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Does BYOD Cost MORE than Traditional Deployments?
This is one of the hottest debates in enterprise technology these days. Here are two perspectives:
One Viewpoint: BYOD costs more. That’s the contention of a Tom Kaneshige article entitled “BYOD: If You Think You're Saving Money, Think Again.” According to the CIO.com post, “Aberdeen Group found that a company with 1,000 mobile devices spends an extra $170,000 per year, on average, when they use a BYOD approach.”
On service plans alone, the study claims a $10/user savings. “Aberdeen's research shows that a company seizing a volume-discount rate and optimizing plans for certain employees spends an average of $60-per-month for a smartphone's wireless voice and data services. Whereas the average BYOD reimbursement for a smartphone is $70-per-month.”
Counterpoint: BYOD works and saves money. Another CIO.com staffer, Thor Olavsrud , offers a different viewpoint outlining “How BYOD Saved VMware $2 Million.” Former VMware CIO (now at StrataFusion), Mark Egan, states VMware conducted a “company-wide assessment of who had corporate-owned mobile devices and whether they actually needed a mobile device to do their job.” They moved to a personal liability and expense reimbursement program in Q4 2011, with differences based on whether an employee’s role is customer facing or not. VMware does not include device reimbursement in the program. They also eliminated phones from staffers who did not require them for their jobs.
As a result of several components to the BYOD program, VMware recognizes considerable savings. According to Egan on CIO.com, “We were spending approximately $172 a month per user in the U.S. My savings are about $2 million that I'm going to save this year in the U.S."
What’s the real answer to BYOD savings? Much like a diet’s success may be less about the ingredients themselves than the process of thinking about what you’re eating, mobile deployments may be the same. When you build, execute and manage a strategy, you’re more likely to recognize the results you’re looking for than if you take a "status quo" position.
Perhaps, the great mobile strategy for 2013 and beyond is ... mindfulness.
Has your BYOD program saved your company money? What are the hidden expenses or pitfalls to avoid? Share your thoughts in the “comments” below.
Aberdeen's blog post on expense reports processing costs The true cost of BYOD http://blogs.aberdeen.com/communications/the-true-cost-of-byod/inspired our platform www.bizzcall.com (open in public beta a few days ago) We have talked to small and big companies and found some relevant facts:
- The main complaint of CFOs and CMOs is that corporate mobile lines and devices lead to irresponsible use. Several companies comment us cases of employees expending a fortune on data transfer just because they forgot to turn data off when travelling abroad. The lost or damage of corporate devices are also very common. This cost is difficult to measure. Reimbursement/compensation policies eliminate careless behaviours when combined with maximum monthly reimbursement amounts. Employees take care of their own devices and do not forget to turn their data off…
- Most companies still use corporate devices and lines. They assume that employees make a personal use of their corporate devices. Employees pay nothing in exchange or a fixed monthly amount. In many companies, when total cell phone budget is finished (due to personal and professional usage), employees make a professional use of their personal cell phones. At the end of the month they submit their personal phone bills to receive reimbursement of the calls and data made for the company. Absurd and inefficient
- CFOs and CMOs believe that they have closed a good deal with phone companies. They think their rates are better than residential plans, so embracing BYOD will have an extra cost for them. When you ask them if they have information about residential rates, the answer is no…So how do they know that they are better off?
- Are businesses rates better than residential rates? We believe they are more or less the same. Even the bigger companies that we have met do not have the great deals they think they have. We think that the residential market is offering great plans that can be split with the company. Phone companies give businesses slightly more voice and data for the same price, but we wonder if all that capacity is really necessary for a company or phone companies are basing their business plans on the analytics of the corporate device irresponsible usage.
Several combinations for mobile communications:
Corporate device + Corporate line
Company cost= business plan + corporate device inefficiencies (management, damage, lost...) + corporate line inefficiencies (irresponsible use)
Personal device + Corporate lines (dual sim cards, VoIp corporate lines)
Company cost= business plan + corporate line inefficiencies
Personal device + personal line (expense reports)
Company cost: a share of the personal plan (based on pay per use combined with limited reimbursement or stipends)
Given that paying business plans or reimbursing residential plans have more or less the same cost for the company, BYOD based on personal lines and not corporate lines should be better alternative for the company, because it eliminates corporate lines inefficiencies.
But wait a minute…Business plans and residential plans are both controlled by phone companies. So they also control the equation. Phone companies are betting for dual sim cards and the like, because they do not want to loose corporate lines. So we believe that they will make corporate plans cheaper in the near future. Obviously, we also believe that they will loose that battle.
We have not done a survey or study. The opinions and cases are the result of meetings and conversations we've had with companies. We will greatly appreciate reading other opinions or experiences.
In my opinion, I believe that at this moment in time, more than half the time, for a typical large enterprise BYOD does cost more than a corporate liable only approach (especially in years 1 and 2 of instantiation). Now that said, I believe eventually it will cost less, much less. The time and date for that inflection point to be reached, when personal liable will be the low cost means is when it is the norm for employees, as a condition of employment, to bring their own devices (sans incentives like stipends). Once the burden is fully on the employee to bring their own computer, communications device and similar tools just to have the job, then the enterprise will really ring in those savings on the BYOD program and those extra profits will bring tremendous economic value.
I feel there are cost savings to be gained, though not initially. Our approach was to not reimburse for personal device purchase and we do not reimburse for full data plan usage, as that can expose you to making the reimbursement a taxable event for the employee. Rather, we offer to either port the employee's cell number into a company plan or provide them with a flat monthly reimbursement (same for all employees).
As a 12 person technology firm, we went from $100-150/d/u to $50/d/u by switching to a business plan and providing smart phones and tablets to our techs in 2012. Also, our client technology plans are anti-BYOD in nature. We have yet to find a real case for a beneficial BYOD scenario other then a 2/3-person startup company. That said, even a startup could see the benefits of not being penny-wise-dollar-dumb if they have the time to even think about it.
Kevin, it seems like you're not finding much of a case among your client base for supporting BYOD. Is the lack of a case for BYOD completely from a financial perspective? Do your clients tend to be super security conscious?
Paul, one interesting exercise would be to quantify WHERE BYOD saves money. It might not be directly on mobile capex or network service costs. In fact, I'm attaching some results of some research I conducted last summer that indicated that - so far, anyway - mobile costs either stayed the same or went up with BYOD. However, BYOD might cut other types of costs or otherwise garner productivity and income gains that translate into profit.
