Mobile devices are everywhere and we all use them to improve communication, but how much do they really cost your enterprise?
The Total Cost of Ownership (TCO) of enterprise mobility is made up of many factors, some of which can be excessively expensive or entirely unnecessary. A common misconception is that TCO is neatly captured within the equation, “device + carrier cost” but the true cost is much more.
This misconception is, made worse when “Plan” only includes predicted carrier costs, not unexpected extras such as roaming bill shocks or excessive data usage.
While the decision to invest in mobility is simple, the management of its cost is not. Unlike much of a company’s infrastructure spend, mobility costs can spiral quickly and unexpectedly. Remedying security breaches, roaming charges and employees’ excessive data use are all ways in which mobility risks and costs can escalate suddenly.
Read on to discover how to calculate the true TCO of enterprise devices, and manage the costs of each individual controllable line item to reduce the TCO.
The typical CIO’s approach to calculating the TCO of an enterprise device is to start with the device cost then add the cost of the data plan.
Mobility managers also need to incorporate additional carrier costs, such as anticipated extras and roaming bundles as well as additional hardware costs, such as accessories and peripherals within their TCO calculations.
The typically perceived TCO is £628, when in fact research discovered that the average is £1,272, this is 103% higher than commonly expected.
Too few enterprises are including important additional items in their TCO calculations, and therefore are considering their mobile estates to be cheaper to run than they really are. If this erroneous belief persists, then readily-available and easily implemented cost-saving measures will be missed.
Unsurprisingly, handsets make up by far the greatest proportion of the hardware cost.
The largest companies pay the most for individual handsets as they tend to be more focused on functionality and specification (greater memory, larger screens etc.) than cost saving. The largest companies for example spends 23% more than smaller companies on average.
Meanwhile, small to medium-sized companies pay the most for repairs. Whilst larger companies are offered better in-built support by carriers for repairs and exchanges, this means they can afford extended warranties and better insurance policies.
Sometimes carrier contracts may include a free device, however the cost of devices is a large part of the monthly charges.
Carrier plan spend is largely flat, irrespective of size of company, savings are generally provided when a company reaches 1,000 employees or more.
It is mainly ‘bill shock’ that causes the greatest fluctuations, this shows clearly that education around this issue is lacking in large companies.
So why is bill shock so dangerous for enterprises?
It’s the second greatest single contributor to overall TCO for 5,000+ enterprises, as opposed to only the fourth greatest for most other company sizes.
BILL SHOCK IN DETAIL
Larger enterprises are less cost sensitive than smaller ones. Therefore, tend to employ less scrutiny over an individual employee’s excessive data use or roaming charges, and they are more likely to require their employees to travel to emerging countries where data costs can be extraordinarily high.
The smaller the company, the greater the IT resource overhead per device. Larger companies however, can spread their IT resource investment across more devices, bringing the individual device TCO down. Costs are further reduced through outsourcing IT management, which is usually only available to larger companies.
Larger companies are more likely to use additional tools and platforms that assist in the proactive management of devices. This is an investment that is not made by most smaller companies, but it does reduce the burden on the IT function.
Smaller companies spend far less on services such as telecom expense management (TEM), insurance, enterprise app stores or enterprise mobility management (EMM). They rarely have the number of devices or the need to justify the investment, hence spend increases with company size.
The cost of remedying a security breach is on average three times the amount being spent on security software.
In the UK, where 18% of respondents had suffered a mobile security breach, the greatest proportion of these companies (20%) said these breaches had cost their companies a staggering £25,000 to £100,000 – with only a slightly smaller proportion (19%) reporting spending between £100,000 and £250,000.
CONTROLLABLE VS INEVITABLE COSTS
How can enterprises control their levels of TCO without impacting productivity?
Looking at the categories of spend, hardware, IT and service costs are largely inevitable – these are simply prices and fees that are dictated by third party manufacturers and market rates. However, carrier costs and security breaches are very much controllable and can be adjusted to meet the budgetary needs of the company.
Data compression technology can minimise data requirements. Prudent usage policies including capping and blocking can ensure that access to unrequired content is restricted – even to the extent of removing as much as 30% of overall data used. And as we have seen, investment in security means a dramatic reduction in breach remedy costs.
58% of TCO can be controlled and therefore reduced.
A successful data cost management policy will introduce noticeable reduction into all elements comprising carrier costs. For example, carrier plans can be reduced by 10%, carrier extras by 50% and bill shock can be removed completely.
Enterprises of all sizes need to be aware that TCO is much more than just device + carrier cost, with significant financial and legal risks, enterprises must regain control of their mobile estate.
The first step is to gain complete insights and visibility into the true financial costs they face from enterprise mobility.
This is where Mobliciti can help. We can provide you with comprehensive insights into your mobile network costs, usage trends and airtime contract & pricing and show you how you can cut costs simply and seamlessly.
Get in touch to find out more.