How to Evaluate an Investment for In Premise Enterprise Mobility Part 4
In the final part of our series on how to evaluate an investment for in premise enterprise mobility, we will look at two further areas where benefit can be generated – improvements in scheduling and income.
Then its your turn to get some numbers from your own business and see what impact an investment for in premise enterprise mobility can generate.
Improvements in Scheduling
Typically areas where you can expect improvements in scheduling are in factory utilisation overtime charges and the reduction in special delivery charges.
Savings in these areas are calculated in different ways. For factory or plant utilisation you need to know the gross margin and annual sales of the unit. We assume it is operating at full capacity. Multiply these figures together with the expected improvement in utilsation using in premise mobility.
To estimate the savings from less overtime and fewer special outbound deliveries multiply the current costs in these areas by the expected percentage improvement. Here are some ideas from Coca Cola on improving working hours performance.
For example. Assume your sales are £1,000,000 and your gross margin is 30%. You incur an average of £30,000 in overtime and special shipping charges. If you believe a 15 % improvement is likely in both areas your calculations will look something like this:
Your calculations would look something like:
Factory Utilisation 15% x £1m x 30% = £45,000
Overtime and special delivery charges 10% x £30,000 = £3,000
Total = £48,000
Improvements in Income
Most view enterprise mobility as a cost elimination tool. It can however also help generate income for your business. For example, not many parcel delivery companies would win contracts without the ability to track your parcel door to door.
These benefits are usually intangible but they can add up. Factors such as a sales boost from better customer satisfaction and improved cost data for new sales bids can be entered into your cost justification analysis.
Customer satisfaction – big subject with lots of opinion pieces and research to support why its such a good idea. In summary faster response times more accurate billing, higher quality products can all mean more repeat business and better word of mouth recommendations all of which mean more sales. It works for Zappos why not in your business?
Improvements to the cost of data for bidding is perhaps a less obvious benefit. But where you are building quotations based on up to date data you can minimize over and under bidding. Resulting in better quality quotations and more profitable ones.
Your calculations form either source can be estimated by taking the expected increase in each and multiplying it by the gross margin.
For example if gross margin is 30% and you expect £15,000 in increased sales from better customer satisfaction as well as £10,000 from additional successful bids then your income improvement would look something like:
Customer Satisfaction £15,000 x 30% = £4,500
Winning more bids £10,000 x 30% = £3,000
Total = £7,500
Add It All Up
So you have gathered your data and made your calculations. In our example;
Labour Savings £24,000
Improve Income £7,500
Total £ 134,500
With in premise enterprise mobility systems costing less than £100,000 these calculations would result in a payback period of less than one year.