is now reduced to two hours of office work.

    While the benefits of improved customer services are intangible to an organization, any developments that increase customer retention are extremely valuable given the significant cost of attracting new customers.

    Real-time information access provides customers with the ability to make immediate decisions about the cost and availability of goods or services. Enhanced customer information via wireless devices reduces the cost of a customer-service infrastructure, focusing staff on more productive/profitable initiatives.

    Production Services
    A combination of Radio Frequency ID (RFID) tags, wearable PCs, and wireless LANs is delivering significant financial benefits throughout the supply chain for manufacturers, distributors, and retailers. Unlike barcodes, RFID tags are robust and programmable, enabling organizations to track goods as they pass through the supply chain. RFID tags:

  • Maximize warehouse space: RFID tags help cut high-storage real estate costs and maximize warehouse space by allowing organizations to track the location of goods remotely.
  • Minimize goods shrinkage: A combination of theft and imprecise inventory management means retail shrinkage (perceived to account for up to 1% of stock), and puts a significant dent in profit margins. Remote monitoring devices ensure an alarm is raised should goods be taken without payment.
  • Minimize errors in delivery: A tightly integrated supply chain means fewer misdirected deliveries or incorrect orders and fewer "on-shelf out-of-stock" situations. For organizations reliant on specific components to fulfill their own order schedule, delivery errors can cause business-compromising delays.
  • Minimize inventory: Just-in-time retailing enables retailers to reduce stock levels, but distribution companies now hold increased quantities of just-in-case stock to meet demands. Improvements in supply-chain visibility based on accurate, up-to-date information will help reduce these buffer stocks.

    Asset Management
    Airline customers worry more about lost luggage than delayed flights, so airports are exploiting the programmable nature of RFID tags to improve luggage tracking. "Smart Labels," enable tracking from check-in to destination, with alarms sounding if luggage is loaded incorrectly.

    Keys to Success
    Wireless solutions can be rapidly deployed to support tactical needs, but significant ROI needs wireless technology to be integral to business processes. Key factors are:

  • Integration
  • Security
  • Cultural change
  • Measurements

    Within each, understanding and resolving the impacts on process, organization, and technology is imperative. It is important to work with an organization that not only has wide experience with diverse wireless devices and networks, but also understands business processes and how to integrate new technologies into existing infrastructure.

    The most powerful benefits and ROI depend on seamless integration of this new channel across the organization, providing users with rapid access to required information. Working with experienced consultants, who have previously deployed wireless solutions, will aid the process of achieving this integration quickly and successfully.

    Security of wireless networks has been highlighted by the media as an issue, particularly with wireless LANs. Security is critical to the success of wireless e-business; a minor breach could undermine customer confidence and brand reputation. People and organizations must be able to trust any new solution before they will use it. However, a wireless network can be made as secure as a wired network, provided that it is configured properly and has the appropriate security processes and procedures applied to it.

    Cultural Change
    When wireless solutions are provided for employees or citizens, there can be significant social implications. These can be very positive. For example, the person is more able to manage his or her work/life balance more effectively, feels more in touch with the office, and can be more empowered. However, the perception of these new systems can be negative with less reason for going to an office, and so less opportunity for direct interaction with colleagues, and the potential for feeling that "big brother" is watching our movements more. As with any project, only a small percentage of reason for success is due to technology. The much greater percentage is due to people and how they are involved and educated.

    All of these aspects are key costs that need to be considered when planning the adoption of a wireless solution. Costs include:

  • System development
  • System deployment
  • Change management
  • Security
  • Hardware
  • Software
  • Network
  • Training
  • Running costs

    Obviously, costs are dependent on the organization's business goals and adoption of wireless solutions. However, irrespective of industry sector, successful organizations will want to measure the ROI of wireless implementation. While financial measures can be quantified, it is also important to assess other benefits to the organization.

    In an environment of restricted IT budgets, wireless offers organizations the chance not only to attain new levels of productivity and cost control, but also to deploy new services to customers that will play a key role in improved customer retention. Wireless technologies have come of age, and measurable ROI is a compelling argument for further exploiting existing systems and applications.

    So the question is not "whether you should deploy a wireless solution," but "when?" It is also worth considering what the impact on your business or organization would be if you do nothing. Just how much business would you lose to your competitors who are exploiting this new channel, accessing vast numbers of wireless devices – not just with human interaction, but also from machine to machine. How much benefit are they getting and are you missing?

    About Adel Al-Saleh
    Adel Al-Saleh is general manager,
    Global Wireless Business, IBM Corporation.
    He is responsible for the business, applications,
    and solutions-related aspects of IBM's wireless
    and mobile initiatives around the world.

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