In an industry increasingly dominated by conglomerates, Charles Wells is an exception. The family-owned brewery employs just 400 people, but it sells some of the UK’s best-known beers including Bombardier real ale and Red Stripe lager.
The brewery has always relied on technology to compete with larger breweries, and has deployed Geac enterprise planning software and Lotus Notes groupware. Now the company is investing in Bluetooth and Wireless LAN technology to improve the efficiency of its customer service.
Charles Wells relies on a team of 40 field sales reps who travel the country selling beer to pub chains and restaurants. Customer orders used to be entered into the planning systems from the rep’s home or when reps visited head office. Orders could therefore be delayed for several days, creating a knock-on effect on the brewery’s forecasting. Cask-conditioned ales take three weeks to brew and must be used within two weeks, so accurate forecasting is vital to prevent wasted stock or long delays in filling orders.
Today, the sales reps use a Bluetooth-enabled laptop and mobile phone to enter orders in real-time, enabling the brewery to reduce wastage and inventory and improve customer service. The company has also installed a wireless LAN (WLAN) at head office to allow mobile workers to access the corporate network when they visit.
The upfront cost of the project wasn’t expensive, and ROI will be achieved in under 12 months purely from reduced infrastructure costs, says Wells.
Then there are other, harder to measure, benefits. “People can now access information more quickly, and use their laptops from home, which improves productivity,” says Wells.
The evidence is that increasing numbers of SMEs are following the lead of Charles Wells, and deploying mobile technology. Because of the relatively low upfront costs, mobile technology is well within the reach of most SMEs. WLANs can be provided in a small office for under £500 and Bluetooth or WLAN-enabled laptops are now only £50 or £100 more expensive than their non-wireless equivalents.
The good news is that small companies are particularly well positioned to benefit from wireless and mobile technologies, says Adrian Horne, a marketing specialist with IBM’s ThinkVantage Technologies division. “SMEs
generally are hardest hit by products that need support because they have smaller IT teams, and would rather focus their attention on running the business,” Horne says. “Wireless is critical in that respect because it is far less expensive to support than an Ethernet infrastructure and it’s becoming increasingly easy for end users to get to grips with.”
Vendors are also realising that they need to develop solutions specifically aimed at smaller businesses. IBM offers a discount programme for SMEs called Top Express, while Microsoft recently launched ‘Connect Anywhere’, a service that provides a mobile device, network access and software for £2 per user per day. The service is already being used by Marie Curie Cancer Care, which plans to roll out the package to all its nurses by 2005.
Lowering the TCO
The aim of the initiative is to lower the total cost of ownership (TCO) of wireless for SMEs, says Annemarie Duffy, of Microsoft’s Mobile Services Division. “We recognise there is a need for wireless in the SME market, and initiatives like Connect Anywhere reduce the upfront cost of implementation and help SMEs calculate a clear return on investment,” she says.
However, few companies are aware of how to build a full ROI case for wireless technology, says Ken Smiley, an analyst with Giga Information Group. “Simply providing more convenience to a customer or an employee doesn’t necessarily benefit the organisation,” he says. “Wireless has to be used to accomplish specific tasks or satisfy specific business needs if you want to achieve any sort of ROI.”
The problem is that the technology cost of a wireless deployment accounts for only a small percentage of the total project costs. In general, the device will account for only 10% of the total project costs. Another 40% of the project budget will be spent on application development (the software program running on the device), security, network connectivity and management costs. Once these upfront costs are dealt with, companies should expect to spend as much again on maintaining the devices and training employees to use the technology.
It may be, that once all of these costs are factored in, an SME cannot afford mobile computing. “Rolling out insecure wireless technology or unmanaged technology is more damaging that doing nothing at all,” says Angelo Lamme, European Product Manager with networking vendor 3Com. “SMEs, with their relatively unsophisticated IT systems, are a prime target for hackers and virus writers, and wireless is opening another gateway into the organisation. If you don’t have the resources to secure that gateway, you don’t have the resources to use wireless.”
Of course, the cost of wireless computing is only half the ROI story. Companies must also quantify the benefits the technology will deliver. Forrester Research found that the most common benefits businesses realise from mobile applications are better productivity (60%), always-on access to information (40%), improved customer services (36%), and better logistics (20%). However, many executives confuse new capabilities with concrete benefits, says Charles Homs, an analyst with Forrester.
“If your staff are saving 15 minutes a day, don’t assume you can translate that into a dollar value,” says Homs. “Unless you can actually get rid of those workers or get them something else to do with that time, it shouldn’t be counted as a benefit.”
To build a solid ROI case for a mobile or wireless technology project, Forrester advises companies should start by ignoring technology completely. “Consider who your employees are, and what level of mobility they currently have, and whether they will benefit from more mobility,” says Homs. “What new processes could be created, or what processes could be improved?”
This information should give you an idea of whether your users need mobile computing (a laptop rather than a PC, for example), wireless computing (a wireless network in the office) or both (a wireless-enabled laptop). Wireless-enabling a mobile worker generally adds around 25% to project costs, but will the benefit of having real-time information generate benefits that outweigh these costs?
“If you make the technology decision first, you’re likely to make the wrong choice and the cost of supporting your users won’t be matched by the benefits,” Homs says.
Increasing the ROI of mobility
- Never buy early Typically, the price of mobile devices falls by 25% within six months of release. Only buy new products if there is a compelling reason.
- Limit platforms If you’re mobilising 200 field service workers doing the same job, they should all be using the same technology. Every additional platform adds to support costs.
- Buy bulk If you’re not planning a large deployment, consider buying back-up units to take advantage of cost breaks. This will also speed up the deployment of new users and keep support costs down longer term.
- Stay flexible The ability to add peripherals, software or to work on multiple wireless networks will enable you to build out existing platforms in future rather than starting from scratch.
- Look for service discounts Devices sourced from an operator or carrier may be subsidised, thereby lowering upfront costs. In many cases, devices are free if the CIO signs an agreement to make use of the network for a set period of time. However, be aware not all devices are available on all networks.
Source: Giga Information Group
Promise of a new wireless generation
The SME looking to adopt next-generation wireless technology must consider a number of profound issues. Equipping workers with wireless-enabled PC or portable device is intended to be in the name of efficiency. What SMEs should aim for in their wireless strategy is the fastest speed possible, with the broadest coverage possible, and the lowest cost.
To achieve this aim means some serious business thinking. Enabling pervasive wireless usage could bring about uncontrollable costs. Even as 3G/UMTS networks handsets become increasingly available it is debateable as to what they mean to SMEs. Even though it has been supplying technology for 3G handsets and systems for some time, Qualcomm has very forthright on what it means for the SME. Says Senior Marketing VP Jeffery Belk, “One thing has been missed is 3G’s relevance to the SME. The promise of 3G/UMTS has always been centred on multimedia handsets with video phones, etc.”
Qualcomm sees its role as working with as many device manufacturers as possible to enable the greatest breadth of next generation devices and services for SMEs to implement. Sales and marketing manager Barry Matsumori says that he has witnessed a big change in products offered by handset and equipment suppliers. “Phone manufacturers are evolving and one thing that they are recognising is that the value they have is not from developing a wonderful modem but from bringing the whole package together.” This package includes knowledge of the back office applications and systems.
Slowly but surely the 3G networks are rolling out and the operators are beginning to target the SME. To Qualcomm the ideal point will be when network operators respond to SME feedback and issue them with requirements that can be incorporated into chip set solutions. Before this day arrives, it is essential that the wireless technology fits totally into your business plan. Joe O'Halloran
This was first published in October 2003