A lot of customers find the possible return on investment that many M2M solutions offer to be unrealistic.  This is an argument that I have heard a few times.  I guess if you are using traditional IT measures, it may be true given many of those can take 5-10x longer to return the investment than most in our space.  The reason is that most IT solutions help your business, while M2M solutions can totally change them.

Over the next little while, I am going to go over some real life data to show how much difference an M2M solution can make.  In this first post, we are going to go over the value of using a cellular modem to back up your main Internet connection.

Aside from the ROI below, this solution also:

  1. Helps you maintain your customer service by ensuring that all systems are up (this ranges from looking up inventory to placing orders online).
  2. Keeps all of your remote staff connected to key items at your office such as looking up sales and that little thing called email.
  3. Ensures that you have a real-time look at inventory, especially for items that are either JIT (just in time) or perishable.

In this scenario, we use the following assumptions:

  • the company generates an average of $1M in revenue per location
  • about 85% of their customers use credit card or debit; this number grows each year,  as the average sale is usually more than most customers carry in cash
  • the locations are open 80 hrs per week; most customers are not able to pay for their orders in cash when the systems are not available
  • their Main Internet connection is up and fully functional 99.6% of the time; this may be high or low, depending on your provider and your location.
  • most of the customers locations are in lower to mid cellular coverage areas, so good to better cellular antennas are required
  • company does all IT work internally (from installation to support)

The following things were not factored in, as they could not be as easily measured (but should be factored in to increasing the ROI of the solution):

  • the company uses a 3rd party e-commerce solution to allow customers to process real-time orders; an Internet outage at their location will not affect customers placing orders online, but it will affect orders being sent to their locations if the Internet is down
  • the company has many remote sales and delivery people who rely on information that is accessed on the company's web site or main servers (inventory levels, email, etc)
  • the company's sales can "peak and valley" at different times of the day and by the season, so outages at busy times can have much more of an impact than at other times; these calculations were for an average sales period only

ROI Input Items

Based on the points above, here are the customer input items used for this ROI. The customer inputted information is highlighted in yellow/red, all results that came from their input is highlighted in bold/green.  The estimates for IT setup and support are from the customer.

Based on the customer’s numbers, we established the following breakdown:

So, will this customer benefit from using an M2M solution to back up their main line?
I think so......the entire upfront cost for the solution (hardware, installation and setup), is paid for within the first 3 months!  As well, the customer will pay for all of the costs that they should experience in the first 5 years (hardware, installation, ongoing maintenance/support and airtime) in under 13 months, providing them with a savings of over $13K per location.

Now, even when you change some of the variables (assuming that more customers can pay cash, there is less downtime than we have estimated or the costs may be higher), it is still a compelling argument, especially when you factor in the points above that are not reflected in these calculations.  For many companies, things such as maintaining productivity and protecting their brand may be enough to justify the solution on its own.

The Bottom Line
Is using an M2M solution the ideal move for ALL businesses? I don't think it is...YET!  Many companies don’t have customers using credit/debit at their location, and many companies do not use the Internet as a main backbone to run their business.  However, these companies are moving towards this model, so at some point, ALL businesses (regardless of the size, industry or location) will want to protect their company by using an M2M solution.

As always, Novotech is ready to assist with your M2M needs. Whether you’re looking to control, track, monitor or back-up, Novotech has the solutions and products you need. View our Line Cards and let us know how we can be of assistance.

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