Are mobile devices a money pit?

In recent years, BlackBerries and other multi-function PDAs have become an essential business tool, and a major line item in corporate budgets. But data from Compass shows that a large portion of this growing spend is either wasted, or worse yet, invisible.
By Renee Robbins October 8, 2009

Large global organizations could save millions of dollars a year on wireless communications through strict management of contracts and services, according to analyses by Naperville, IL based Compass, a global management consulting firm specializing in business and IT operational improvement. "Mobile devices are becoming an integral part of IT infrastructure," says John Lytle, a Compass senior consultant specializing in network and telecom issues. "But many businesses today take an ad hoc, decentralized approach to managing mobile communications, and are paying the price."

Mobile field worker process plant

In recent years, BlackBerries and other multi-function PDAs have become an essential business tool—and a major line item in corporate budgets. But Compass data shows that a large portion of this growing spend is either wasted, or worse yet, invisible.

Mobile devices—ranging from basic cell phones to sophisticated PDAs—are generally contracted at an individual level, and often paid for through individual expense accounts. says Lytle. As a result, corporate oversight and central transparency into device functionality, contract terms and costs are highly variable, and the ability to leverage economies of scale is often limited, he says.

Moreover, many companies that fund multi-function mmart phones and PDAs for employees also fund additional accounts for basic cell phones. "In other words, companies not only subsidize mobile phone service, they subsidize it twice," says Lytle. "As a result, on a per user basis, mobile phone costs are significantly higher than they are for traditional land line communications." Compass analyzed 450 sites in 17 countries, including North America, Europe, and the United Kingdom to come up its conclusions.

According to Lytle, organizations that centralize mobile device contracts and administration and eliminate device redundancy can save 25 percent to 40 percent on telecom spend. Generally speaking, he adds, the bigger the organization, the greater the savings.

"Improved management of mobile devices requires a change in mindset and organizational culture. Ten or 15 years ago, businesses determined that the ‘personal’ had to be taken out of personal computer," says Lytle. "Standardization, centralization, and lock-down policies became the norm, and PC cost efficiency greatly improved. Organizations need to take a similar, business-oriented approach to mobile devices."

To create visibility and raise awareness of mobile costs, champions of rationalization within the organization need to make a business case to quantify the dollars at stake. Says Lytle: "What’s the cost to the business of supporting thousands of individual cell phone plans? How does that compare with the cost of a centralized plan that pools minutes? If you can show those numbers, you can get the boardroom’s attention."

A successful mobile plan must also define terms and categories. "If an organization is going to mandate support of a mobile phone," says Lytle, "they need to define what constitutes a ‘phone.’ Is it simply a mobile voice device? Or a multi-function device? Whatever criteria are defined and wherever the line is drawn, the company shouldn’t pay for more than one."

An additional benefit of mobile services rationalization is that it doesn’t negatively impact functionality; indeed, centralized management is an essential foundation for enhancing security of mobile devices, and for developing and maintaining the increasingly sophisticated applications running on them. Says Lytle: "Given their role in the global enterprise, smart phones and PDAs require the same level of management scrutiny as established service towers such as networks, storage systems, and mainframe and midrange server environments."