BYOD's Achilles heel: Billing and losing group buying power

Bring your own device plans hold a lot of promise. Employees get to use the device they want and the enterprise doesn't have to hand out smartphones anymore. But the returns on these plans have been sketchy. Why? No one has figured out proper billing arrangements.

The big knock on BYOD plans for corporations is simple: Companies lose all leverage in carrier contracts because they can't buy in bulk. With BYOD plans what used to be a corporate expense winds up in an expense report or a stipend. What would be a large contract is splintered into many little consumer deals. More money could be spent on BYOD plans and tracked less than the good ol' days of corporate issued smartphones.

Billing came up as a large issue in a recent roundtable I moderated at CBS Interactive's office in San Francisco. The roundtable, sponsored by Verizon, included tech leaders responsible for mobility policies and management. The big takeaway was that returns aren't a slam dunk for BYOD plans. I doubt enterprises have much of a choice with BYOD because employees will tote their own devices and apps anyway. But the billing issue is looming as a large one for both IT leadership and the employee. Here's a look at the moving parts:

How large should a stipend be? Kim Barrier, CIO, Bio-Rad Laboratories, said her company is moving off of BlackBerry and more to a BYOD approach. The issue is determining the right size of stipend for the employee. Barrier said her company is looking at eligibility by employee role and how much data they'll use. Data usage and costs jump when moving from BlackBerry to iPhone and Android. She said:

We try to look at average bill size based on function. We’ve got different stipends if your sales and marketing or customer service or back office or support.

Barrier added that stipends differ if an employee is U.S. based or international. For international employees, it appears to be more cost effective to issue devices.

Data tagging work and personal. Lori Rudolph, associate director for product marketing at Verizon's business solutions unit, said that tagging data usage for work purposes and personal usage could allow a company to better get a handle on costs and contract negotiations. Barrier was receptive to the idea because BYOD takes away enterprise purchasing power, but it's unclear how employees would respond. Vijay Sammeta, CIO for the City of San Jose, said family plans are another item that makes tagging data usage difficult.

I think one of the real challenges with that is also that a lot of people have family plans. There isn’t just one. I work for a corporation and I’ve got my iPhone, but I’ve got three other iPhones on that same family plan because I’m trying to create that pooled discount for my family.

It's that decentralization of group buying out into these little pools and islands that puts most corporations at a disadvantage. I think that when you start looking at that, maybe the universe gets much bigger for negotiation, right? Now you’ve got everyone’s family plans in there as well.

I noted that it's going to take a lot to unravel usage in a Salesforce app and Minecraft.

What do you reimburse? Tony Harte, director of infrastructure and business solutions at Lids, a major hat retailer, said that costs with BYOD have to be watched closely. For instance, Harte recently turned off the use of hotspot functionality on phones. Why? Lids had to pay too much. Harte said:

We’ve got a combination of not only phones, but Mi-Fi devices as well for our mobile sales force. So, we try to figure out that balance of the data plan between the cell phones. We did turn off mobile hotspot capabilities for everybody’s cell hones because that got a little too convenient and expensive. So yeah it’s a challenge.

Do you offer a stipend at all? I found the view that employees should get a BYOD stipend at all interesting. The companies on the roundtable were mostly West Coast based and viewed stipends as a must have for employee retention. However, I know more than my share of disgruntled East Coast workers that don't receive stipends for using their own device. Harte said eliminating stipends is a recipe for disaster:

Drawing hard lines like that, really says, “Well great, I’m going to stop working precisely at five then. I’m going to leave, don’t call me on my cell phone. I’m not giving you the number. I’m not going to sync my corporate e-mail or I’ll set it to only sync between these hours.”

Sammeta said that "it shouldn't cost you money to show up for work if it's an expectation of the job."

Privacy issues. Clearly a service has to emerge to track corporate data usage and bill directly to the enterprise. The issue is tracking corporate vs. public usage over the Internet instead of an app. It's also unclear where privacy, billing and mobile device management lines begin and end. Joellen Fung, senior director of strategic technology at San Francisco State University, noted:

People might feel almost like (billing and data tracking) is getting into a privacy violation---especially if you’re looking at browser stuff. It’s like you went to this website on your own time and I don’t necessarily want my company to know especially if it’s my own device.

Bottom line: Gray areas in BYOD abound. Billing brings a lot of those gray areas together.