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

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

Summary: Bring your own device plans sound great until you start figuring out that your enterprise negotiating power with carriers has evaporated and expense tracking creates a headache.


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BYOD and the consumerization of IT

Special report: The Bring Your Own Device phenomenon is reshaping the way IT is purchased, managed, delivered, and secured. We look at what it means, how to handle it, and where it's going in the future.

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:

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Kim Barrier.

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.

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Vijay Sammeta.

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.

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Tony Harte.

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."

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Joellen Fung.

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.

Topics: BYOD and the Consumerization of IT, Mobility

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  • Does not make sense?

    If workers are buying their own tech. Why does it matter if enterprise loses its buying power?
    Could a business not simply offer devices at their buying power discount to employees? I am much more concerned about security risks with BYOD then anything else. People in general have differing priorities and safe web habits to not be concerned that some may not be so protective as they should be. I do however think most people who BYOD will most likely have a more modern OS and device and may in fact help their company maintain a safer network.
    I certainly like using my personal PC in my business as I am not having to try and separate two separate PC lives between devices. But I have very little interaction with my PC and my companies network. I mostly access much of my information through the cloud and internet.
    • Depends how your business handles things

      I think the gist of this article was mostly regarding phone and data plans. Let's say your company does a high volume of business with Verizon, and you are able to leverage this into a deal that charges, say, $75 per month unlimited talk and data. But then half the corporate accounts vanish, so they pay more per covered device. On top of that is whatever reimbursement plan they offer employees -- maybe they take responsibility for most or all of the employee's own contract rate, where Verizon is fisting them at, say, $150 per month. Of course, your company could take the same route my company did, welcome anyone who wants to BYOD but at the same time eliminate all subsidies for non-corporate owned devices. So I have the choice of using a corporate owned and regulated phone with restrictions on its use, or, I can just use my personal phone and suck up whatever incidental costs corporate use might have on my monthly bill (about half, me included, chose the latter).

      Now, when it comes to devices like PCs, again, it depends a lot on your company. I used to handle IT purchasing for a hospital, and our discounts from CDW, Dell, etc. all were based on the prior year's purchases. These discounts can be substantial -- sometimes 40-50% from prices listed on the website. End-user devices might count for a substantial amount; and major cuts in this area could result in drastically lower discounts, which raise the cost substanially on big-ticket items such as servers, sans or switches.

      While it may be possible over time to mitigate this effect by consolidating vendors, it is definitely disruptive to do so and proactive vendors will have a vested interest in managing these trends as they could find themselves on the short end of the stick if their business is consolidated to a competitor.
  • DEal?

    It is a deal for the company if they are not paying for it and it integrates without much IT time.
  • Buying power?

    I am still trying to find this power. The reality is, the majority of companies are small to mid-sized and never had that kind of buying power. We manage a corporate account with all the pains and inconveniences of managing and paying for individual accounts. The only tangible benefit is pooled minutes (With AT&T) but that would only matter if people actually used the device to talk these days. There seems to be zero benefit for most of us, which is why BYOD is appealing.

    Security is addressed with a $3.50 per user / per month MDM solution (AirWatch for us) and our new policy is to pay 'up to' $83 per line which is more than enough for corporate consumption. We stand to save about $3000 per year in avoiding overages, device replacement (read: misuse) and roaming fees. In the end, the user get s the device they want on a carrier that works for them. Win Win!

    Did anyone catch that weird article last week relate to this? It was about CYOD, a step backwards from BYOD in my opinion and still leaves the real issues unaddressed.
  • Personal data on personal data, company data on company device.

    Period. I have retired from that game, but if I were still in it, that is how I, as an employee, would want it. Any device that I would "bring" to work would have to be an ADDITIONAL device, not the one I use personally, so I would object to having to pay for it. The reason is that the company's data would not be as safe as business needs (and for some businesses, legal needs) require, on a device also used for personal data, UNLESS the company managed it, backed it up, and had veto power over installing new apps, thus making it no longer a "personal" device, and giving the company copies of my private data that has nothing to do with them. So neither company secrets nor personal employee secrets are safe from one another if they are on the same device. And personal data which is subject to the same wipe-if-lost and wipe-on-termination rules as the company's data would be lost if the employee him/herself had not backed it up somewhere else (which might not be allowed, because of the threat of rogue employees "backing up" company data to transfer it to unauthorized parties).

    Carl Sandburg wrote "good fences make good neighbors," and this is one situation in which that proverb is certainly true. Once employees are aware of the cost to their privacy, and employers are aware of the risk of litigation for discrimination if private employee data (beyond what is needed for human resource and payroll administration) indicating race, religion, political beliefs, sexual orientation, or gender identity, is accidentally made available to company managers, both parties would surely feel more comfortable with separate devices. If my job required sending and receiving company emails, running company apps to manipulate data in the company cloud, and surfing the internet on company business, I would expect to do it on a company workstation PC (or Mac) when I am at my own desk; on a company tablet to be left in the building when I am at a meeting on site away from my desk; or on a company phone or device issued to me, separate from my own, when I am working away from the company site. I would rather carry two devices than mingle my personal affairs with my employer's.
  • I don't think employees really want BYOD.

    "Employees get to use the device they want "

    Not really. A lot of them really DON'T want to use their personal phone as a work device. That's pretty much a lie.

    Only bloggers want to use their personal cell phone as a work device. Nobody else I know of does.

    "We did turn off mobile hotspot capabilities for everybody’s cell hones because that got a little too convenient and expensive. "

    And another reason not to use a personal cell phone for work - you don't control the device, your business does. There's no way I'm handing control of my personal device over to them.
    • yep, BYOD looks & sounds a lot like a tech' fad

      But in the certain scenarios where it does inevitably exist, the gray areas regarding regulatory control & rights of both parties (i.e. employer and employees) are there, nonetheless.

      As much as i hate the whole concept of BYOD, i still find myself trying to offer up "an out" or Plan B type solution for the employees .. i seriously don't give a rat's for any enterprise that mandates BYOD as a policy.

      The short answer? Employees, just be sure you own *at least* TWO phones: one phone is you 'personal-BYOD' device and the other is your 'personal-personal'. Sure it'll cost more initially, but at least those employees can maintain a definite degree of separation between business life & their private lives (a la a second smartphone).
  • This is as bad as tipping

    Some jobs you tip, some jobs you don't. Why would I get my cell phone stipend and not my jacket, tie and shoes? Don't I need to be dressed well for my job? Doesn't taht cost me money? And I can't be hungry, right? So shouldn't the company pay for my breakfast. Studies show a good breakfast makes you more productive. And with the price of gas, why do I have to pay for transportation? Here's my receipt for my monthly car bill, please add that to my check. Tooth brush? Toilet Paper? Deoderant? Hair cut? Any of those not needed for my job? Then here are the receipts.
    A Gray