How mobile costs can cripple your company
Most enterprise organizations today are playing defense when it comes to managing mobility costs. As a result, they are doing only a fair to poor job of tracking, managing and securing smartphone devices — and that is costing them millions. Much of that money disappears in a slow trickle that is hard to see in a glance at the books.
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Here's an example. My firm recently did an audit of a networking infrastructure technology company and found that four phones in Saudi Arabia were racking up charges of more than $12,000 a month. Just four phones. As is common, there was little transparency about who was using what device and where in the corporate network. Not only is that a major security issue, but such a lack of knowledge about the mobile workforce would leave any business vulnerable to runaway costs without ever knowing their source.
How bad is it? Based on what I've seen and heard from fellow CEOs and business leaders, if organizations with more than 1,000 smartphones or smart devices in use do not enforce mobility audit and cost management strategies and solutions, they can be sure their mobile communications costs will rise sharply, and so will the risks associated with device and data losses.
Why are enterprises in such trouble? Over the last two years we've seen corporate mobility shift from a primarily BlackBerry-centric market to one that encompasses a whole range of devices, operating systems and application platforms. The average worker now has more mobile choice and flexibility than ever before. But these devices are generating corporate costs at an exponential rate. First is the cost of the assets themselves.
Device churn is very high; employees are acquiring a new device approximately every 18 months. This rapid turnover creates rapid replacement costs and raises questions about how to decommission and dispose of old hardware, which can also cost money. Being green takes green.
The most serious issues, though, arise on the billing side. Each device may be tied to a rate plan, but also each device can rack up serious service charges, depending on how and where it is used. Significant billing overages, runaway application costs, and exorbitant international roaming fees are no longer a corporate rarity. Yet at many companies new devices are brought into the organization by individual users. This leaves enterprises forced to answer new questions such as how much of the costs of such devices they should cover, what limits should be set on their costs and what policies should be set to mitigate their costs.
We've all heard it said that defense is what wins championships. Unfortunately, that's not true for managing mobile costs, where playing defense means addressing devices and their costs strictly as they occur. That may be possible when managing several hundred devices, but thousands will most certainly be a challenge. The defensive approach is what has driven most enterprises to the brink of their budgets. Costs slip through the cracks, and an organization never gets a holistic view of its expenses.
Obviously in today's business environment, there's no way for an enterprise to pull back on its mobile strategy. So how do you allow the freedom that comes with enterprise mobility, yet commit to being an expense czar? Here are three things you must recognize and address now.
- iPhones are not the problem. Many would like to blame one device or another for their cost issues. That's shortsighted. The key to reigning in rogue devices (and costs) is not to say yes to BlackBerry and no to iPhone. Rather, take an aggressive stance on liability — on what you're responsible for and how you can control it — and the effect on cost management will be tremendous. Before you can understand where your costs lie, you must first determine if you are responsible for them in the first place. CEOs who leave device expense liability undefined will ultimately lose the battle. Set a clear policy, and you'll be on the path to better communications cost management.
- Be green to add green. Earlier I mentioned device churn. Employees are cycling through devices in less than two years. On top of the costs of new devices, there can be significant costs to disposing of the old ones safely and effectively. Implement an effective mobile recycling/reuse program. It can not only help the environment but also bring money back into the business, because of the financial incentives that are offered for green technology problems. It's a shame more organizations don't take advantage of those incentives. Starting a mobile recycling program is simple, and the savings can be significant.
- Take no prisoners. Your biggest cost offenders may be sitting across the board room table from you. Don't assume that a large number of employees have to be responsible for out-of-control costs. It can take only a few devices to throw off a budget. When that happens, those devices are usually in the hands of senior-level employees.
So as you consider your 2011 budget and try to negotiate the price you'll have to pay for mobility next year, remember, don't think you have to sacrifice cost for productivity. A simple shift from defense to offense can set your business up for huge gains in the new year.
Al Subbloie is the chief executive officer of Tangoe, a company that helps businesses manage, understand and control their fixed and mobile telecommunications assets and costs.