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Wrangling wireless costs

News Analysis
Jul 14, 20035 mins
Cellular NetworksNetwork Security

Nail down a contract and track usage to keep your employees' cell phone bills low.

As business becomes ever more dependent on mobile communications, the cost of keeping employees untethered is soaring. In-Stat MDR estimates that companies will spend $12 billion on wireless services this year. If these expenses aren’t being managed well, corporations are probably overpaying.

“Wireless provides lots of efficiencies and improves productivity for mobile users, but companies need to take control of the costs,” says Philip Redman, research vice president for Gartner. Companies should implement a policy for wireless adoption, usage and management, and negotiate a corporate-wide service contract, he says.

“Enterprises with consistent and documented policies, coordinated service adoption and stringent management of wireless services will save 15% to 35%,” Redman says. Sure, this takes time, but the payoff is money in the bank.

There are several things to consider when developing a policy, including which employees get company-paid service, personal vs. business usage, how wireless service should be expensed, and what security procedures wireless users – especially wireless data users – should practice. Seek input from all departments to draft an effective policy that lets users be most productive while keeping costs in check.

As a first step in tackling wireless-service cost management, conduct a wireless telecom audit of all your users. “You can’t manage what you can’t measure,” says Lisa Pierce, a Giga Information Group analyst. Get a handle on wireless usage and service needs before drawing up contracts or policies, she advises.

One company that is trying to get as much as it can out of its wireless service is Hawaii Home Loans, which is using Sprint PCS wireless service to support all employees’ voice and some of its wireless data needs. While the organization doesn’t have a formal policy that restricts personal calls, “there is a direct correlation between usage and productivity,” says Leonard Loventhal, senior vice president at Hawaii Home Loans in Honolulu. “On average our top producers are always talking to clients and therefore use the most minutes.”

If an employee has logged a lot of minutes in a given month but hasn’t brought in much business, then it’s clear most of those minutes were for personal calls, he says.

Hawaii Home Loans uses Sprint PCS’s Web site to track individual and group usage throughout the month. In the 14 months since the company began using Sprint PCS’s service in and out of the office, Loventhal says there was only one instance when he had to tell an employee to curtail personal phone usage. “We brought her in and talked with her, and the problem was solved,” Loventhal says. He could approach the employee because he had evidence: The Sprint PCS customer-service Web site shows detailed individual usage for outgoing and incoming calls, as well as the duration of each call.

The management tool lets Hawaii Home Loans monitor its bucket of minutes to ensure it doesn’t exceed its allotted reserve. Loventhal negotiated a flexible corporate-wide contract and can easily reduce or increase the company’s total minutes.

“That has been extremely easy for us to manage,” he says, which also keeps costs in check.

Don’t simply accept the standard contract that a carrier offers. “Everything is negotiable,” Redman says, including:

• Length of contract. Cost of adds, moves and changes. Discount rates. Pricing plans. Activation fees. Devices. Service-level agreements.

While reducing costs is important, analysts say most IT managers first choose a service provider based on geographic reach, and second based on rates. That’s why many larger companies sign contracts with multiple service providers to meet all their needs, says Becky Diercks, an analyst at In-Stat MDR. A company might go with Verizon Wireless for a large group of employees because of the geographic coverage the carrier offers, and might turn to Nextel for another group of employees who need its DirectConnect walkie-talkie feature, she explains.

It’s most cost-effective to get as many users as possible onto one plan because carriers offer better volume discounts, but if you need to use multiple providers to meet your company’s needs, play the carriers off of one another to reduce service costs and increase flexibility.

William Lawrence, CEO at Bubbles Enterprises, a car wash and detail chain in Houston, streamlined his company’s wireless usage and costs by consolidating from three different wireless services to one plan. Lawrence assessed which features his employees needed to increase productivity.

The company was using pagers and cell phones and land-line voice mail to keep managers and the maintenance crew in contact throughout the day. “What we found was none of the three were effective,” Lawrence says. Calls still were being missed and important information wasn’t always delivered in a timely manner, he says.

Bubbles switched to Nextel’s service about four months ago. The company added 16 users to the system, and now has an effective communication tool to keep employees constantly connected and has reduced costs. “We are paying $700 less per month for the Nextel service,” he says.

Instead of worrying about restricting employee usage, Lawrence is splitting the monthly costs with the users. Bubbles offers employees the Nextel phone and service for $20 per month, which Lawrence says is one-third the cost of what many of them were paying on their own. They get 500 anytime minutes, 2,000 night and weekend minutes, and unlimited DirectConnect minutes.

Another tactic is to offer employees discounted wireless service that counts toward the company’s total annual commitment. If your company has a contract with AT&T Wireless that covers 100 employees, you could let your employees purchase service at the same rate for their personal use and pay the bill on their own.

Reducing wireless service costs
Appoint one person to oversee procurement.
Allow departmental input, but centralize buying decisions.
Identify appropriate users; wireless isn’t for all employees.
Negotiate service-level agreements.
Review usage regularly.
Use management tools provided by the carrier or third-party tools.