As part of Everest Group’s digital services research, we discuss digital transformation initiatives with multiple enterprises. Of course, mobility is one of the cornerstones of such conversations. In a recent discussion with a retail company, I was told how they transformed their store operations by providing mobile-driven BI solutions to their managers.
Although the business case was strong and the results were highly evident, when pushed for the measurement of success, I received an intriguing reply that was in line with data captured in our earlier published research on moving beyond feel good ROI (Return on Investment). The enterprise said that more than 80% of its store managers and employees had downloaded and accessed the mobile app and that this was a great success.
Such discussions are not uncommon. Enterprise shops running mobile initiatives are typically benchmarking their success based on how many users install the app or how many actually use it rather than the business impact. Let’s be clear on three things:
- App downloads do not mean app usage: This is something that should not even be discussed. But still, app downloads have become a metric for the IT teams developing mobility solutions. This implies that they are either fooling themselves or the business users about mobility. Anyone can download an app, but it does not imply usage. However, from a project team’s perspective, this metric is easy to capture and used to impress other stakeholders.
- App usage does not mean ROI: Moreover, even if the app is being used, does that mean it has achieved its objective? How is the ROI defined? A lot of enterprises define ROI based on the usage metrics, and a “good” number is considered to be the final objective in itself. It’s like running a 100 meter sprint with a KPI that 15 seconds is great, without realizing others might be finishing in under 10 seconds. Again, this is an easy metric that can be shown to the business and make them believe that mobile initiatives are gaining traction.
- ROI does not mean business impact: An ROI calculated on usage metrics, though meaningful, still does not track the business impact. What is the eventual business impact of the app? How are you going to track that? Metrics like these are what enterprises should be concerned about.
Why do enterprises choose to do this?
The simple reason for tracking ROI based on usage or downloads and not business impact is that the latter is extremely difficult to measure and correlate. The fundamental attribution of business success to an app is difficult and, therefore, enterprises take the easy way out of collecting download and usage metrics. Business outcomes depend on a number of moving parts. An app can bring a horse to the pond but can’t make it drink water.
Is this scary?
Some would argue that if business impact is hard to measure, then enterprises should not use it to define ROI of digital initiatives such as, enterprise mobility. But isn’t it scary that enterprises are making such investments simply because of access to a cool new channel through which they can share information with their external or internal customers? Is the “hope” that enterprise mobility will eventually have a business impact a good enough reason to invest? This nicely ties to our earlier published research on digital investments.
The road ahead?
Are there other KPIs to measure the effectiveness of enterprise mobility initiatives? If yes, how do they link to the business impact? Enterprises need to think through three fundamental aspects:
- Define the business impact: Is it improving the top line, enhancing customer experience, addressing customer churn, creating better personalization, targeted messaging, or driving operational efficiency? Enterprises may want to address a lot of the above and more through a single app. However, they need to spell it out in terms of the business impact the app needs to demonstrate.
- IT-business partnership: The above challenges are not only the making of enterprise IT. In fact, enterprise IT is like the messenger. The bigger problem is from the business side. Line managers who are unable to grasp their business objectives and visualize the impact of enterprise mobility to drive these. For this, enterprise IT needs to partner with business stakeholders in creating a value journey map in terms of the expected ROI from each stage of mobility adoption. The final stage must be a tangible business impact.
- Define failure: My market interactions suggest that 70-80% of apps do not meet their intended objectives. This could be a fault in objectives or the way they are being measured or in the way they are being worked towards. Therefore, enterprises need to have a better definition of failure before they reduce investments in specific enterprise mobility projects.
While there are only two things of importance in business, revenue and cost, there are multiple levers that drive these fundamental outcomes. Enterprise mobility can impact these levers as long as the right KPIs are defined. Impressive metrics around downloads or usage do not really serve a meaningful purpose. Enterprises are not digital start-ups whose valuation is driven by usage rather than real money. Therefore, if enterprises want to really extract value from their mobility initiatives, they have to develop measurable KPIs linked to business impact instead of easy-to-measure feel good factors.
How are you measuring your enterprise mobility initiatives?
