Uncovering hidden mobile costs

Today, with a lagging economy, those charged with finding savings within their organizations wonder if opportunities to reduce costs still exist; and if so, where they can be found, says Al Subbloie CEO of Tangoe, Inc.
Written by Al Subbloie, Tangoe, Inc, Contributor
Commentary - As a result of the down economy, businesses have spent the last two years cutting costs wherever possible. Today, with the economy still lagging, those charged with finding savings within their organizations wonder if opportunities to reduce costs still exist; and if so, where they can be found.

Despite the economy, telecom expenses continue to be one of the three largest expenses for an enterprise. The good news is that makes telecom ripe for savings potential. While many businesses are in the habit of proactively preventing cost escalation on their fixed or land communications, the mobile side of telecom spending has proven to be more volatile and difficult to control--evidenced by the constant stream of new devices (like the iPhone, Droid, and Nexus One) penetrating the enterprise and demanding support.

In many organizations, the costs incurred from maintaining a mobile workforce can go unnoticed, but over time, they add up quickly and significantly. For example, many organizations pay monthly services charges for a significant number of “zero use” devices that can cost upwards of $100 per month. That’s why taking a deep dive and investigating all aspects of mobile expenses, including those listed here, is key to uncovering new opportunities for significant savings and for preventing unnecessary future costs.

Mobile device management can do more
Not long ago, enterprise access to smartphones was controlled by IT and restricted to a select group of executives who received devices along with a set of rules and policies designed to enhance employee productivity and secure enterprise data. More often than not, that smartphone was a BlackBerry. Today, the game has changed considerably: consumers at all levels are purchasing the latest smartphones for personal use and asking their IT departments sync their devices for professional use as well. (Many is the C-level exec who has pointed to a new iPhone and said, simply, “Make it work,” regardless of the corporate device policies.)

What has quickly become apparent is that a large and diverse number of mobile devices, if improperly managed, create excessive costs. To offset this risk, it’s imperative that organizations implement a mobile device management (MDM) solution that can manage and track device usage, monitor and control mobile applications residing on each device, enable users to self-provision their own devices (thereby eliminating significant help desk costs), and facilitate remote “wipe and kill” capabilities. The most effective MDM solutions also enable rate plan optimization and pooling, and enforce mobile policies—two areas which when implemented correctly, can dramatically lower mobile costs. These often overlooked MDM solutions can greatly reduce help desk calls (and the associated productivity costs) and increase user up-time and user satisfaction. Put simply, strong mobile device management solutions optimize cost management, improve operational effectiveness, and mitigate mobile data and application risks that are increasingly associated with complex mobile environments.

Beware of hidden costs from combined fixed & mobile carrier contracts
Businesses are often approached with the option of combining their fixed and mobile carrier contracts. This may seem plausible or practical at first, particularly when the consumption of wireline services is on a decline and the goal is to aggregate total telecom spend to avoid an impending shortfall penalty under an existing fixed agreement. In the long run, however, this decision could prove detrimental, so all outcomes should be considered before consolidating fixed and mobile spend in a new carrier agreement.

There are many different versions of combined fixed and mobile agreements so it’s important to examine the offer carefully to ensure it is truly an integrated contract and not merely two separate contracts stapled together. Remember that a traditional mobile contract has no hard dollar commitments when it comes to use of service. Therefore, the penalties for not achieving commitments are seen in reductions in discounts rather than a shortfall liability. In a fixed service agreement however, there is a hard dollar commitment that businesses must make, or they will face cutting a check in the amount of the shortfall. The agreements being put forth by many carriers thereby create a combined agreement that actually represents increased overall risk to the enterprise. Since tier-one providers do not price fixed and mobile services cross-elastically today, companies should ask what benefit they are receiving in return for taking on increased risk.

The loss of flexibility provided by traditional mobile agreement is another element to consider before combining fixed and mobile agreements. Mobile agreements tend to be fluid, allowing businesses to move from carrier to carrier based on service offerings and coverage. When signing off on a dual agreement, that flexibility is lost, resulting in the potential loss of leverage and long-term savings. To avoid being locked into an agreement that results in unforeseen expenses, it’s important to closely review these considerations prior to renegotiating your carrier contracts and make sure you have properly assessed how a combined fixed and mobile contract will impact the bottom line.

The costs of going mobile internationally
When it comes to doing business internationally, mobile expenses can add up quickly if an organization doesn’t properly prepare for expansion. With mobile device use, something as simple as a surcharge or a roaming fee can go unnoticed initially, yet add up to a huge expense over the course of the contract term. One organization Tangoe helped was inadvertently racking up roaming charges of more than $12,000 a month for only a handful of devices! While there may be a mobile rate plan in place for executives that travel on a regular basis, those who travel intermittently can accrue excessive charges if rules and policies regarding usage and roaming aren’t established and enforced.

In addition, as more businesses open international offices, local employees will be communicating with remote employees on a regular basis and it isn’t always clear whether one is calling a landline or a mobile phone. An international call to a mobile device can result in a surcharge of up to $1 a minute. Now more than ever, it’s important to deploy mobile device management systems that can monitor mobile usage and effect policies that control costs in real time. For example, an effective MDM system can automatically notify IT if a device is roaming, so that devices can be seamlessly switched to the appropriate international plan (or shut off entirely) to avoid unnecessary charges.

As the economy continues to struggle businesses continue to seek all opportunities for uncovering and preventing hidden costs. To manage these hidden costs it is vital for businesses to pay close attention to how the mobile enterprise landscape evolves as end-user demand for new devices increase. Organizations that proactively implement device management solutions that consider both local and global expenses, and also closely examine the new options in carrier agreements, will be one step ahead of every new cost in the mobile realm—which will have a great impact on enterprise-wide savings.

Recognized as a telecommunications technology and Internet pioneer, as CEO of Tangoe, Inc., Al Subbloie has led the vision of the company to become the leading software provider in the Telecom Expense Management (TEM) space. Al is credited with one of the patents for reverse auction theory, the leading Internet paradigm in most shopping sites today.

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