Four Steps to Figuring the ROI of Mobile Apps Developed for Business

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Four Steps to Figuring the ROI of Mobile Apps Developed for Business

Mobile business apps are in high demand. As the mobile industry grows, enterprises are starting to recognize that mobile apps may improve productivity and efficiency in the workplace. In the rush to go mobile, most businesses assume that in some way they’ll be gaining a financial benefit, but they can’t specify how much that benefit will be, or if in fact there will truly be one. Instead, most companies rely on instinct and guesswork. The thinking is that it’s simply too complicated to determine the payback on custom mobile apps for business.

That thinking is wrong, according to a new white paper from Kony. The white paper details a four-step process for determining the ROI of your mobile app. Calculating the ROI for building a mobile application can help you determine if the app is worthwhile and validate any assumptions you may have about the benefits mobile apps developed for your business may bring.

Checking the value of your custom mobile application: The Four-Step Process

In the first step, you determine the primary purpose of your app and list its goals. There are two primary purposes, either increasing consumer engagement, or improving workplace efficiency. For consumer engagement, list important goals such as lead acquisition and increasing retention rate. For workplace efficiency, list goals such as improving asset management or bettering the supply chain. Make sure to determine those goals in as much detail as possible, because you’ll be coming back to them later.

Next, add up the development costs of your app. How much does it cost to develop and implement it? What are the costs of integration? What are the hardware costs?

Now determine a real-world, measurable key performance indicator (KPI) for the app — in other words, what are the actual financial benefits you can expect to see from it? Take the goals from first step and calculate the financial benefits you can expect from each. For example, for lead acquisition, figure out how many new leads you can expect to get, and multiply that by how much revenue you expect from each lead. Add up all the financial benefits you expect to gain.

Finally, figure out ROI. Let’s assume that you’ll be determining a five-year ROI. Multiply the business benefits as outlined in the KPI you can expect by five, then subtract the opportunity costs of capital from that. That gives you what’s called the net present value benefits (NPV Benefits). Now take the app’s development costs, add to them the annual maintenance costs times five, and subtract from that the opportunity cost of capital. That gives you what’s called the net present value costs (NPV Costs). Finally, divide NPV Benefits by NPV Costs. That gives you the ROI of the app.

All that calculates the ROI, but doesn’t help you improve the ROI. That’s where Alpha Anywhere comes in. It can dramatically reduce development costs by a factor of five or even more. In addition, its tools allow for the creation of extremely flexible apps, which can increase an app’s financial benefits and KPI. Increasing the KPI while decreasing costs can dramatically improve any app’s ROI.

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About Author

Dion McCormick
Dion McCormick

Dion McCormick, Lead Solutions Engineer at Alpha Software, is a recognized expert on agile application development. He helps enterprise development teams around the world transition from slow legacy approaches to high-performance mobile, web, and desktop development using the Alpha Anywhere platform.

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