Navigating Around the Pain

Traditionally businesses have benefited from reduced device costs on new activations. Built into that price reduction is math that ensures you pay for that price break over the term of your contract.  Cost recovery is usually based on a 2 year term.  If you cancel service on that device prior to the termination of your contract, you get an unpleasant experience of paying an early termination fee.

Most carrier termination fees will start in the $325 – $350 range for iPhones and Smartphones and will range from $175 – $200 for a standard phone. Termination fees typically decline on a straight line basis aimed at expiring shortly before the contract term ends.   Businesses have greater flexibility in finding ways to avoid or minimize the ETFs (Early Termination Fees) because they have more lines to juggle in ways that avoids termination fees.  Below are some techniques that permit organizations to reduce or eliminate ETFs.

Negotiated Waivers – depending upon the volume of business you provide to your carrier or carriers, you may have sufficient leverage to negotiate a specified number of waivers for ETFs in your contract.  These waivers can be used through the course of the year to zero out any ETF fee until you have exceeded the negotiated count.

Using Upgrades Against Zero Use Devices – if your device count is constant or increasing over time you will have the option to convert an unused service line to an upgrade in lieu of activating a new device on another line.  Upgrade eligibility usually precedes contract termination by 2-4 months.

Device Reuse – another way to avoid termination fees is to use unneeded devices to fill new orders.  Cost-conscious companies can be effective at developing the culture that everyone doesn’t always need the newest model.  In particular, when there is a need for a replacement device for a lost or damaged device a cost-effective approach can be one that utilizes unneeded devices that may still be under contract and contain ETFs.

When ETF Is Less Than Monthly Service Cost – for this case, based on a simple calculation, it can be determined if reducing these devices to a minimum plan will be less than paying the ETF. There may come a time when the declining ETF finally reaches a point where it will be less expensive to pay the fee than to pay an accumulating monthly service charge on a device no longer needed.  This option may be necessary for organizations that are seeing an overall decline in the number of wireless devices in use.

There is no reason to pay the carriers unnecessary ETF fees, but it will take some planning to make sure the best of the above strategies can be applied.  Using a solution like MobilSentry acts as your safety net for avoiding ETF fees.

Balancing Choice and IT Standards

Many believe that ‘Bring Your Own Device’ (BYOD) as an IT mobile management strategy was sown in the 2006 and 2007 timeframe with the introduction of iPhone and Android smartphones.  At that time simple phones along with Treo, BlackBerry and Windows devices had been the staple in enterprises.  Corporations and government agencies with serious security concerns had settled on BlackBerry due to its encrypted data transmission capability along with BES Server functionality which was a precursor to today’s Mobile Device Management (MDM) solutions.

The years that followed 2007 produced an explosion of smartphone devices with enormous customer appeal which launched the first decade of the millennium into mobile device commotion.  Individuals wanted to use the advanced interfaces of these leading-edge consumer devices in their businesses.  Then, all that was needed was voice communication and email.  By 2008, Apple and Android had supported ActiveSync link which gave access to the Microsoft Exchange server and business users everywhere saw the new features of these smartphones as essential for business use.  Information Technology managers began to chafe under the pressure and the pundits in the research organizations captured this angst under the banner of Bring-Your-Own-Device (BYOD).

After several years of BYOD debate, recent industry studies are finding enterprises are pulling back from the idea that the solution to BYOD is individual employee liability.  In an article called ‘BYOD, Still a Work in Progress’ Bob O’Donnell (see link below for full article) notes that “20% of all IT decision-maker respondents with BYOD programs and 29% of the medium-sized business group said they have started to pull back a bit from their earliest efforts.”  The reasons for the pullback are varied and numerous, but they illuminate the reality that BYOD individual liability is not the complete answer for all organizations, or even most organizations.

One interesting trend is so recent that it has not been highlighted in recent analyst commentary.  The device that led to the rise of smartphones, the iPhone, with its new iOS 8 operating system, has plugged a number of enterprise capability holes that originally spawned resistance by IT organizations.   Robert Sheldon in a recent article ‘Apple iOS 8, iPhone 6 Improves IT Security and Control,’ (see link below for complete article) emphasizes that iOS 8 “has added passcode protection to Mail, Calendar, Contacts and Messages, as well as to third-party apps.  It also supports individual email encryption through the use of Secure/Multipurpose Internet Mail Extensions technology.” He further highlights that Apple now supports certificate-based single sign-on (SSO) so secure logins can be made without re-entering credentials as well as improvements that can be utilized by current Mobile Device Management (MDM) tools to increase their effectiveness.  It should be noted that Android devices have made security advancements, but because their strategy is built on openness, these advances have not been as significant over time as Apple.  There is an inherent conflict with openness and security.

All of following factors:  industry frustration with the integral challenges of BYOD, continued technology advancements to address enterprise mobility needs (such as Mobility Managed Services, MDM and security friendly devices) and the new Apple – IBM partnership, may be trending to push BYOD out of the forefront of today’s mobility dialog.  Is BYOD about to become outdated?  Only you and your organization can make that judgment.  If nothing else, the recent trends should bring some pause to those organizations considering an imminent move away from a centralized mobility management strategy.  You may wish to reach out to Mobility Strategy experts as it will be costly and time consuming to reverse course and scrap BYOD if you find it was unnecessary in the end.  With an undertaking this significant you want to be certain that you are skating to where the puck will be, not where it is currently.

References

Bob O’Donnell, ‘BYOD, Still a Work in Progress’ http://bit.ly/1hlbkMj

Robert Sheldon, ‘Apple iOS 8, iPhone 6 Improve IT Security and Control’ http://bit.ly/Appleios8security

Practical Cost Reduction Ideas

Does your company have adequate checks and balances to catch those employees that order every accessory available just because they were offered on your ordering portal?  With all the challenges facing wireless administrators, monitoring the buying patterns related to accessory purchases may not be high on their to-do list.  Even in situations where management is approving orders and accessories we find that the steady influx of what seems like an insignificant cost compared to the cost of the primary device can accumulate over time to become a sizeable expense.  While the cost of accessories in a single month may not raise alarm flags, those costs when accumulated over a year can become sufficiently large to justify attention.

It is important to view the accessory cost in its own context and not overlook these charges simply because they are dwarfed by an increasing cost of smartphones, iPhones and tablets.  In one recent analysis we found that a company with reasonable set of corporate policies and order controls was still spending in excess of 20% of their monthly equipment budget on accessories alone.  There are ways to manage more effectively the accessory purchase processes and the cost of accessories.  Below are some steps to consider in bringing about a reduction in accessory expenses:

Control the Offered Accessories – if you are using an internal ordering portal or utilizing one from an Enterprise Mobility Management vendor, you will want to be careful to limit the number and type of available accessories.  It is not unreasonable to require employees to purchase accessories beyond the staple items like chargers, batteries and protective cases.  Whether you’ve adopted a cost sharing strategy with employees under BYOD (Bring Your Own Device) for handsets and data plans, accessories are a safe place to begin.

Ensure Visibility of Accessory Order Details – when management is part of the approval process, a clear delineation of the ordered accessories will be important to eliminating those that make it through the process just because they were a small portion of the overall approved cost.  Your approval workflow processes should include a clear delineation of the number and types of accessories ordered.

Consider Sourcing 3^rd Party Accessories – Carriers make considerable margin on accessories.  It is an easy choice for buyers once they have selected their carrier and mobile device to throw in a few accessories that they might need down the road.  As such, the carriers face little competitive pressure on accessory pricing.  There is a certain convenience in ordering accessories from your carrier but you are paying for that convenience.  Some estimates have shown as much as a 50% savings on accessory cost when using third-party vendors.  It can be challenging to source a reliable accessory vendor that will work with your employee needs and who can provide easy ordering capability.  In addition, it is usually the case that you will want these accessory charges incorporated in your device Account Payable allocations.  Most Enterprise Mobility Management solutions do make accommodations that will allow the appropriate assignment of charges for accessories even though they do not appear on your carrier invoice.

For a company with 2000 wireless devices that spends 5% – 10% monthly on equipment costs this can translate into $12k – $15k a month.  If 25% of that cost is accessory expense, this can approach $50k/year.  Saving $25k a year or more can be worth the effort to consider instigating enforceable accessory policies and to entertain a third-party source for acquiring accessories.