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Maximize your business' mobile budget by understanding TCO

IT's focus is on productivity and security, but shrewd enterprises also pay attention to ROI for their capital and operational expenses around mobility.

Total cost of ownership (TCO) is one of the most important elements in IT and organizational finance, and yet TCO is often misunderstood, misinterpreted and difficult to calculate.

Determining the TCO for mobilizing the enterprise workforce is especially complicated. Most organizations consider employee productivity the key metric in evaluating the return on any IT investment, but it is often difficult to quantify gains in efficiency.

By understanding TCO, you can get a handle on how to manage your enterprise mobile budget without too much angst or a degree in finance.

What's included in TCO for enterprise mobility

First of all, TCO is just that -- the total cost to own a given resource or element over its useful life. Ownership in this scenario involves maximizing the productive value of an investment in enterprise mobility, which also includes the return on investment an organization obtains.

TCO has two primary components, capital expenditure (Capex) and operating expenditure (Opex).

Capex includes the cost to purchase equipment and software for enterprise mobility, usually as a one-time charge. But it can, and usually will, include additional one-time charges for non-recurring engineering (a Wi-Fi site survey, for example), building preparation, installation, initial configuration, functional verification, integration and other related activities.

Opex is everything else related to ongoing enterprise mobility management and operations. This includes monitoring, control, administration, troubleshooting, support, maintenance and repairs. Most organizations consider upgrades as a new capital expense, but there is often an associated operating expense that might go up or down depending on the nature of the upgrade.

Managing Capex and Opex investments in a mobile budget

Minimizing Capex and Opex in the mobile era can be pretty straightforward, but total cost of ownership is never stagnant.

IT is perpetually under pressure to find faster, better and cheaper methods of delivering business processes, but managing a mobile budget also requires patience and strategy. Enterprise mobility products become far more cost-effective over time as they integrate new technologies and productivity-enhancing features. Admins should consider those advancements when assessing Capex in particular; your initial mobility costs depend greatly on innovations in technologies and manufacturing economies of scale.

Organizations should always remain open to mobile technology product and service upgrades. New capabilities are often designed to enhance productivity and thus reduce Opex for both operations staff and end users. Sure, kicking out obsolete PCs and infrastructure may involve additional Capex, but organizations will usually come out ahead if they make smart investments off the bat.

Opex, on the other hand, is mostly labor-intensive, meaning that it's interconnected with employee compensation for several roles -- managers, technicians, operations specialists and even a few folks in the finance department. But, unlike capital equipment, people usually only get more expensive over time (think salaries and benefits) -- unless, of course, you can improve their productivity.

Ongoing employee efficiency is the key reason why new capital equipment is more often than not a good idea. Lower support costs mean lower Opex, effectively lowering the TCO for mobility.

Bring your own device (BYOD) initiatives in particular reduce capital expenses, because the company doesn’t have to provide the endpoint device. Consolidating the approved list of mobile devices around more contemporary offerings will also support costs, and thus Opex.

Minimizing Capex and Opex in the mobile era can be pretty straightforward, but total cost of ownership is never stagnant.

Opportunities for optimizing mobile TCO

Organizations should recognize their long-term mobile budget will adjust with new trends and technologies. Here are a few tips to keep costs down while keeping productivity up:

Make the move to 802.11ac. The incentive to find faster, better and cheaper methods clearly applies to Wi-Fi. Today's enterprise-class 802.11ac systems improve throughput, range, capacity, time-bound performance and management capabilities. Even better, 802.11ac almost always costs the same or less than 802.11n. Some IT managers want to wait for Wave 2 of 802.11ac, which does include a few new useful features, but waiting it out comes at a price. Investing in additional 802.11n infrastructure as part of a mobile budget is buying into a technology that, while still useful and in no danger of immediate obsolescence, is clearly on a terminal trajectory.

Organizations with wireless capacity issues need to take action now, because a poor Wi-Fi situation can really squash productivity. However, many enterprises will also need to invest in new client devices to take full advantage of Wave 2 at scale. Any meaningful benefits from Wave 2 of 802.11ac are realistically still at least 18 months in the future, but it’s a good time to start looking at wireless and device investments than can help save on your mobile budget.

Revise old approval lists. Speaking of devices, IT should review and update the list of allowed client devices, OS revisions and enterprise mobility management tools on a semi-regular basis. Older products may have additional support costs, not to mention security holes that can hike up maintenance and disaster control costs. Keeping enterprise mobile device and product lists up to date means IT isn't losing Opex by supporting old hardware that requires more maintenance. At the very least, companies should require software updates and upgrades when possible, which is a smart business practice regardless of TCO.

Seek out productivity. Finally, examine IT operations to look for opportunities to enhance productivity. Consider analytics tools, which allow IT to identify problems otherwise buried in system logs and other operational data. Also examine enterprise mobility support requests; in many organizations, 20% of issues occupy 80% of support-staff time. Gleaning analytics and tracking support better can help trim the mobile budget in the long term.

Device and service providers are also driven by the motivation to make mobility faster, better and cheaper, so new capital investments will almost always result in lower operating costs over time. Whatever the budget breakdown, IT should evaluate the TCO of enterprise mobility based on the return on investment. All that spending is worth it if it results in noticeable productivity gains.

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This was last published in April 2015

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