You saved how much?

by Brian Katz on May 16, 2012 · 7 comments

As I wing off to another city this fine Monday morning, it seemed like the perfect time to talk about the economics of bring your own device (BYOD) and in this case we are talking mobile solutions. We’ve all read plenty of how easy it is for a company to save money by going to BYOD and no longer paying for the actual phone or tablet that their employee uses.

This whole concept kicked off a few years when an analyst house published a research report on how much money a company could save if they went from corporate liable (company owned) devices to personal liable (employee owned) devices. This would protect companies from spending the $100 to $200 every two years for each employee whom they supplied a phone to. So a medium to large size enterprise which supplied devices to 10,000 people would save $2 million dollars over the course of every two years just on purchasing devices, This was the big allure to BYOD, in an era of cost cutting it was a no brainer.

The funny thing is that this isn’t how it has worked out for most companies. Let’s start with the simple part. Most of the companies that went to BYOD let the employee choose whatever device they wanted as long as they paid for it themselves. While the companies shed the capital costs, most of them still reimburse the employees for part or all of the voice and data plans as many were using them for work purposes. This turns out to be a lot of money. What’s the big deal though, they were already paying for the plans when they were corporate owned devices so at least they saved on the cost of the device. While this looks like the real deal they are actually spending more money on these plans than they did originally. Most medium or large companies get a discount on their voice and data plans from the carriers. In most cases it adds up to a total of $10~$20 per user a month that they save. This doesn’t include some of the perks that they can take advantage of when they use corporate data plans. In some cases they can get unlimited roaming data or extraordinarily cheap data. They may get the ability to pool data and voice to avoid paying for overages.

So let’s take a look at the numbers. If we look at the costs savings of $20/month per user if the user is on a corporate device then we see that over the course of two years a company spends an extra $480 per person using BYOD in reimbursements. That $200 savings based upon who buys the device doesn’t look so hot anymore does it? Let’s assume though that they save at the low end of the scale, $10/month – that is still a savings of $240 over 2 years if they are on a corporate device, which means a net spend of $40 per user instead of the savings they would have if the company bought the device for $200. Let’s not forget that most of these times these reimbursements happen through the expense system. That means that each employee has to spend time doing the expense, it has to be processed, and then sent out. How much of a cost does that add to your BYOD program. Most do not take these ancillary costs into account.

Now let’s take a look at managing these devices. In all likelihood, you will need to purchase some sort of management system to administer these devices such as a Mobile Device Management system. You have a couple of different ways to pay for these systems but if you go for a hosted system, you are usually paying anywhere from $1 to $10 per device a month. For our 10,000 users that is between $120K to $1.2M a year just so your employees devices can be managed. Now you might decide to save some money and run your MDM system on site, you will still need licenses for your devices which will run $10~$20 per device or $100K to $200K for you device fleet. Let’s not forget the maintenance fees you pay each year for the software (we’ll leave those out for the moment). You will also have to pay for the servers and pipes that you need to run the management software. By the way, in most cases these aren’t perpetual licenses, they apply to a device and when you get a new one you have to pay for a new license for it. This is another set of costs you didn’t plan on.

So now your employees have their devices, and you can manage them, but since you went to a BYOD model, your employees have chosen a plethora of different devices. Many of them don’t work the same way and now you have to be ready to support them. This is going to require helpdesk support and depending upon the number of users this can require the addition of representatives. Let’s assume that this will be 2 FTE positions to cover the 10,000 users (conservative I think) and one can calculate that themselves but it certainly isn’t cheap. There is one more thing to consider when you go BYOD, if someone is traveling and needs their device to access the enterprise ecosystem, what do you do when they lose or break the device? Is it important that they be connected? These are all questions that can add to the cost of BYOD.

We are going to ignore the infrastructure investment as far as wireless on the enterprise sites due to the fact that you would have to make those  upgrades anyway if you went with corporate owned devices. The question is, since we are talking about BYOD, does the enterprise start to invest in technologies like NAC (Network Access Control) to make sure that only devices that meet the minimum security requirements can access corporate resources? This turns out to be quite an investment in equipment and knowledge to design and run these environments. Was this factored in when companies considered going to BYOD?

The truth of the matter is that BYOD is an effective way for companies to raise employee morale and make money for free as most employees become more productive as they put more time into work during off hours. Just don’t expect to save money through the program.

{ 2 comments… read them below or add one }

Daniel Steeves May 16, 2012 at 3:47 pm

and if you have any concerns at all about security of data and information from the corporate network, then what? ??


Hyoun Park July 2, 2012 at 3:17 pm

Brian, great post, but I have a couple of quibbles. For Mobile Device/Application Management, shouldn’t companies be buying into this regardless of whether the devices are BYOD or corporate liable? Or are you thinking of Blackberry BES vs a more customer third-party management solution?

On the other hand, there’s also a hidden cost of processing and managing expense reports as well. The majority of reimbursements are happening via an internal process that takes up an end user’s time and some amount of manager or A/P time as well. So it might cost even more than the case that you’ve made so far.


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