Articles

RSS

By: Boris Fridman, CEO of Broadbeam Corporation

Contents:
Savings are possible
Systems costs
Manpower costs
Wireless software costs
Time to deploy
Lower initial costs free funds
Scalability and future proofing

Recently, application service provider (ASP) hosting services have been introduced to the wireless market. The new services provide wireless connectivity and enable enterprise customers to "rent" a wide range of wireless applications. These services are designed to enable organizations to rapidly deploy and reduce the total cost of ownership of their mobile application solutions. But until recently, no one has known for sure how much money hosting services can really save organizations.

The "net" of the research is that by the end of the third year, hosting a wireless gateway with a full-service ASP should save an organization approximately 25% to 45% of the overall costs when compared with implementing the same system in-house. Savings vary and are dependent largely upon the number of wireless users. With fewer users, savings are proportionately higher than with more users.

Savings are possible
In terms of dollars, when evaluated over a three-year period a small- to medium-size deployment of 200 users will likely save about $200,000 (40%). A larger deployment of 1,000 users might see savings of nearly $270,000 (28%).

Most of the direct cost savings from the Wireless ASP approach derive from maintenance, manpower, and connection charges to the wireless carriers as well as middleware licenses. In addition, there are also "opportunity cost" dollar savings, including reduced time to deployment, freeing up of funds for other purposes, and reduced costs when deploying additional networks/device types.

For purposes of this article, we examined cost contributors when deploying and supporting a wireless application for 200 users to show how an organization might save $200,000. First, the approximate hard costs over three years for 200 users:

(Back to Top)

Systems costs
Because of the unique nature of wireless applications, wireless network connectivity, and system design, organizations generally use dedicated servers to separate the wireless traffic from application servers. The business-critical nature of wireless applications necessitates the use of fault-tolerant servers with redundant components and network infrastructure.

While many IT operations have invested in this equipment already for their back-end systems, most will need to make additional purchases to accommodate their wireless needs. By choosing the Wireless ASP approach, organizations can optimize and even share the overall costs for connections to the wireless data carriers and "rent" space on pre-configured, dedicated servers. Research indicates that the relative costs for wireless systems including the server and network connections are $145,000 when done in-house versus $80,000 when using a Wireless ASP.

(Back to Top)

Manpower costs
One of the largest savings is in manpower. These estimates include the manpower needed in implementation, project planning and technical support, all of which are critical pieces in the deployment and long-term operation of these systems. Many Wireless ASPs include these services as part of the package (larger companies will need 24-hour by 7-day support due to the nature of their business and the hours that mobile workers work, smaller companies may not).

In quantifying what turns out to be an enormous piece of the pie, it has been assumed that personnel will not be dedicated to support just one application component. However, when comparing the relative costs, full 24 by 7 support by the Wireless ASP is included. Providing this support in-house is much more expensive than outsourcing. In fact, research shows that relative costs for manpower are about $230,000 to provide the support in house while a Wireless ASP can provide it for approximately $145,000.

(Back to Top)

Wireless software costs
Hosting services generally include a percentage of the costs for the middleware license and maintenance as part of the monthly fee. With in-house approaches, licenses must be paid for in full, with yearly maintenance charges added. Thus, when comparing hosted versus in-house approaches over three years—even on a single device and network—savings can be significant.

Add the fact that Wireless ASPs often include multi-network support with the standard package, and the direct savings are potentially much larger. Wireless middleware and maintenance cost approximately $155,000 when purchased up-front but only $105,000 when rented through a Wireless ASP.

With the hard costs considered, we can look at the approximate opportunity costs for 200 users over three years:

(Back to Top)

Time to deploy
Wireless IT projects often take a long time to deploy due to extended learning curves , delays in establishing connections with the wireless carriers and systems installations. While hosting services do not remove all development bottlenecks, they often include programs to smooth the development path. In addition, hosted servers are ready to go. Thus, implementations take days rather than weeks or even months.

(Back to Top)

Lower initial costs free funds
If an organization chooses to deploy internally, the license fees, systems and infrastructure and some of the manpower costs are due immediately. Businesses choosing the Wireless ASP approach benefit from investing the money that would have gone into up-front licensing and information system costs into their own businesses—eliminating the hidden costs of missed opportunities. For large-scale implementations this figure can be substantial.

(Back to Top)

Scalability and future proofing
It is rare, particularly in larger organizations, that wireless projects don't expand to encompass new users and regions. For example, organizations often add new networks for coverage in newly deployed regions. While wireless middleware can assist in this, hosting ensures new network deployments at little up-front direct costs and with no waiting. Thus, the organization can capitalize on the new market without delay.

Bottom line: Companies will discover that there are significantly fewer hard costs associated with the Wireless ASP versus in-house approaches. Soft savings tip the scale even further toward selecting Wireless ASPs. To prove savings, ISVs and enterprises should perform a cost analysis using their own data. The results may surprise them.

(Back to Top)

About the author
Boris Fridman, is the CEO of Broadbeam Corp. Formerly Nettech Systems, Broadbeam is headquartered in Princeton, NJ and develops wireless middleware—a suite of tools that enable cost-effective mobile data communications over the broadest range of operating systems and wireless data networks. The company's products are used by independent software developers, systems integrators, and in-house corporate developers to integrate wireless data communications into their enterprise-wide systems with minimal development time or modification to existing applications. Broadbeam also offers a full complement of support services designed to accelerate the development and deployment of mobile applications.