Economic Considerations

In general, organizations exist to create value. The value creation process can take on many different forms, including the production of goods and materials in the manufacturing industry, the care of patients in the healthcare industry, the safekeeping and growth of financial assets in the financial services industry, and the sharing of knowledge in the academic world. The value can be tangible, as in the production of an automobile, or intangible, as when sharing knowledge.

To be effective at value creation, organizations must invest in tools that directly (or indirectly) support the value creation process. IT infrastructure assets are such tools. At a high level, investments in IT infrastructure assets are made to provide the organization with enabling tools to increase productivity and flexibility. Increasing productivity can be thought of as extending the leverage of other assets such as property, plants, equipment and human, intellectual, and brand capital. Greater flexibility implies a better ability to sense and respond to internal and external changes that directly affect the organization.

In the context of WLANs, the key question that you need to answer is this: "How can WLANs aid my organization in the value-creation process?"

To effectively and successfully answer this question, implement the following top-down approach:

Step 1.	Understand your organizational ecosystem.
Step 2.	Define the problem that you are trying to solve.
Step 3.	Break the problem down.
Step 4.	Define the WLAN-enabled solution.

Figure 2-2 illustrates the discrete steps that need to be taken. The next sections describe each step in detail.

Figure 2-2. Determining the Economic Value of Your WLAN

Step 1: Understand Your Organizational Ecosystem

Every organization is subject to forces of change. These forces can come from inside the organizationinternal driversor from outside the organizationexternal forces. The combination of the organization, the external constituents that are directly related to your organization, and the internal and external forces makes up the ecosystem in which your organization operates.

Strategy consultants employ a variety of frameworks to structure and facilitate the comprehension of the organizational ecosystem. Example frameworks include the three Cs (Customer, Company, Competition), low-cost versus niche player, and internal-external factors.

When an understanding of internal factors and external considerations has been developed, you are ready to tackle the following step.

Step 2: Define the Problem That You Are Trying to Solve

Given the dynamics of your specific organization, what value do you expect the WLANs to deliver? Note that this question does not necessarily constrain itself to trivial answers such as "Enhancing communications and connectivity." Indeed, armed with the knowledge acquired in the first step, your answer can be made not only much more relevant for your organization but also much more specific.

Two examples clearly illustrate this point. In the summer of 2001, Starbucks Corporation, a company known for serving coffee through its worldwide retail outlets, commenced deploying WLANs in its retail outlets. It is arguable that the value proposition for installing WLANs in the retail outlets was to make the baristas more productive.

Starbucks' management identified the value of providing WLAN-enabled Internet access to its customers in another domain. By providing customers with easy-to-use Internet access, Starbucks hopes to enhance and extend the customer's experience with the ultimate goal of serving him or her more coffee. As such, the value proposition of WLANs to Starbucks becomes increased revenues through more satisfying (repeat business) and longer (more servings) customer visits. The problem that Starbucks Corporation solved with WLANs is this: "How can Starbucks enhance the experience of customers to increase repeat business and make them consume more Starbucks' products?"

A second example is that of Lifespan, which is featured in Chapter 10, "Healthcare Case Study." Wireless networks formed an integral part of Lifespan's IT infrastructure strategy as early as 1997. The challenge that Lifespan tackled was providing timely information access throughout the healthcare continuum.

The nature of healthcare is such that physicians and nurses cannot be tethered. They must be able to do rounds, go to clinics, and visit libraries. A challenge arises in that hospital staff must be able to access applications for patient information while remaining mobile. As such, the goal becomes finding a solution to get applications closer to the mobile physicians and the point of care of the patient.

The problem that Lifespan solved with WLANs is this: "How can Lifespan provide its physicians and nurses with relevant and timely information at the point of care of patients to increase customer satisfaction through delivery of safer, higher-quality healthcare?" Chapter 10 is dedicated to a case study of WLANs in the healthcare environment and specifically covers the rationale that Lifespan developed for deploying WLANs.

After you accurately define the problem, the next step is to break the complex problem down into simpler, more manageable components.

Step 3: Break the Problem Down

As you learned in the second step, organizations primarily address two different types of problems with WLANs:

Increasing revenues, as was the case for Starbucks
Increasing productivity and accuracy of staff, as was the case for Lifespan

You could argue that productivity and revenues are directly related and, hence, imply the same goal. The goal might be the same. After all, the majority of organizations strive to increase profitability by increasing revenue and decreasing expenses. The methods for achieving the goal, however, can be very different. This becomes clear when you deconstruct the problem to more specifically identify how your organization benefits from WLANs. Breaking down the problem not only makes the identification of a specific value-proposition easier, but it also reduces the risk of oversight.

Four different dimensions are relevant when evaluating business challenges: strategic, operational, financial, and technological. Keep in mind that the WLAN's value-proposition that you are attempting to pinpoint is not necessarily limited to a single dimension. Indeed, it will typically span at least two (strategic and technological) of them. A sample of drivers for WLANs in each of the four dimensions follows.

Strategic drivers include the following:

Provide high-speed mobile access/availability to information.
Increase employee productivity.
Facilitate and enhance collaboration.
Improve response times to stakeholders (customers, coworkers, and suppliers).
Provide richer communications capabilities.
Enhance customer experience.
Increase customer satisfaction.
Increase customer loyalty.
Improve aesthetics (no dangling wires).

Operational drivers include the following:

Simplify management of network infrastructure.
Provide connectivity in temporary locations.
Avoid difficult cabling situations.
Provide scalable connectivity (avoid insufficient data ports).

Financial drivers include the following:

Obviate cabling costs.
Avoid circuit expenses (WLAN inter-building bridges).
Reduce equipment cost for sporadically used spaces (meeting rooms and common areas).

Technological drivers include the following:

Provide communications infrastructure for mobile devices.
Enable mobility for wireless applications.
Interconnect heterogeneous platforms, devices, and applications.

Figure 2-3 illustrates the four dimensions you need to consider when assessing the value proposition of a WLAN.

Figure 2-3. Identifying the Value Proposition of Your WLAN

Step 4: Define WLAN-Enabled Solution

After you define and understand the problem to be solved, a WLAN solution can be constructed. Chapter 3, "Preparation and Planning," provides you with a structured approach for doing this. However, prior to launching this phase, you need to understand what the role of WLANs is in your organization as well as how to demonstrate the business value to your stakeholders. This is covered next.

Economic Considerations