|
News
Issue #2002 - 23
(June 2002)
(Updated June
19, 2002)
MARKET
OUTLOOK & TRENDS
Annual Cost of PDA Ownership:
$3,000 per user
Businesses concerned about
their expenditures take note: The total cost of ownership (TCO) for
a PDA per business user could be as high as $3,000 a year, according
to a study by Gartner.
With PDAs becoming a standard work tool, businesses should know
how these devices, and accompanying costs for hardware, software and
services, can impact their bottom line, the study said.
TCO for a wireless device will include additional hardware,
software and service costs on a per-user basis compared with a
mobile device. The addition of software and service costs, of
course, will vary, but average about $50 per month. Adding a
wireless modem at $1,392 will bring the PDA TCO of $3,000 to $4,392,
comprising mostly of hardware, support and additional service fees.
Gartner analysts found that the TCO of wireless devices is
directly related to their capabilities — so, you get what you pay
for.
Breakdown of the Total Cost of Ownerships for Wireless PDA
- Capital costs, including hardware, software and network
services, are 60 percent of the total cost.
- Operations, ranging from technical services to application
management and development, comprise of 30 percent.
- Administrative expenses, including evaluation, implementation
and training, amount to 10 percent.
To reduce the overall TCO, Gartner recommends consolidating
network service providers, bundling services and aggressively
negotiating contracts.
When calculating return on investment, businesses must calculate
the total cost of benefits of ownership (TBO), which can be easily
identified in vertical applications, but in horizontal applications,
it is more complicated. Enterprises would be well advised to look
for the following when calculating TBO:
- Increase in productivity
- Increased revenue
- Improved accuracy associated with constant communication
- Lower costs based on improved efficiency
"ROI is possible for many mobile applications, but
enterprises that proactively link mobile technology investments to
job functions and bottom-line productivity indicators, such as sales
revenue, customer support and internal operations goals, will be
successful at defining a mobile ROI, as long as TCO is also
understood," said Phil Redman, research director for Gartner.
For more information: http://www.gartner.com
MobileInfo.com’s Comments & Advisory: Gartner
drives home the point of high TCO for PDAs very eloquently. We generally
agree with Gartner's emphasis on TCO and developing a proper business
case analysis. In fact, our website provides tools and templates for
this purpose. It is obvious from Gartner's study and our own analysis
that cost of PDA hardware is not as important as other costs. At the same time, we think that
Gartner's cost estimates are on the high side and valid for poorly-operated mobile
environments only. This number could scare small and medium businesses
off from mobile applications.
We promote pragmatic workable analysis
and not necessarily perfect Harvard business school analysis counting
every dollar unless the organization works perfectly. In real businesses
howsoever large and well managed, focus is (and should be) only on 80%
of the relevant cost factors and issues. Per user support costs should
be based on fully-deployed solution and not on a pilot solution because
you must capitalize that investment over the life of a project or an
application. We have a hunch based on consulting work that well-run IT shops,
with proper user
training, well-designed applications and with professionally-managed
asset management software should result in lower costs than what Gartner
estimates. If Gartner wants to make a point, they are right. However, I
would be careful in going to my CEO to write me a cheque for a mobile
solution based on the above number.
Note: This news release may contain forward-looking statements. Readers should take appropriate caution in
developing plans utilizing these products, services and technology
architectures. All trademarks used in this summary are
the property of their respective owners.
|
