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How BYOD Saved VMware $2 Million

By Thor Olavsrud, CIO
February 01, 2013 01:50 PM ET

CIO - 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.

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