How Much Are You Throwing Away Monthly?

Every carrier bill is littered with forgotten or unnoticed features that are no longer needed or used. Carriers can’t know if a feature is no longer needed and are happy to include them in each monthly bill.  Because feature charges recur monthly, it doesn’t take long for wasted spending to add up.  The problem is that if your company doesn’t have a way to track or identify these unneeded features, they will continue to bill unnoticed.  Too often the benchmark of successful mobility management is to compare previous month spending.  If an invoice is consistent with previous month billings this is often deemed adequate.  An uptick in billings will draw immediate attention but stable spending becomes a false assurance that spending is under control.

There are two categories of feature expense that are deserving of attention.  First are the usage-based features.  These would include functions such as messaging, data, and international features.  Because overage charges can be painful, there is frequently a tendency to overshoot on the feature tier selected.  Rarely do companies have effective procedures to monitor these devices as usage drops below their peak.  They are often sized based on these peak usage months and, as long as peak usage is a recurring event, then this strategy may work.  However, some percentage of devices will return to a lower usage rate or even stop using features as the carrier invoice continues to bill at an elevated feature level and cost.

The second category of unneeded features includes those for which there is no usage tracking such as insurance and navigation.  There are also other monthly recurring services lurking where an employee may intentionally or unintentionally register by responding to a solicitation.  Some services like navigation may be sanctioned for certain mobile employee job functions although all smartphones today have spoken navigation as a base map application.  Others such as ‘Daily Horoscope’ are clearly not.  We usually recommend against carrier insurance because it is most often more cost-effective to self-insure.

Monitoring Usage-Based Features – Invoices are good at letting us know when feature levels are too low with overage penalties but they are silent in regards to under use.  Because messaging has become a more valuable business tool, some companies will include messaging on all company devices.  While this is simple to implement, it can result in monthly unneeded expense.  If you have 10% of your employees not utilizing messaging but paying an average of $10/month for that unneeded service those charges can add up.  For a company with 2000 cell phones that represents $2000/month or $24,000/year in unneeded carrier expense.  However, we would not usually advise dropping a messaging feature without several months of contiguous usage data indicating a pattern of non-use.  Mobility Managed Solutions (MMS) are oriented to monitoring monthly usage and tracking trends over time to permit easier decision making on removing or reducing features to lower carrier costs.

Non-Usage-Based Features – The most frequently identified savings opportunity here comes from insurance charges.  For families or small companies with a limited number of wireless devices, insurance can be cost effective because there isn’t a large base over which you can spread the risk.  One company with 150 devices was paying over $400/month in insurance fees.  Most of these insurance programs come with a deductible if the device is damaged or lost.  While this can reduce the sting of paying retail for a lost device, it also can add up over time.  In this scenario the company is paying nearly $5,000 a year to manage risk.  To break even on this proposition they would need to be replacing 8-10% of their devices annually – a number higher than the industry averages.  A better solution is to self-insure, particularly when making use of buddy upgrades or recycling used assets as a way to avoid paying full replacement cost when there is a need for a non-warrantee replacement.

Monitoring unneeded features can reduce the slow trickle of payments to your carrier that you shouldn’t be making.  While there are other savings initiative that can contribute a higher level of savings (see our previous tips on these topics), paying for things that you don’t need can present a proportionately higher degree of angst.  We find that a careful process of identifying and terminating unneeded features can reduce your invoice 1-2%.  For companies with 1,000 mobile devices and annual carrier bills of $800K, that would be $8,000, which is no small amount.

How Much Money Is Sitting In Desk Drawers?

Too often value is left sitting in an office drawer when it could be either reused to avoid a full cost replacement for a similar damaged or lost device or redeemed for some value with a mobile device recycling company.  Figuring out what to do or how to accomplish reuse often doesn’t make the priority list of the typically overburdened telecom administration staff.  It is also difficult to engage in any collection process of unneeded assets without a system that accurately identifies asset ownership.

Deploying a used device to fulfill a need which might otherwise cost a company full replacement price can save from $200 to $400 dollars by delaying the purchase until that line is upgrade eligible.  A similar savings may be achieved each time one of these devices is used to fulfill a new activation request where a new device is not required.  In addition, while older flip phones may not command much value on the reseller marketplace, used smartphones, iPhones, and tablets can be sold to recyclers for $75 – 250.

Most companies do not have tight controls and processes to capture asset reuse savings.  Below are some necessary steps to squeeze additional cost savings from your wireless budgets.

Accurate asset tracking – Does your company know who is in possession of wireless devices?  Do you have accurate records of the Make/Model of each of those devices?  This key information is where effective asset reuse starts.  This should be a capability of any Mobility Managed Solution (MMS) but some do a better job than others of providing both timely and accurate information regarding device ownership and asset attributes.  Your system will need to have an effective integration process with Human Resource (HR) information such that there is confidence in the ownership information of each billing device.  Asset information is not part of the monthly invoice and supplemental files are needed to update the Make/Model, ESN or IMEI information.  Your system should also provide information on zero use devices as these devices will represent candidates for reuse at some point in their lifecycle.

Replacement identification – You will either need a central review point for order fulfillment or an automated online ordering capability that will permit the identification of replacement order requests.  A replacement request would be characterized by a priority request to replace a broken or lost device which otherwise is not yet eligible for an upgrade.  This request would then be fulfilled from an internal supply of like devices to resolve the issue by putting the device back in service until an eligibility upgrade date is reached and a new device can be secured for the user at the lower upgrade cost.

Inventory accumulation – In order to assemble inventory for reuse, there needs to be an established process to collect zero use assets or unneeded assets resulting from upgrades.  This will not happen effectively without well communicated company policies.  If the collection and reuse process is managed from within your company then a well published collection address may be sufficient.  If an outside MMS vendor is handling the collection and redistribution, then your ordering system will need to accommodate the ability to request return labels which will be used to ship the equipment to a central location for handling.  There will need to be a clear obsolete device list for each Make/Model to facilitate reuse or recycling.

Inventory preparation – Prior to redistribution or to sending devices to a recycling operation, you’ll want to wipe the device to ensure sensitive company information is removed.  It may be necessary to upgrade and install specific applications for devices intended for reuse.  Also, you will need some form of triage to determine which devices are in acceptable condition and aren’t considered obsolete.

So how does all of this affect the bottom line?  If we assume a conservative 4% of devices are lost, damaged or stolen on an annual basis with a replacement cost savings of $250, then a company with 2,000 devices would save roughly $20,000 a year.  On top of that if we assume 10% of devices collected from employees receiving new upgrades or leaving the company could be redeemed by a recycler at an average of $75/device, it translates into an additional $15,000/year.  With the proper planning and processes the ROI on asset reuse can be very high.

Buddy Upgrades – Finally, A ‘Good’ Pyramid Scheme!

The concept of a Buddy Upgrade is simple enough – when an employee needs a new phone but isn’t upgrade eligible, you use someone else’s service number that is upgrade eligible.  If that borrowed line comes to a point of needing an upgrade, you borrow against someone else’s eligible upgrade and so on.  The concept is similar to what most families practice with their family plans – you look for the next available upgrade to be applied against the family member most in need of an upgrade.

It is easy to manage Buddy Upgrades on family plans but with hundreds or thousands of business phones this can be more challenging.  Like any pyramid scheme, this one relies on the principle that at any given time there are plenty of unused upgrade lines of service (bottom of the pyramid) to fill the demand for those users that can’t wait until their upgrade term matures before taking advantage of the latest technology (top of the pyramid). Of course Buddy Upgrades aren’t just for early adopters but may come into play when a device is lost, stolen or stops working and the user needs an immediate replacement.

Varying company philosophies – If expectations of every employee is that they will get a new upgrade on their one or two-year activation anniversary then the pyramid will look more like a cylinder and it will be very frustrating to execute a Buddy Upgrade process.  However, if your company mobility policy encourages longer asset lifetimes and there is no expected employee entitlement to a timely upgrade then there may be a sufficiently large pool of available upgrades to mine for users in need of an upgrade before their line is eligible.  A large inventory of data cards can help your ratios as they typically are not upgraded as frequently as tablets or smartphones.

Determining if you are a good fit – A simple mathematical calculation can tell you if you are a good fit or not for a Buddy Upgrade approach.  At a minimum you will want your ratio of available upgrade inventory to be 5 times the projected monthly demand.  While this may seem cautious you must remember that upgrade dates don’t necessarily become available on a smooth daily schedule and your upgrade demand will likely peak at times of newly introduced iPhones and smartphones.  Determining the top of the pyramid, monthly upgrade demand, can be calculated from recent order history.  The available inventory can be approximated by dividing your upgrade eligibility term (typically between 12 – 24 months) into your total current device count.

What you need to be successful – There are three essential components to a successful execution of Buddy Upgrades.  First, you need the ability to accurately capture and maintain eligibility dates by service line for all active devices and frequently update them. Second, you need a centralized process to control and prioritize devices that will be accepted as upgrade candidates. This would require a step to approve or disapprove upgrade requests based on the user’s need and available inventory of upgradeable lines of service.  Finally you need a controlled execution process that will match the line to be upgraded with the line donating its upgrade eligibility for that same carrier.

Implementation – If you are a good candidate based on culture and ratios indicated above you will find that a Mobility Managed Service (MMS) with online provisioning capability can allow the most efficient execution. Two particular challenges to be aware of are first, managing expectations and surprises when an employee that has gone well beyond their eligibility finds that their line has been used by someone else, and second, managing the cost assignment of the upgrade equipment to land on the proper line or cost center rather than the unsuspecting ‘buddy’ user.  Some carriers handle this charge assignment issue more seamlessly than others.

Some recent studies indicate that 1 in 4 cell phones may be damaged yearly.  The cost of replacement at full price can average over $500.  Even a conservative 10% replacement rate and replacement upgrade delta cost of $250 translates into an expense of $50,000 a year on a population of 2,000 mobile devices.   In this case, an effective Buddy Upgrade program would save over $4,000 a month.