Return on Investment for Office WLANs

For over a decade, companies have been reaping significant ROI (return on investment) using wireless LANs for labor-intensive functions, such as inventory management and retail price marking. Companies such as Symbol and Intermec have been very successful at selling wireless LANs to these vertical markets, even back in the early and mid 1990s when there were no standards, performance was relatively low, and prices were very high. Even with radio cards at $1,200 each, you could easily show a ROI in 12 to 18 months for a wireless bar code system.

Of course today, we have standards, higher data rates, and much lower prices for wireless LANs. This raises the question of whether wireless LANs can provide a decent ROI in common office environments, the so-called horizontal market, which is potentially huge. Let's look at how wireless LANs can be applied in these common office areas.

Wireless for desktop computers?
One place to add wireless connectivity is in ordinary desktop PCs. Of course the idea here is to avoid the installation of wire between the desktop and the corporate network. Because of the size of the desktop PC, we can assume that it's stationary. Are wireless desktops financially feasible today?

An 802.11 radio card today costs approximately $150, which is still higher than the $50 or so that you'll pay for a wired Ethernet card. In general, it runs approximately $150 per desktop to install Ethernet cabling, wall plate, etc. Thus, the net savings to go wireless instead of Ethernet is about $50, not including cost differences of the network backbone.

At least today, you'll probably pay more for wireless LAN access points than Ethernet switches, once you factor in the varying costs for hardware, RF site survey, and other factors. As a result, wireless desktops provide very little net cost savings, especially when the number of end users per access point (density) is relatively low. Keep in mind that these thoughts also assume that the facility has no existing Ethernet connections to the desktop. If Ethernet is already available, then you'll have an awfully negative cost saving when adding a wireless network.

Productivity gain is the answer
For more compelling reasons to install wireless LANs, you need to show continual productivity benefits. For example, consider using 802.11-equipped laptops. This enables users to read and respond to e-mail and browse the Internet during office meetings, assuming the user can be responsive when needed at the meeting while plunking away at their laptop. Even though this seems trivial, the productivity gains can be significant.

Let's say a person attends three hours worth of meetings each day. If the user spends approximately 15 minutes per hour responding to email and other Internet-related tasks during each meeting, then user will have 45 minutes more time each day to other tasks. This seems pretty reasonable, considering the average person and office setting.

Show me the real savings!
A 45-minute productivity gain equates to company cost savings that depend on the person's cost per hour. At $50 per hour, the savings will be $37.50 per person-day. A smaller company with 20 users will save $750 per day, $15,000 per month, $180,000 per year, and so on. After including wireless LAN costs of $40,000, you should see a positive ROI in about three months! Even if you factor in the cost of new laptops for everyone, you should still see a positive ROI in less than one year.

As a result, the use of wireless LANs can be financially beneficial in common office environments, even if it only enables people to make better use of their time during meetings. Once a wireless LAN is in place, however, you'll surely think of additional productivity-enhancing applications.

Jim Geier provides independent consulting services to companies developing and implementing wireless networks. He is the author of the book, Wireless LANs (2nd Edition), and regularly instructs workshops on wireless LANs.

Editor's note: This story first appeared on internet.com's 802.11 Planet.