How to Calculate the ROI of Your Enterprise Mobile App
On one hand, Enterprise applications are taking businesses by the storm. Sharp rise in work productivity, increased revenue, and crystal clear view of the organizational operation; with a mobile app it’s all easier than ever.
On the other, app users discard 74% of all apps after a single use. The trend is not very promising for the internal users also. 46% employees responded to the XYZ survey, that they are disappointed with the app performance and prefer to not use it.
Do you want to know where your app stands between these two extremes?
In this article you will find how to calculate the ROI of your app so that you can figure that out yourselves.
Basic tools for ROI calculation
To calculate the ROI, you will need to consider the three components; Benefits offered by the app, KPI, and TOC (total cost of ownership).
Benefits offered by the app:
Businesses choose enterprise mobility for varied reasons. For some, desired benefits could be revenue generation, for others improvement of productivity is the priority. One needs to understand the benefit of having a mobile app.
The basic principle of the ROI calculation of an enterprise app is the ratio of gained benefits and total cost involved. If your app can manage to offer greater benefit with reasonable cost, the deployment is successful.
The benefits of any enterprise app could be of following categories,
- Quantitative: Quantitative benefits are the measurable benefits; you can view those as numbers. Some examples of quantitative benefits include increase in cost saving, decrease in operation time etc.
- Qualitative: Qualitative benefits cannot be put in numbers. You can understand the qualitative benefits only through quantitative benefits. An example of Qualitative benefit is customer loyalty. You can only conclude to the effect on customer loyalty by measuring two quantitative benefits; customer engagement and revenue.
Since qualitative benefits are hard to measure directly, quantitative benefits are used during ROI calculation, according to standard practices.
KPI (Key performing Indexes):
For the calculation of the ROI, you have to represent those benefits in the numbers first and measure against some standard parameters afterwards.
KPI or Key Performing Indexes serve as the yardsticks of measuring the benefits of the application. Compare to those yardsticks, make your app perform better, higher will be the ROI.
KPIs vary widely, based on the type of the app and its usage. For instance, KPIs for some businesses application, intend to improve workforce productivity through mobile, which is quite different from an enterprise application that provide a better system for their on- field employees.
However some KPIs are common for lot of scenarios. Here is a list of such commonly used KPIs for enterprise mobility solutions.
Total Cost of Ownership (TOC)
- Active Users
- Session length
- Average revenue per user (ARPU)
- User experience
- App launch time
- Retention rate
- Lifetime value
While calculating the ROI of an enterprise app
, you must weigh the benefits against the cost incurred. And to do so, taking account of the total cost of ownership is extremely important.
TOC or Total cost of ownership stands for the combined expense of upfront costs and recurring costs.
- Upfront costs imply the one time large investments during the deployment of application; including licensing, app development cost etc.
- Recurring costs on the other hand, is lesser but you have spent it for several years. It includes expenses like data plans, upgradation charges training etc.
Here is the breakdown of TOC of an imaginary enterprise app for your understanding
- App development costs: The cost of app development is a onetime investment may vary based on functionality, complexity, and technology. If your business doesn’t have infrastructure to develop your own app, outsourcing is an economic option.
- Licensing: During application development, license of IDEs and servers are required. These are one-time cost that you would require only in development phase.
- Device procurement: With the rise of BYOD trend, this cost is much lesser now than it used to be. But if you want your employees to assign company owned devices, device procurement cost can vary based on the devices.
- Data plans: Every application requires data connectivity to function and expenses due to data plan incurred every year.
- Maintenance: Enterprise application needs periodic up gradation and constant maintenance. So, expenses due to maintenance can vary depending on the factors like maintenance frequency and addition/changes in features etc.
- Training: The end-user training costs can vary depending on the number of users and the number of apps available to users.
For determination of ROI of your enterprise app, calculate the total benefit gained utilizing the KPIs. Figuring out the total cost of ownership based on your unique situation only comes afterward. When you have both numbers, find the ratio of benefit gained and TOC. That ratio is your ROI.
ROI of enterprise app: Key considerations
- While calculating ROI for an enterprise app you cannot take account of all benefits. As discussed above, qualitative benefits are hard to measure and are represented in numbers. Moreover, in the first phase or year of deployment, your app may not deliver all the benefits. This could be because of the functionality used, scale of coverage or adaptability levels among the users. Similarly, a few benefits of mobile app may end after a few years of deployment.
- The costs of owning and maintaining an enterprise app go down after a few years of deployment. If you are developing your own app, you may have to make some significant upfront investments. But with the rise of scale the adoption, the cost per app user will start coming down.
- For increasing ROI, you can cut the costs of app development by outsourcing it. In-house app development requires significant investments in technology and manpower which increases the cost.
- To gain the most from your mobile app, keep user experience and users’ pain points in mind while developing it. The main reason behind the failure of the applications is that they often don’t offer solutions to problems that users face. The bigger the scale of adoption, the more ROI you can gain.