Managing BYOD expenses: How to get it right

Bring your own device (BYOD) has become an accepted practice in business. Gartner predicts that by 2017, half of all employers will require workers to supply their own devices for work. Yet there are mixed reports about whether BYOD actually saves businesses money.

In 2012, the Aberdeen Group found that a company with 1,000 mobile devices spends, on average, an extra $170,000 per year on BYOD compared to the costs of providing corporate-owned phones, mostly due to behind-the-scenes expense-management issues. But then other stories surfaced from the likes of VMware and Intel showing how much they’ve saved by implementing BYOD programs.

So is BYOD cheaper than issuing corporate-owned phones and tablets, or isn’t it? The answer: It depends on how you implement BYOD and how you count and manage expenses and benefits. The good news is that, since the Aberdeen report was released two years ago, businesses have learned more about how to more efficiently manage BYOD. For example, there are lower monthly amounts being reimbursed on average, and there’s also more efficiency around processing the reimbursements.

Managing reimbursements

Handling those reimbursements has been perhaps one of the most surprising expenses related to BYOD. Managing reimbursements manually, usually via individual employees submitting expense reports, can cost $15 to $20 per expense report in internal labor, says Hyoun Park, principal consultant for DataHive Consulting. “It’s an expense management black hole,” he explains. That’s primarily because BYOD reimbursements touch many different departments, from accounts payable to finance and IT — and all those hours add up to extra expense.

But some organizations have figured out how to bring down that cost.

Take the State of Delaware. Workers who opt to take advantage of the BYOD plan are eligible for a $40 monthly reimbursement for wireless service. To get the reimbursement, they have to submit their bills through the state’s expense form. “We require they don’t submit them any more often than quarterly,” says Bill Hickox, chief operating officer for the State of Delaware. That’s to cut down on the expense the state incurs from processing the reports.

“We have a lot of people who submit all their bills once a year,” he says, further reducing costs for the state. Around 600 people are on the BYOD plan.

Brunswick, the marine, fitness and billiards company, has streamlined the reimbursement process for its employees even further. Workers are eligible for either $50 or $25 a month, depending on their job role.

Brunswick built an internal system where individual workers can apply to get the reimbursement, answering questions about their travel and other requirements. IT doesn’t make the decision about whether an employee is eligible, though. “We really couldn’t police it,” says Mike Tegtmeyer, director of enterprise network services at Brunswick. Instead, employees’ managers decide.

Eligible employees automatically get the reimbursement quarterly. To process those payments, Tegtmeyer collects the data from the internal system that workers use to apply for BYOD reimbursement and runs a report against the company’s human resources database to make sure that the employees are still active. If they are, the reimbursement gets approved and processed without employees filing any paperwork.

“It takes me a half hour [each] quarter to run this report and put it in a clean format to send to payroll,” he says. The payments go out to around 1,400 people.

He figures his cell-phone spend has dropped from $140,000 a month to $80,000 by adopting BYOD. That includes the reimbursements, some monthly service bills — around 200 workers are still on corporate-owned phones — as well as his time processing the reimbursements. Brunswick’s one employee who used to manage corporate-issued devices has been reassigned to other work, resulting in additional savings.

Brunswick doesn’t have much additional overhead around BYOD. It uses AirWatch to control the corporate-owned devices. Otherwise, it relies on security built into Lotus Notes Traveler to secure email used by BYOD workers. The company may bring BYOD devices under AirWatch or another management platform in the future, Tegtmeyer says.

Since most business-incurred expenses relate to managing corporate-issued devices, like running a BlackBerry Enterprise Server, costs associated with a mobile device management (MDM) product like AirWatch are really a wash when comparing the cost of BYOD vs. a corporate managed program, DataHive’s Park says.

Centrally managed BYOD

Intel has taken a totally different route compared to Brunswick and the state of Delaware. “We try to do as much as possible [by] not using expense reports because it’s a hassle and expensive,” says Lisa Spelman, IT director of client services at Intel. It’s expensive, she adds, in terms of time spent by people who have to process the reports as well as those who have to file them. “When we look at one of our central functions as IT, we believe it’s to drive Intel productivity to maximize output, so if we put in place policies that guarantee every month you need to do an expense report or track something, it never felt like the right thing to do,” she explains.

Instead, when employees become part of the BYOD plan, they’re moved onto a corporate-funded plan with their mobile provider, and the bill is taken care of by Intel. Managers get a monthly statement that they can use to keep an eye on expenses by employee.

“We’re trying to drive fiscal responsibility with as minimum overhead as possible,” Spelman says.

Another benefit to this approach is that Intel can still negotiate corporate discounts with operators. Many businesses saw monthly service bills go up when switching to BYOD because they were reimbursing for all (or nearly all) of their employees’ bills, which were more expensive because they were no longer on a corporate-negotiated plan.

Intel is on the leading edge in terms of keeping workers on centrally negotiated mobile plans. Companies are just starting to work with operators to get better deals for employees on BYOD plans, says Forrester analyst David Johnson. “But it’s early on and many are still just doing expense reimbursement,” he explains.

Overall though, Intel didn’t implement BYOD as a way to cut costs. “It’s not something we view as a cost savings but a productivity adder,” Spelman says.

Other cost-cutting techniques

Another way that some businesses have cut back on the cost of BYOD is by dialing back the amount they’re willing to reimburse employees. Nowadays, $40 is the average monthly reimbursement that businesses offer employees, says Park. A couple of years ago, $80 was the norm, he says. “When companies started to do BYOD it was to get out of the business of managing devices. But after a couple of years of experience and dealing with expense reports and bills, where the total cost is significantly higher than with corporate-owned devices, they had to cut back,” he said.

Also, new services are becoming available to help businesses manage BYOD expensing.

Cass Information Systems, for instance, will handle direct payment of a set reimbursement for workers. Employees see a credit for that reimbursement amount on their cell phone bills each month, with a line showing how much additional they are responsible for. Visage and Concur have a joint offering that lets businesses manage mobile expenses. Tangoe and MindWireless are other companies with products aimed at making it easier to manage BYOD expenses. (None of those vendors could provide customers willing to talk about their experiences using the services.)

Once a business has device management and expense management systems in place, there are likely more challenges to come. When Intel introduced its BYOD program, it got a positive response from employees. But very soon, once workers discovered how productive they could be using their phones to get work done, they began asking for access to more and more applications, Spelman explains. “They love you for a day and then they want more,” she says.