I once knew a Post Office manager, responsible for overseeing all aspects of postal services in a main branch. One of the things that irritated him was the amount of time it took to weigh a parcel and calculate the cost of dispatch to the address. It was all manual, with real scales, then affixing stamps, then writing a receipt for the customer. As most people had more than one packet or parcel, the queues were long, especially at lunchtime.
After a fair amount of research, he presented a report to the senior management regarding the purchase of computerised scales, which did everything at once. It was implemented, and after the staff had been trained, it worked a treat. Sales went up, waiting time down, and customer service was a joy to behold.
‘What did we get from it’ divided by ‘How much did we pay for it’ is a pretty basic description for Return On Investment, or ROI. As I am not aware of the specific industry you, the reader, are involved in, it’s a bit tricky to highlight one or two areas that can be measurable after a life cycle of a particular piece of software. But I’ll have a crack at it, and choose an industry that is generic to most, logistics.
A logistics model
There is a country-wide logistics company in Poland, called InPost, which delivers goods to parcel lockers, positioned in cities, towns, villages and other locations. Established in 2006, it has become the go-to service for online purchases, with services in the UK and Italy. Prior to 2019, the company would send an SMS with a barcode to the customer that their shipment had been delivered to a parcel locker in their vicinity. The customer would then go to the parcel locker, get the barcode scanned, and retrieve their package.
InPost was sending tens of millions of text messages every month, and this was a big problem for the company. Apart from the cost, there was the possibility of fraud. Another major problem was the length of queues waiting for a package, especially around holiday periods and special occasion days. In some cases, lockers were full, requiring the delivery driver to stay in front of the location and physically hand out parcels to customers once identification had been made, adding to lost time. InPost needed a solution to speed up the process.
A software application
In 2017, InPost teamed up with iteo to fix the situation. After a year of collaboration, meetings and refinements, iteo started a project to build a mobile application that would be contactless, and would enable customers not only to make a pick up without using the parcel locker’s on- screen display and scanner, but also would allow them to send something, not needing a delivery address printout (labelless posting).
The app became very popular, even more so when the pandemic struck and governments were strongly suggesting the use of disposable gloves. Delivery speed and pick up rate increased dramatically, and the parcel lockers were utilized in a much better way, allowing drivers to make several deliveries a day, instead of one. Multilocker was introduced to allow several packages in one locker addressed to a customer, freeing up space.
In summary, the app provides customers with a 24/7 dispatch and retrieval contactless service.
How a ROI goal is calculated
Speaking in general terms, ROI = net gain / cost but it is more than that. Over the course of the initial meetings between InPost and iteo, there must have been a point where costs were discussed, and the ROI goals set by the company.
There are several key areas to focus on when a company decides to use digital technology.
- Increasing employee productivity by using innovative solutions
- Augmenting a revenue stream by an extension of business services
- Improving efficiency by automation
- Meeting and exceeding customer expectations
- Removing redundancies
You could definitely assign the first four areas to the InPost app, and it is clear that there will be a ROI. While I am not privy to any figures from InPost, I would like to think that the application has been extremely successful for them, and collaboration is ongoing. ROI cannot truly be determined until after the end of the product life cycle, but it can be regularly monitored. And with 5 million online users, and daily dynamic increases, it makes a strong case for success.