How One Company Made A Multi-Million Dollar Blunder In Buying 14,000 iPads

How One Company Made A Multi-Million Dollar Blunder In Buying 14,000 iPads

What can businesses learn from a company that spent millions of dollars on thousands of iPads without knowing how they’d be used?

I’ve been a big proponent of the iPad in business since Apple first announced its tablet more than two and a half years ago. In that time, the iPad has more than proved its value in companies of all different sizes and across virtually every industry. That said, the iPad isn’t a fit for every job within every workplace. If a company is considering investing in iPads for its employees, one of the first things that company and its IT leaders need understand is how the iPad will be used.

That seems like a pretty basic step in the procurement process, but it’s one that seems to be getting overlooked by some companies – including one very large enterprise company that should have known better.

Gartner enterprise software research director Nigel Montgomery was recently interviewed by ZDNet Australia about enterprise resource planning (ERP) apps for the iPad and other mobile devices. While the focus of the interview was on the challenge that software vendors have had adapting ERP tools to mobile devices, one comment from Montgomery was a bigger story.

A company I spoke with last week bought 14,000 iPads for its management team, and 40 per cent of them had sent the devices back because they don’t have a clue what to do with them. The company never considered what the value was and what was going to be delivered [through the iPads].

This story is so mind-boggling at first that it’s almost hard to believe. This was obviously a very large company and most likely a multinational corporation if it has at least 14,000 managers. It almost certainly had a large and skilled IT staff and the type of technology procurement system common in large companies – ones that require multiple people from various divisions to sign off on major purchases. That usually adds a layer of bureaucracy that slows down the process, but it also ensures that purchases aren’t made on a whim.

Despite that, this company somehow spent at least $5.6 million on iPads without an understanding of how they would be used by the staff that received them.

And that’s the most conservative estimate possible. It presumes that all 14,000 iPads were 16 GB iPad 2 models without 3G support purchased for $399 after the new iPad’s release. The cost could have been as much as $11.6 million if they were all 64 GB new iPads with LTE.

The scale of this purchasing fiasco is enormous and I can’t help assuming (and hoping) that it will result in much tighter procurement policies and probably a few people being reprimanded, fired, or losing the authority to authorize such purchases.

There is, however, a lesson here that applies to the iPad as well as other mobile technologies and to the entire bring your own device (BYOD) trend that allows or encourages employees to use their personal iPad, iPhones, and other devices at work. Before you implement any mobile technology program, you need to have a clear understanding of some basic facts.

What problem or need will a device, app, or service solve or fulfill? Who will use it? If there are security concerns, how will you mitigate them? What type of training and support will you offer? How will you determine if the solution is a success?

You also start with limited testing and a pilot project – even if your company is a small to mid-size firm with as little as a few dozen employees. That process helps you determine if the solution does what you bought it to do, how easy it is to use, whether it integrates with your other technology systems, and the level of support and troubleshooting you may be taking on if you move forward with a wide scale deployment.

These are all steps that this company clearly skipped when it bought the iPads, but the simple fact is that many organizations are moving fast towards the goal of empowering workers through the use of iPhones, iPads, and other mobile technologies. Many are moving just as fast towards universal BYOD. In the process, too many are skipping these kinds of steps and rushing forward with no clear idea how, or even if, their employees and bottom line will benefit. It may not be buying thousands of iPads at every business, but this story should serve as a cautionary tale to any company racing towards mobility like a man racing to a mirage in the desert. Despite the hype and excitement, mobility initiatives — all business initiatives, really — need to start from a clear and level-headed mindset.

  • Atienne

    Really, Really, want to know what company that was.

  • Tallest_Skil

    Really, Really, want to know what company that was.

    So that they can be avoided at all cost. Incompetence like this shouldn’t have gotten their money back for the iPads.

  • MrMLK

    Unless they were spending $89,000 per iPad, I think you probably meant to say that the cost could have been as much as $11.6 million.

  • tdmac

    1.16 billon ?? I think 11.6 million , still a large number tho…

  • Atienne
    Really, Really, want to know what company that was.

    So that they can be avoided at all cost. Incompetence like this shouldn’t have gotten their money back for the iPads.

    Was actually wondering what kind of company can spend that kind of money on IT equipment without the head of IT signing off on it, so I can send them my resume with a cover letter that states… “sure my salary of 800K might seem a bit exorbitant, but under my guidance, dumb shit like that will never happen”

  • volodoscope

    So they couldn’t at least get their corporate email on it? Really weird.

  • YodaMac

    I’m sure the same thing would have happened at my company as well if I’d just given them a bunch of iPads and said “Here. Use it.” Face it, PC users all seem a little flustered and confused by the whole tablet idea, and cloud computing, etc. At least my co-workers were.

    That said, everyone saw me using my personal iPad at all our meetings instead of the piles of papers and folders everyone else was lugging around, and without me even promoting the idea, management decides they all want one too.

    Fortunately our staff is small enough that I could work with them each individually to get their iPad’s set up and ready to go. I provided a list of useful work-related apps to download, links to Apple’s “how to” videos, set up their WIFI and cellular service, and walked them through the basic process of storing their documents “in the cloud” to access from their iPad or desktop as needed. Afterwards, I made myself available to answer any questions if they arose.

    Even with all that, there are still a couple of “hold outs” who insist on using a wireless keyboard and treating their iPad like a laptop. Ah well… they’ll come around. :-)

    Point is – even managers need some hand-holding and guidance when first using one of these “new-fangled” devices. Otherwise they just get frustrated and don’t give it a chance.

  • assyrianpride

    i laugh at stupid people.

  • tomp

    I think this corporation is Microsoft :)

  • robert_walter

    If the management team is this incompetent in the area of IT strategy, planning and roll-out, I wonder how incompetent they are in their core areas of business!

  • siddharthbandhu

    The company should make a deal: $5.6 million and they’ll tell which company they are ;)

  • djrobsd

    Again, another story that is less then believable from our favorite rumor mill site. I don’t know about you, but if my company hands me something worth $600 bucks and lets me use it for FREE I’m NOT going to give it back unless I leave the company. 40% of managers REALLY sent their iPads back? That’s a VERY washed out number, I could see maybe 10-20%, but 40% of over compensated executives rejected another $600 dollar stipend?

  • pk de cville

    Don’t believe Gartner when they as a shill, for others make up stories like this.

    A major company ordering 14,000 iPads w no plan in sight?

    I have a bridge to sell you. Good price,too.

  • mlm

    IT departments biggest mistake was thinking an ipad is anything but a toy.

  • Tallest_Skil

    IT departments biggest mistake was thinking an ipad is anything but a toy.

    Get bent, you worthless troll.

  • bowlingGreen
    IT departments biggest mistake was thinking an ipad is anything but a toy.

    Get bent, you worthless troll.

    Says the King of Trolls to his disciple.

    Face it, people here who diss the Windows tablets aren’t taking into account how the iPad is the exact same thing, if not much worse. Closed app marketplace? Just like the iPad. Comes with a keyboard? Actually pretty brilliant. If it’s around $200 people can just make the argument it’s cheap, unlike the iPad. And standards-compliant (HTML5), unlike the iPad.

  • Alfred2612

    Don’t believe Gartner when they as a shill, for others make up stories like this.

    A major company ordering 14,000 iPads w no plan in sight?

    I have a bridge to sell you. Good price,too.

    Er, what? I’m sorry, but that is quite naive.

    Stupid blunders happen all the time, especially in IT. Just looking at one country, the UK, literally billions and billions have been wasted on failed IT projects in the NHS, fire service, police service, the army, HM Revenue and Customs, and as well as in large companies including banks.

    14,000 iPads is nothing compared to the blunders that have been going on for years. It’s a blip on the radar, and this story is entirely unremarkable.

  • warrengonline

    While I LOVED my iPad2 and LIKE my iPad 3rd Gen (like because it takes almost twice as long to charge it – but the 5.0MP Camera is nice), the iPad is not for everyone. As a company, they SHOULD have did a survey of WHY their employees would USE or NEED a tablet in the first place, iPad or some other one.

    The iPad is Great for note-taking, video recording and audio recording. Thoughts and ideas can be scribbled down. But you NEED the right apps for such.

    Such apps as:

    Chapters (by Steven Romej) – GREAT for unlimited note taking and prepping emails or posts on websites.

    PenUltimate (by Evernote) – Brain Storming? This app is just so useful you will use it on day one and wonder how you got through office, design or engineer or teacher life without it. Also, it is GREEN.

    AudioNote (by Luminant Software, Inc)- For meetings, conversations during brain storming if you do not want to write currently, but in down time you will listen and take notes in the app then share them.

    Readdledocs (by Readdle) – If you want a WiFi USB Flashdrive or if you deal with webservers, this app is A GOD SEND! No iTunes needed, just a connected Wifi and you load ANY documents onto it. Granted you can load .swf files, but you can’t view them, all else, yes. Video, audio, images, pdf, doc, docx…

    Keynote (by Apple) – Presentation software, its rad and cool, yadda-yadda.. PowerPoint on iPad.

    Doodlecast Pro (by zinc Roe) – Teachers, engineers, artists, tutors, this program is GREAT for recording notes and playing it like a video WITH sound AND it can be uploaded to YouTube! My clients and friends love it! It saves A LOT of time of not whiteboarding when our time difference it too extreme.

    Pages (by Apple)- If you do not know, think MS Word and you are there.

    Idea Sketch (by Nosleep Software) – Bubbles that let you put brainstorming in order. Works great one many things, from organizing a party to thinking the workings of an app when building it.

    Converter doe iPad (by Architechies)- Have an issue converting measurements? Length, time, volume, etc? This app, put in 250 seconds and you will immediately know it is 4.16667 minutes. Or 1 US pound is 1st 11lbs in Stones.

    I use all of these app, Chapters being the most used as it is backed-up to DropDrop Box and can be shared easily. It is also my secret to long posts like this. Think of my like a great white.. I’ll hit once and I might return the next day as I’m off typing up something else or working on something else.

    But these applications make a working world manageable, efficient and more free time. Check them out.

    I forgot to mention FaceTime, iMessage and image and video sharing via wifi. THAT ALONE is worth the price! Snap a photo, send it, tada!!! It is so much easier than a laptop when out and about. It does NOT replace a computer, but for the average user….. I may soon.

    But the iPad is not for some, but for those who write notes, take photos of prototypes, keep logs of inventory, post items to ebay, are into social media, who like to plan things on the go, who likes to shoot video and share, who cooks with recipes or even one who just like to read….

    The iPad is top notch. But this posting clearly shows a company jumping into the 14k Foot Deep Pool when they should have only purchased maybe 20 for field test runs.

    Though this is not a totally loss. Where’s this company? Do they need an iPad Trainer? Do they want videos to train their employees? Do they need an app built for their private servers? Then, here I am and quite a few other who could be that team of iPad Tech Trainers. And no, my salary does not have to be $800k. Let’s start at $45k and work our way up when trains yields 30% profit and rising in 3 months. Baby steps.

  • Terence Milbourn

    Ryan, Ryan ~ where’s you’r imagination? The thought of a billion monkey’s hammering away at keyboards surely must have crossed your mind? Sometimes you just got to be experimental and keep banging the rocks together.

  • extra_medium

    What’s even more difficult to believe than the purchase of the 14,000 ipads is the claim that 40% of the managers sent them back. I don’t believe for a second that that many of them received that shiny new expensive toy theyve been forced to desire, for free, then said “I can’t see any way to integrate this into my workflow” and sent it back. No, in the real world, they sat down and got busy working on angry birds.

  • thedroidabides

    I’m calling shenanigans on this story.
    “A company I spoke with last week…” Perhaps Mr. Montgomery’s company contact was Stephen Glass or Michael Finkel? Or maybe he just borrowed from their playbook of story sourcing techniques?

    Even if I suspend disbelief long enough to believe this could happen without any of those 14,000 people leaking the name of their company, I refuse to believe “40 percent of them had sent the devices back”. Even if that 40% struggled to find utility, a toddler can find amusement on an iPad. In fact, “toddler” is about the only age range for which not finding utility would be acceptable.

  • normm

    I think the story is made up. Even if the iPad was useless for their work, 40% would not have returned it. This is just anti-iPad propaganda.

  • Bob Forsberg

    Entertaining, not believable.

  • technochick

    .

    A major company ordering 14,000 iPads w no plan in sight?

    No it’s possible. Sometimes the only way to how you might use them is to do it, or try. What the article is slim on is details. No confirmation on what model was bought, no confirmation othe size of the company or if they are making billions every quarter so this cost is really nothing.

    Ryan tries to come off all knowledged with his ‘everyone knows first you are supposed to do a small test’ but perhaps 14k was a small test. That could be say only 5% of their staff.

  • technochick

    I think the story is made up. Even if the iPad was useless for their work, 40% would not have returned it. This is just anti-iPad propaganda.

    You assume they were given them flat out and could take them home for personal use. Perhaps they could not

  • sylia

    You’re assuming that the IT department was even consulted in the process. In my own experience, there’s always some Executive type somewhere that has a brainwave, gets the rest of their cadre to buy into to it, and next thing you know we’re expected to try integrating something that has not been properly vetted for compatibility with our apps and environment.

  • Lex Luminati

    And there goes our bail out money….

  • GNZT

    Or the guys story is exaggerated 1400 more like, Gartner carnival crystal ball readers..
    Ive seen it before, IT rolls out hardware for users to familiarize themselves with, prior to immersing them in its real intent, lots get returned by the inept and the ones uninterested in change until they are forced to.
    Many would explore the gadget more intently if it didn’t have the work factor associated to start with.

  • timacheson

    “the iPad has more than proved its value in companies of all different sizes and across virtually every industry”

    Please cite robust evidence for this bold Apple propaganda statement.

  • timacheson

    “This story is so mind-boggling at first that it’s almost hard to believe.”

    It does not surprise me. Anyone considering an iPad roll-out, when the device is in almost every usecase is the most expensive and least useful solution, must implicitly be a dufus.

    It’s not uncommon for ageing dead-wood executives to take drastic decisions in order to jump on a perceived “cool” bandwagon as a desperate plea to look “down with the kids”. Furthermore, it requires those responsible to be reliant on TV ads for their knowledge of trends in technology. It’s lamentable.

  • Martel

    Either the story is an apocryphal fable or 40% of the company’s ‘management team’ is composed of specimens who would be more suited for fry cook work at McDonald’s…much like some of the stunted intellects who have posted comments on this fable.

  • Brainz

    First off. The iPAD is a CONSUMER PRODUCT. Not a business product. APPLE will tell you that themselves if you meet with the bigwigs. That being said, there are some limited uses for HealthCare and other areas but there is NOTHING that a normal laptop or tablet can’t already provide that makes the iPAD and all its additional needs, to be required. Most companies end up having to spend $50k-$100k plus just for solutions to lockdown and secure the iPAD in their networks, and that’s an average. Segregated networks, additional wifi Access Points due to the poor power antennas in the iPAD compared to a normal Windows laptop. Then you need IT staff training or additional IT people to mitigate the obvious issues that come with BYOD devices. I’m an IT Manager and most of the users we’ve tested, find that the iPAD isn’t business ready. Unless you have a custom APP written for your specific need for the iPAD. What makes everything funny is how people take a MAC or an iPAD and instantly want to make it run like Windows so they can do their business work and rarely does it work how they want. For email, notetaking and web browsing, sure it works. But that is nothing new that hasn’t been done for 15+ years now. BYOD I wouldn’t recommend to anyone unless you don’t mind wasting a bunch of extra money for no reason, putting addition concerns for security on your network infrastructure, legal issues, etc. The list goes on. The iPAD phase will fade out and Windows 8 will likely fill the void with updated hardware that meets the thinner, lighter, longer lasting tablets that were the real reason the iPAD gained popularity.

    This company that bought 14000 is a perfect example of thoughtless overpaid management that takes an idea and says, “It’s an iPAD. My kids love it, I use mine for email and stuff so it’s the perfect solution.” Then they want IT to make it work and guess what, IT DOESN’T. Unless you write your own software, face it, it’s not a BUSINESS SOLUTION that is built around a Windows Domain and we all know that Windows is in 99% of the world’s businesses. Windows or Linux, Citrix, Xen, you name it! None have anything that screams, Apple.

  • myother

    Yellow journalism at its finest.

About the author

Ryan FaasRyan Faas is a technology journalist and consultant living in upstate New York who has written extensively about Apple, business and enterprise IT, and the mobile industry. In addition to writing for Cult of Mac, he is a contributor to Computerworld, InformIT, and Peachpit Press. In a previous existence he was a healthcare IT director as well as a systems and network administrator. Follow Ryan on Twitter and Google +

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