Business Benefits of the Solution

Business Benefits of the Solution

Cisco IT believes that the global WLAN solution provides positive productivity benefits in excess of US$50M per annum. Internal Cisco IT studies show average productive time savings of over 30 minutes per day. However, to ensure a more conservative approach, Cisco has calculated the business value of the WLAN on the assumption of 50 percent of users saving only 10 minutes per day.

Cisco Systems, Inc. commissioned an independent study on WLAN benefits in 2003. Based on a survey of over 300 U.S. organizations with more than 100 employees, it was found that WLANs typically provide average daily time savings (and therefore productivity) of 90 minutes. This in turn is equivalent to US$14,000 per employee, per annum[1]

Rather than adopting these figures (which would have resulted in projected savings of several hundred million dollars when considering over 38,000 regular employees), Cisco IT took a considerably more conservative and financially prudent approach.

First, Cisco calculated the cost of employee time, as follows:

• 230 work days per year

• 96,600 work minutes per year (7 hours per day)

• Average cost of $120,000 per employee per year (salary, workplace resources costs, and so on)

• 120,000 / 96,600 = 1.2422

• Average cost per work minute: $1.24 / minute

Cisco IT then calculated the benefits that would result if each employee were to save 10 minutes per day. This resulted in a figure of over 100 million dollars:

• 10 minutes saved * $1.24 * 230 work days = $2,852 per employee

• 38,000 employees, productivity improvement =US$108,376,000

This figure is, of course, unreliable. Cisco IT therefore undertook a normalization process and reduced the projected time savings. To ensure financial prudence, Cisco IT revised their estimates downward. They now assume only 50 percent of their daily WLAN users saved and used 10 minutes of productive time per day:

10 minutes saved * $1.24 * 230 work days = $2,852 per employee

19,000 employees * 2,852 = US$54,188,000

Experience, user reports, and observed behavior show that these figures err on the side of caution. However, even with this statistically conservative and financially prudent approach, Cisco IT has shown that the global WLAN solution not only paid for itself within six months of deployment but also has been positively affecting the Cisco bottom line to the tune of tens of millions of dollars for the past five years. Cisco IT expects this trend to continue as users' reliance on the WLAN increases and additionally enhanced services are added to the solution.