Return on Investment

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WLANs are clearly a way in which IT can add value to the overall company. But management typically will not fund technology adoption without a business case supporting a tangible return on investment. This means that WLAN enthusiasts must quantify the ROI associated with the adoption of a WLAN environment.

As you read the following, keep in mind that there are many ways you can quantify the costs and benefits of deploying a WLAN, and that the WLAN technology can vary from organization to organization. For example, one organization may occupy a large fairly open retail space in a mall complex, another may be located in an 1880 ten story office building, still another in a campus environment.

The first step in defining the total costs and benefits of a WLAN is to understand the value of adopting the technology. However, you will find that while some of the benefits derived from a WLAN have dollar figures attached, many do not. Therefore, measuring the ROI of a WLAN can be challenging. For instance, you must find a way to assign "soft benefits" such as productivity gains to a dollar figure. While quantifying these soft, intangible benefits is difficult, it can be done. Once you've put a value on these subtle benefits, you can add their total to the "hard" benefits total and you have a credible ROI.

While it may not be difficult to explain the hard and soft benefits of a WLAN, quantifying them to a skeptical audience of executives is another story. Some benefits, such as those that arise out of the time and money saved moving employees to a different workspace, or accommodating a temporary workforce when a WLAN is the data communications environment, are tangible and easy to calculate. But others, such as higher employee satisfaction and quicker informed decision-making, are intangible and thus are not easily measured in dollars and cents.

To use the Intel method (see text box), start by determining the organization's employee demographics. Then segment those employees into groups based on the potential value that could be gained from increased mobility. For example, a sales force that conducts much of its business outside the corporate walls would belong in one group. Another group might be composed of executives and managers who must attend a lot of meetings, but also need to stay in touch with the office. For an organization with a warehouse or a distribution center, there are, in all likelihood, many employees who might benefit from untethered connectivity. Another group might be populated by employees whose sole benefit from wireless connectivity is convenience. This group might include receptionists, secretaries, customer service employees, data processors, and other back-office employees.

The best way to determine the ROI for a WLAN deployment is to base the valuations on real data. You can get that data from a pilot project. That is if along with the pilot project, the team also performs incremental surveys of end-users, IT staffers, and management, and keeps impeccable records. When the pilot project is complete, submit the material to a financial specialist for rigorous analysis.

The following are some basic guidelines to help you in determining your WLAN project's ROI. Factors within your organization will necessitate some refinement of the following guidelines.

  1. Incremental surveys: These should document soft benefits such as:

    • Increased flexibility-WLAN users can work how, when, and where they want to work. This flexibility includes mobility within the office, at home, or at public HotSpot locations.

    • Faster decision-making-anytime, anywhere access to information leading to quicker, informed decision-making.

    • Higher employee satisfaction-employees should appreciate increased flexibility and access to the latest technology.

    • Greater accuracy-when an employee can instantly access and transmit data from wherever they happen to be, they are more likely to avail themselves of the available information rather than guessing.

    • Increased productivity-thanks to the ability to work anytime, anywhere.

  2. Productivity measurements: Ask the pilot project participants in each user segment to estimate how much time the WLAN saved them, each day-overall, and while performing certain tasks. Then segment the responses by user group and calculate the user-perceived timesavings for each group. End-users will almost always over-estimate their timesavings. Therefore, to establish conservative estimates for your ROI calculations, you need to make two adjustments to these figures.

First, cut the user-perceived time estimates by 50 percent (for a conservative estimate) or between 25 and 30 percent for a more liberal estimate. Take the results and divide it in half again to recognize that not all timesavings necessarily contribute directly to higher productivity and increased ROI. For instance, taking the conservative line, if an outside sales person claimed that using the WLAN enabled one hour of additional productivity each day, the figures would show that he or she would achieve 15 minutes in actual productivity gains per day.

Don't worry about what will seem like paltry daily timesavings. As Fig 14.2 indicates, the end result will still show that a WLAN provides a huge ROI.

As an organization expands its WLAN to incorporate more end-users, the average cost per user drops dramatically and the ROI increases. But conversely, the average benefit per user also drops, because the WLAN was first deployed to the employees who would benefit the most. Thus when additional end-users for whom wireless connectivity isn't as vital to their daily work process are incorporated into a wireless network, the overall per user benefit will level off.

By determining the value of productivity gains, and then subtracting start-up and sustaining costs for the WLAN, you can find the actual ROI of the WLAN project. But to help build credibility in your ROI model, consider all indirect costs (that's what Intel IT did), including, for example, extensive employee Help Desk support.

click to expand
Figure 14.2: Timesavings equal productivity. These tables represent the Intel IT WLAN pilot project's calculations. The top table shows the user-perceived timesavings and the adjustments thereto. The bottom table shows the resulting translation of the timesavings into annual WLAN productivity gains. This was done by taking the daily timesavings for productivity gains (last column of the first table), calculating the value of each end-user's productivity gains, then multiplying each end-user group's average hourly burden rate-salary plus benefits-by the number of workdays per year (235). Graphic courtesy of Intel.

Even when an organization approves a corporate-wide WLAN, wireless connectivity won't be the "be all to end all." When there is wireless connectivity everywhere, it can create cultural problems. Thus before implementing a corporate-wide WLAN, institute polices that enable department managers and executives to find the line between the intrusiveness of wireless connectivity (e.g. employees sending and reading email during a boring meeting) and connectivity as a powerful, productive tool (employees researching a specific problem to help move a meeting to conclusion).

Access to a WLAN is not necessary for every employee group. Deskbound employees (e.g. secretaries, data processors, customer service staff) usually have no compelling need for access to a wireless LAN.

Note 

The Wi-Fi Alliance offers a ROI Calculator that can help you to support your argument for deploying a wireless network. The ROI Calculator, which uses Microsoft Excel, determines ROI based on the productivity gains associated with increased access to an organization's networked assets. The premise is that making employees more connected increases productivity. The results are presented in terms of dollars saved, or payback in months, relative to the up-front costs for installation, hardware, and the recurring costs for IT support for the WLAN. The tool is offered as a free download from the Wi-Fi Alliance website, www.wi-fi.org/OpenSection/WLAN_Calculator.asp.



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Going Wi-Fi. A Practical Guide to Planning and Building an 802.11 Network
Going Wi-Fi: A Practical Guide to Planning and Building an 802.11 Network
ISBN: 1578203015
EAN: 2147483647
Year: 2003
Pages: 273

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