I was talking to my friendly Edward Jones representative the other day about investments. The conversation went like this:

“So Brad I was looking into xyz stock and wondered if that was a good investment?” His reply was “Well it’s yielding about 11% right now so that’s great for this economy.” That’s when it hit me that for stocks and bonds and all types of personal investments we view an 8 to 10 percent return as a great return but for business investments like Mobile Applications and hardware we don’t. Why is that? So in order to answer this question let’s do some math using a real customer and the ROI process they use to get a good return.

We will call this customer Bob. Bob has a company and has 15 mobile workers that do installs and maintenance of HVAC equipment. Bob keeps track of a ton of data on his technicians: what job they are on; how long each job takes; how much money per job; etc. As Bob looked at a mobile application he tried to make sure that an application would save him time and money or gain new customers or opportunities.

So here are some estimates:

  • Each technician spends a little over two hours per day on paperwork related to the jobs.
  • An office worker also spends four to five hours any given day to schedule, dispatch, re-schedule, and re-type data about the day’s jobs.
  • The total hours per day spent on these processes is 35 (15 workers x 2 hours + 5 hours for office data entry) for those of you doing the math.
  • A mobile application was designed and it would save Bob 75 hours per week in communication and data re-entry (1 hour per day x 5 days per week x 15 guys = 75 hours; 5 hours office data entry).
  • 80 hours per week times 52 weeks is 4160 hours per year. At an average cost of 20 per hour that is $83,200 dollars in lost revenue.
  • Now an extra two hours per day equals one more job that can be scheduled so Bob also gains 7800 hours of work per year at an average charge of $50 per hour equaling $390,000 in opportunities not yet received.
  • The total of savings and additional revenue is $390,000 + $83,200= $473,200.
  • The total estimate for Bob’s mobile application was $30,000.
  • So Bobs total ROI is a whopping net gain of 537%.

Wow, no-brainer, huh? Guess what, Bob did not build the application. He is still doing business the old way losing 1560 hours per year and not getting that $83,200 in return. How many of us would like an extra $83,200 next year, not to mention the extra revenue?

Ok so here is my dilemma, if I were to ask an investment broker if I should invest in a stock that returned 537% he would tell me I was crazy not to, but in a business situation why don’t people use the same logic? The lesson I get out of my mental exercise is this, always look at the true ROI of any mobile application or hardware investment and take the time to talk to a Mobility expert who can help you see the real value of the application or hardware you are thinking about.