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CIO - When 600 workers jumped on their tech company's new "Bring Your Own Device" smartphone program, expenses went through the roof: collectively $300,000 over budget in the first year, says Network Sourcing Advisors, a mobile consultancy that helped the company rein in costs.
"It was just outrageous," says David Schofield, partner at Network Sourcing Advisors.
After Network Sourcing Advisors exposed hidden costs and crafted a comprehensive policy for the tech company, expenses dropped. Now the cost of BYOD is only slightly higher than the cost of company-issued smartphones that preceded it.
Truth is, most companies would do well to break even with BYOD smartphones. Hidden costs can spiral out of control and wreak havoc on a company's bottom line. That's not to say companies shouldn't adopt BYOD. Rather, they might want to learn what they're up against when it comes to BYOD's dollars and sense.
The aforementioned tech company's biggest misstep: trusting employees to do the right thing. Network Sourcing Advisors found widespread employee abuse, such as expensing family plans, upgraded phones and termination fees, signing up for maximum data plans even though they weren't necessary, and racking up thousands of dollars in overseas data charges.
Network Sourcing Advisors ironed out an enforceable policy that included a monthly stipend for BYOD expense reports. If an employee goes over the stipend and still wants to get reimbursed, he'll have to prove that the overage is business related and that steps were taken to reduce costs.
"It was a significant cost reduction for the company," Schofield says. "But even in their stipend situation, people are still over-buying. In BYOD overall, they're net losing, although not as much as they were."
Cost Savings: BYOD's Mixed Message
The idea that a company spends more on BYOD smartphones than company-issued smartphones flies in the face of conventional wisdom. After all, if companies no longer have to pay for phones, then that should add up to a whole lot of savings, right?
(To be fair, many companies choose to adopt BYOD not for cost savings but increased worker productivity. Intel, for instance, claims to have a return of $7,500 per BYOD employee per year, in the form of 57 extra minutes a day per employee, compared to $2,500 per employee to enable, manage and secure BYOD, reports InfoWorld.)
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High-tech companies such as Cisco, VMware and Ingram Micro began mandating BYOD smartphones, and they're claiming huge cost savings. "I feel very comfortable saying that I will save seven figures this year," VMware CIO Mark Egan told me earlier this year.
But these cases just might be the exception, not the rule.
Last month, Nucleus Research predicted BYOD will decline in 2013, stating: "The reality is that the support costs, compliance risks, and usage reimbursement typically lead to a higher total cost of ownership with no discernible return on investment or productivity gains. As enterprise CFOs take a closer look at the true pros and cons of BYOD in 2013, they will seek to pursue the most fiscally responsible option: corporate-based accounts."