Magazine Article | October 26, 2012

TCO: Do Your Due Diligence

Source: Field Technologies Magazine

By Tim Eusterman, sr. director, industry marketing, Intermec,

Some of the important considerations for a TCO (total cost of ownership) analysis are often overlooked.

There is no doubt that the rise of the smartphone and tablet is causing IT and operations leaders in field service driven companies to rethink their mobile computing strategy. These devices combine a new capability of form factor and user interface — driven by point-specific apps — that are changing how people perceive ease-of-use, convenience, and personal productivity. Today, we’ve gone well beyond the halfjoking “there’s an app for that” to a world where mobile workers expect instant, easy information access, leading IT and operations executives to face difficult questions.

Best-in-class companies work hard building strategies and getting clarity on business objectives for field reps and technicians. They understand which key metrics are best used to measure the performance for their particular businesses. These metrics, or KPIs, are typically a few higher-level metrics that drive customer satisfaction, revenue, and profitability. Often there can be several underlying metrics that impact how these are calculated and the criteria used to define these measures.

There is one common building-block metric without which it is nearly impossible to develop a complete management and productivity solution that drives field workforce performance — TCO of the device carried by the field worker. Here we will explore TCO to help shed some light on considerations for your business.

Many people think TCO is a simple cost measure. But cost can be interpreted in several important ways. The most common way to measure cost is the "hard" cost associated with purchase price, maintenance fees, data and voice plans, time and material repair costs per incident, batteries and their replacement costs, chargers, accessories, etc. These are the easiest to compare side-by-side for given devices, accessories, and associated services. But they tell far from the whole TCO story.

Another area of cost to contemplate, admittedly harder to compare, is the basic performance costs associated with time-centric measures like first-time scan read-rate, signature capture time, remote payment capture processing time, system host application wait time, image focus/capture, data upload/download performance, video buffering wait times, battery recharge cycle times, etc. These are often very closely tied to the underlying technology and how well it is built to match specific use needs. These characteristics impact user performance in many ways, but often only seconds at a time. The downside of ignoring elements measured in seconds is that those seconds add up to minutes, hours, days.

Don't Forget Opportunity Cost In Your TCO Evaluation
An often overlooked area is that of opportunity cost. This has to do with measures like uptime or availability, battery life cycle per charge/shift, voice call clarity, ergonomics, display usability, worker acceptance, etc. This cost category requires a comparison between products designed for specific applications and consumer-grade, horizontally applicable products. It is critical to understand the value of a missed appointment, an incomplete service call, compiling manual logs sheets for a day, the wait time for a replacement unit, or not being able to take an electronic payment on-site. All these factor into real costs of lost opportunity that impact customer satisfaction, topline revenue, and overall profitability.

Lastly, there is the cost associated with device management, upgrades, and future applications. With apologies to Shakespeare, to BYOD or not to BYOD is not necessarily the question. Understanding the impact of deploying and supporting the operating system, browser, host application, client-side application, predictive device health monitoring, help desk, and other realtime management of field units is no trivial matter. And these do not speak to new workflow-specific applications that companies will want to deploy within the lifetime of the device. So, carefully understanding the interdependencies of all these elements on the overall system and support costs is a critical and often underappreciated calculation.

While these evaluations must be made with respect to business objectives, operating conditions, workflows, customer interactions, and other criteria, with some work and help from your solution provider you can develop a robust TCO calculation that will serve you well today and use real-world results to improve your mobile computing solution decisions tomorrow.