Are you spending too much on your enterprise wireless service? If you're like most large companies, the answer is an overwhelming yes.
About 80 percent of enterprises will overspend on wireless service costs by an average of 15 percent through 2014, according to Gartner. As mobility has grown among enterprises, Gartner said, costs have also grown. The good news is you can curb wireless costs if you understand contracts, data usage, roaming and mobility management.
"Our research shows that the majority of companies are not adequately managing their mobile users or services," said Phil Redman, research vice president at Gartner. "They need to look more closely at their key user segments and requirements in order to match those needs with the right services and optimize their spending."
How Much Savings?
How much can you save? The Aberdeen Group reports best-in-class companies can decrease wireless voice and data costs by implementing a wireless enterprise management solution. Best-in-class companies saw data costs drop by 32 percent and voice costs drop by 26 percent, while laggard companies actually saw a 16 percent increase in data charges, according to Aberdeen's 2009 Wireless Expense Report.
About half of companies Aberdeen researched are either using an in-house solution or no solution at all to manage their wireless expenses. Without a program, practical tasks like retrieving smartphones from terminated or transferred employees fall through the cracks. In large companies, it's not uncommon to find a closet full of cell phones that were tossed in a box without thought about the ongoing service contracts, according to Hyoun Park, a research editor in the Aberdeen Group's Technology Markets Group.
"A typical billion-dollar company will end up spending about $5 million a year on wireless costs. In an unmanaged environment, there's probably $1 million to $1.5 million in potential savings available," Park said. "That's money enterprises have been giving up on a regular basis once they hit about the 1,000 cell-phone mark. It's mind-blowing."
Reviewing Wireless Contracts
A major culprit running up costs is ill-fitted wireless contracts. The way enterprises purchase wireless services has changed in the past few years. More than 60 percent of midsize and large companies have moved away from buying individual plans because they are least efficient in terms of cost reduction, according to Gartner. But newer plan types such as pooling, flat-rate and zero-minute phones need to be evaluated carefully to make sure they offer maximum value across the entire organization.
That said, there is a universal change in wireless contract types Gartner does recommend: Moving away from individual liability plans. With individual liability plans, users are responsible for the payment and contract. But Gartner suggests companies should migrate to corporate liability plans that allow for better control of costs through the optimization of wireless services and corporate discounting.
Some companies are also integrating their cellular phones into their corporate system in a move to support cost routing for reduced service calls or the elimination of desk phones. Both options are part and parcel of fixed mobile convergence (FMC) plans, FMC is the intersection of fixed and mobile unified communications (UC) where services and functionality are shared. In this scenario, users have the freedom to conduct business in a mobile environment but maintain enterprise functionality in the wireless device.
Reigning in Roaming Charges
A second area of potential wireless cost savings is curbing international roaming charges. These costs have become more difficult to manage in the face of globalization. According to Gartner, 10 percent of users who travel internationally will make up 35 percent of the total service costs for companies that support travel through 2010.
Gartner isn't suggesting there is a magic bullet for cutting costs beyond the number of users who travel, reducing the minutes used, and making users aware of the costs. However, the firm said companies can negotiate with carriers for roaming cost reductions and look to adopt mobile-roaming plans.
Of course, voice-roaming charges are one cause of swelling wireless bills -- international data roaming is often a far greater factor. International data roaming can drive up bills, reaching thousands of dollars in a short period. Gartner recommends that companies disallow all ad-hoc use of international wireless data and instead promote the use of smartphones for e-mail or ask carriers for bundles for remote workers.
Double-Checking Data Plans
Park shines a bright light on data charges in his studies. His research shows data costs are increasing rapidly for employees partly in the face of the smartphone revolution with its increasingly complicated mobile services.
Park noted that as the cell phone has transformed into a smartphone, new sets of services are available that weren't before on previous bills. These services can include location-based services (LBS), mobile data connections, mobile applications , photo capabilities, and mobile messaging capabilities.
"Companies need to make sure they're looking at data plans," Park stressed. "A lot of the discussions for companies that have been doing this have really focused on voice minutes to a greater extent. Although that's important, it's definitely not the entire pie. It's just one slice."
Internal Cost-Containment Strategies
Beyond working directly with carriers, there are also measures enterprises can take internally to cut wireless and data costs. For example, active management practices can play a vital role in organizing services and controlling expenses.
According to Gartner, the two main areas to focus on in management are policy -- used to eliminate undesirable practices and promote a set of desirable practices and compliance across the organization -- and the use of outsourced services that provide extensive mobility-management services to enterprises. But although telecom expense management (TEM) providers are proving they can save companies hundreds of thousands of dollars, most enterprises still fail to tap into the potential cost savings.
Another strategy is to standardize on a specific device. Park said it's easier for IT to deal with wireless support if there is only one brand or one model of phone. "Our research shows that companies have to assign one individual to support the paperwork, management and tech support associated with every 500 devices," Park said. "But that figure drops to one individual for every 1,500 or 2,000 devices when the enterprise standardizes around one brand or device."
With Aberdeen reporting that 90 percent of enterprises are planning to increase smartphone deployments so employees can do business anywhere via wireless access to the corporate network -- and with millions of dollars of savings at stake -- telecom expense-management providers may be an outsourced service whose time has come.