As more companies adopt a bring-your-own-device (BYOD) approach to mobile, many are getting caught by hidden costs. But virtualization titan VMware has bucked that trend. VMware CIO Mark Egan explains how his company accomplished its feat.
It seems counterintuitive, but last year, Aberdeen Group found that the costs for a company with 1,000 mobile devices go up by $170,000, on average, when they adopt BYOD. Why? Hidden costs. Premiums go up because employees no long have access to volume discount rates. The number of expense reports processed skyrockets, meaning more processing costs. Then there are setup, security and compliance costs and more.
[ALSO: Get ahead of the BYOD wave]
Looking at these hidden costs, Nucleus Research in November predicted the BYOD trend will soon begin to shrink as CFOs balk.
Escaping the Hidden Costs of BYOD
And yet, companies like VMware have famously managed to buck the trend.
"The results of this were quite positive," says VMware CIO Mark Egan. "I'm saving seven figures in the U.S. alone on cell phones."
VMware went "all-in" on BYOD in the fourth quarter of 2011.
"Although I had a fairly liberal approach [to BYOD], it just wasn't enough," Egan explains. "I wasn't getting the new device immediately available to my business partners. We were spending a lot. That's when we decided let's give everybody choice. What we did is we moved all of the employees to personal liability and expense reimbursement. We were spending approximately $172 a month per user in the U.S. My savings are about $2 million that I'm going to save this year in the U.S."
Determine Whether Employees Actually Need a Device for Work
It seems simple, but if that's all VMware had done, Egan might have found that his organization's costs were spiraling out of control like that of some other organizations that have adopted the BYOD approach. Egan stresses that one of the first key steps VMware undertook was to perform a company-wide assessment of who had corporate-owned mobile devices and whether they actually needed a mobile device to do their job.
"Are you eligible for a phone?" he asks. "We added a lot more oversight over whether they needed a phone for work."
"We had more phones out there than was deemed by management to be appropriate," Egan says. "It hit the IT cost center. We eliminated several hundred phones, which came up to the tune of $500,000 for the first year."
Once the list of those eligible for mobile devices was stripped to only those personnel who the company determined required them for their work, VMware introduced two reimbursement programs-one for employees in customer-facing roles and one for employees in noncustomer-facing roles. Neither program includes a stipend for buying devices. Egan says he learned that lesson early on.
"The new iPhone shipped and we suddenly had a lot of broken and lost phones," he says. "I'm sure it was a coincidence, but we don't have that anymore."
Instead, employees in customer-facing roles are reimbursed up to $250 a month for their legitimate mobile-related expenses. Non-customer-facing employees are reimbursed up to $70 a month for their legitimate mobile-related expenses.
Put Business Leaders in Charge of Costs
The money for the reimbursement doesn't come out of Egan's budget. Instead, it comes out of the budget for the employee's department, meaning business leaders are incentivized to keep a tight rein on their employees' mobile costs, but also that they have the authority to reimburse at a greater level on a case-by-case basis.
"We do a report back to management on a monthly basis: All the folks in your department that have phones, here's what they spent," Egan says.
"The expense reports come in on a monthly basis and we work with the finance team to generate a report every month," he adds. "We have that check and balance. I put the onus on the business leader to make sure the expenses are appropriate for the employee."
Another way Egan spares VMware costs associated with BYOD is that the company does not provide technical support for employee-owned mobile devices beyond helping them get squared away with security and management technologies like its Horizon device management solution. But when it comes to repairs and similar issues, that's between the employee and the carrier/device manufacturer, though Egan does have a small number of cheap loaner phones on hand for emergencies.
So just what is Egan doing with the money he's saving?
"I took the $2 million in savings and invested it in IT programs that I would not otherwise have been able to do," he explains. "It went into upgrades to infrastructure and the security program: some of the key things that are not tied into revenue-generating projects for sales or R&D projects."
Advice for those Contemplating BYOD
In the end, Egan says he believes getting out of the phone business was one of the best decisions he's made in his tenure at VMware. Other organizations can do it too, he says.
"Start with phones," Egan suggests to any organization exploring BYOD. "I think it's kind of an easier one to approach. You will need executive support. If you don't have it, you won't be successful. I recommend going all in. If you have an opt-in, it's very hard to manage; you may get a lot of overhead and heartache in the process."
Also, change management is huge," Egan says. "Use a collaboration tool so employees can support each other. We use Socialcast, which is kind of like a Facebook for the enterprise. We just have a stream going and everybody kind of pitches in. It's amazing how you can get the employee base to resolve issues. It was just amazing the amount of collaboration that I got from the employees."
"You want to be consistent," he adds. "Even if you have five percent of folks that don't go into the program, those exceptions will kill you. You want to get your policy squared away. Work with your legal group and make sure that they're comfortable with this. Different industries are going to have more reluctance than others."
Thor Olavsrud covers IT Security, Big Data, Open Source, Microsoft Tools and Servers for CIO.com. Follow Thor on Twitter @ThorOlavsrud. Follow everything from CIO.com on Twitter @CIOonline and on Facebook. Email Thor at firstname.lastname@example.org
Read more about consumerization of it in CIO's Consumerization of IT Drilldown.
This story, "How BYOD Saved VMware $2 Million" was originally published by CIO.