Telecom Expense Management Blog

While you may have a responsive telecom carrier account team who treat you well, they still are in business to maximize the profits they earn from you. Hopefully, your experience with your carrier has been good. Unfortunately, it is possible that your experience has not been a positive one. You may be suspicious of extra charges on an invoice or you do not feel your account team is supporting you. Whatever the case, it is important to understand what motivates carriers in order to understand how to effectively perform internal wireless expense management.

Carriers are under extreme competitive pressure. Couple that with antiquated systems that are too expensive to update easily, and you have a perfect conditions for overbilling. Often carrier account teams are compensated by plans that entice them to push your organization into features and other expenses you do not need. Sales rep compensation plans are focused on recurring charges, not on overages. While it is in the carriers best interest to recommend optimization suggestions, often the teams are ill-equipped to provide good ideas for true wireless cost management.

The Life of a Telecom Carrier

When it comes to providing useful information, it is not unusual for carriers’ internal systems to be ineffective at providing regular, automated reporting. That leaves it to the carriers’ account team to manually create effective reports, which often makes them simplistic. Furthermore, client satisfaction often takes a back seat to revenue generation. After all, there is more money to be made by increasing your device count. While carriers will not stand in the way of you managing your wireless expenses to reduce expenses, they will not typically bring to your attention that you are overpaying unless they fear losing your business.

The bottom line is wireless carriers are not your friend. That being said, they are also not your enemy. Most organizations simply want to pay a fair price. The thought of spending hours determining if you are being overcharged is unpalatable. Plus, carrier invoices are difficult to understand. If you spend some time analyzing your bills, then you are probably catching some of the issues. If you do not spend any time analyzing and rely solely on your carrier’s representative to take care of this for you, your organization is definitely overpaying.

Carriers are in business to make money, and that is fair. However, you must spend time protecting your organization against overbilling, and that takes time and effort on your part. Spending time and effort to engage in some wireless expense management to review invoices and ensure that they are in alignment with your organization’s needs is worthwhile

There are several ways a wireless expense manager can allocate the cost of the pool plan to different cost centers.

Average per line.  With this method, you simply add the total monthly recurring and peak charges and average per each line in the pool plan. 

1. 100% Cost per Minute.  With this method you take the total monthly recurring and peak charges and divide by the peak (non-mobile-to-mobile) minutes to derive a cost per minute.  Then you allocate the pool costs by charging each user the cost per minute times their peak usage.  Users with zero peak usage in that month should be charged nothing for the voice component.  Of course, if they only made text or data charges, those costs would be directly allocated to the individual and not averaged in the pool.
2. Base Plus Cost per Minute.  This method is a hybrid of methods 1. and 2. Here you would allocate a base charge (say $39) to all users in the pool.  This is the cost to have the potential benefits of a cell phone, regardless of how much you use it.  Any excess costs (pool monthly and peak charges) above the base charge times the number of users is converted to a cost per minute.  Thus, each user is allocated a base plus the cost per minute times their peak minute usage.
3. Everyone Gets Unlimited.  While this may not be the most cost effective option, it does simplify order, administration, and monitoring. If your company is large enough, you might be able to negotiate the unlimited plans down to $89/line.

If you need help with your wireless expense management, contact us today or call us at 877-219-8012

You would think that it would be easy to get approval from senior management to migrate to a pool plan to reduce wireless expenses.  This is not always the case. Migration can become a complex and contentious issue when there are multiple cost centers.  Cost center managers that have low usage individual lines do not want to subsidize the high usage cost centers that share the pool.  For example, cost center 1 has 10 users on the lowest individual plan of 450 minutes (at $39/line) and cost center 2 and 10 users on the highest individual plans of 2,000 minutes (at $89/line).  So the total pool size needed is 24,500 minutes for an average of 1,225 per user.  The closest plan that the carrier has is 1,500 minutes so you put all 20 users on the 1500 minute plan (at $59 per line).  Cost center 1’s cost has gone up $190 in the pool even though the company reduces wireless expenses and saves $100 ($1,280-$1,180).

In my next post on wireless expense management, I will explore different ways you can allocate a pool plan.

As a manager with responsibility for Wireless Expense Management you may be challenged with converting individual plans to pool plans. If you do some analysis, you can see that it is possible to reduce mobile phone expenses by a significant amount by simply placing all of the lines into an optimal pool plan. 

There is another benefit of the pool plans.  The number of minutes an employee uses in a given month can vary by as much as 100%, especially if the individual occasionally travels.  However, with all the users on a pool plan, the total usage usually doesn’t vary by more than 10%.  Obviously, the larger the pool, the less the monthly variance will be.  Therefore it is much easier to monitor and manage a pool plan rather than individual plans. If you manage your pool using a manual process or a spreadsheet, we think the optimal pool size is one that gives you about a 20% buffer over your average monthly usage. If you use a Wireless Expense Management solution, you can save money by reducing the number of minutes in your pool to give yourself a 10% buffer

Once you decide on the cost allocation methodology, the next step is to determine the monthly process to monthly monitor the pool plans and implement the cost allocation methodology.  I’ll discuss some ideas regarding this in my next post on Wireless Expense Management.

In my last post on this subject, I provided some background information on wireless handset insurance and discussed the hidden terms and conditions associated with these products that make them unattractive.

Now, because we are in wireless expense management business, let’s do some math. The biggest risk we can manage with Handset Insurance is the cost of a new phone with no upgrade; let’s say that’s $250. To manage that risk, we pay an average monthly premium of $6 per month and a deductible of $89 in the event of a loss. After a device life of 12 months, the net value of the risk we have managed is marginal;  $250-((12*$6) + $89) or just $89. Assuming a device life of 24 months, the net value of handset insurance is even less attractive; as $250-((24*$6) + $89) is just $17.

There’s an old truism that states one should buy insurance to protect against catastrophic loss and self insure less significant risks. If spending $250 to replace a smartphone represents a potentially catastrophic loss to you, go ahead and buy wireless handset insurance. For most business wireless expense managers, replacing a smartphone is a nominal risk that makes better financial sense to self insure.

Almost everyone has had the experience of buying an expensive piece of technology like a smart phone, laptop or even a refrigerator and being asked at checkout if we would like to buy some sort of insurance for our new purchase. The sales rep who is working with us can earn a big commission on this “upsell” and may pressure us into making a snap decision. We don’t have a lot of information about the potential risks to our new purchase or the economic value of those risks. We might be nervous about how our new acquisition is going to work out and the sales rep is offering an inexpensive-sounding solution to assuage our anxiety. It’s tempting to buy handset insurance for wireless devices, but it’s almost never a good deal, especially not for company liable mobile devices that are part of a wireless expense management program.

Before we dig into the economics, let’s review some background information about wireless handset insurance. The top four US wireless providers all have different names for the product, but the underlining carrier is always the same: Asurion. This company stays under the radar but insures millions of wireless handsets around the world. Wireless carriers charge between $5 to $12 per month for handset insurance, depending on the model of phone and the level of coverage. Insured users are covered if their phone is lost, damaged, or destroyed. Wireless carriers tend not to over advertise two important aspects of the wireless handset insurance coverage they offer. First, many claims are subject to a substantial deductible, sometimes as high as $89. Secondly, carriers fulfill customer claims with used, refurbished equipment.  The average market retail price for a used, refurbished handset is $100.

In my next post on the subject of wireless expense management, I’ll do the analysis to show the poor expected net value of buying wireless handset insurance.

The use of mobile devices increases the risk of loss of company data. This risk can be mitigated by using company liable mobile devices and following two practices. First, the company should maintain an accurate and updated inventory of all company-owned mobile devices along with each device’s user assignment. This is usually done as part of a telecom expense management process.  Second, the company should acquire the capability to remotely “wipe” or disable and delete all data from lost or stolen mobile devices.

Loss of Company-Owned Mobile Devices: Personnel Data Security

The use of mobile devices also increases the risk of loss of private data belonging to employees. An example of this type of loss could involve a human resources manager who loses a mobile device that contains company personnel data, such as employee tax identification numbers or medical information. If this type of loss occurs, we recommend employers notify employees immediately.  Here again, the employer can mitigate risk by implementing wireless expense management and maintaining  an accurate inventory of mobile devices and corresponding user assignments, along with the capability to remotely “wipe” mobile devices.

Mobile Devices and Enterprise Network Security and Performance

In addition to the risks discussed above, the use of mobile devices introduces vulnerabilities and potential performance issues into an enterprise’s network. Network security risks increase exponentially as an organization adopts mobile devices with e-mail and internet browsing capabilities, as a portfolio of such devices provides numerous attractive access points into a company’s network for viruses and hackers.  Telecom and IT managers must ensure that appropriate security measures are deployed to drive down risks as far as possible. Highly effective tools to manage risk include data encryption, firewalls, virus protection and the use of passwords.

It is very easy for employees to download applications onto company-owned smart phones, PDAs or mobile data devices. Some of these applications may create security risks or create network bandwidth bottlenecks. Employees should agree not to download software that is not approved by the company onto company-owned devices. Your service provider may provide utilities that prevent users from downloading unauthorized software or content.

Again, the employer can mitigate these risks by implementing wireless expense management maintaining an accurate inventory of mobile devices and corresponding user assignments, along with the capability to remotely “wipe” mobile devices. It is not good practice for the company to rely on wireless service providers to maintain this device and user assignment inventory, as it must be accurate and available at a moment’s notice.

My next post on the topic of wireless expense management will discuss the implications of employee use of company-liable wireless services.

It’s 7:00 am and you get an e-mail from the CEO. He’s in London and his cell phone isn’t working.

User support is the most high profile and time consuming part of managing a portfolio of mobile devices and expenses. Unless the number of mobile devices is very small, user support is not something an IT or Telecom manager can do in the time they may have between their other responsibilities. Typically, user support is the sole responsibility of a full time employee. Most folks agree the maximum number of devices and users one full time employee can manage is around 1,500. User satisfaction and job satisfaction of the employee doing user support degrade quickly past 1,500 devices. Typical issues you’ll need to build a process to resolve include technical support, lost or broken devices, upgrades, porting devices from other carriers, etc.

As with their wireless expense management process, IT and Telecom professionals have a “make or buy” decision developing a wireless help desk process. You can invest in hiring, training, equipping and retaining a full time employee. As an alternative, many organizations find they get a better quality/price relationship by outsourcing help desk and user support as part of a wireless expense management solution.

Reducing and controlling wireless expenses all begins with the process employees use to procure mobile devices and services. Employees often perceive mobile devices as a way to show their status in the organization, so determining who gets the latest and greatest smart phone and the biggest data plan can get very political. You can avoid getting in the middle of disagreements and being exposed to resulting hard feelings by documenting and implementing a policy that defines what type of device and sort of services employees are eligible to receive.

It is poor practice to have employees procure mobile devices and services at carrier retail locations. Often carrier retail locations open new individual accounts so that a new line is not part of a pool plan or receive contracted discounts. A better way to go is to have employees order new devices and services from an internal resource. If order volumes are large enough you can set up an online order process. Doing things this way allows you to present employees an online “catalog” of devices and services with the functionality needed to ensure users can only order approved devices and services. You can also set up an online order approval process. This will get you out of the unpleasant role of deciding which employee gets what device and plan.

There are two ways of setting up an online procurement process. If you do business with a small number of the main carriers, you can use web procurement portals the carriers may provide. As coverage is the single most important driver of mobile service procurement decisions and coverage varies greatly by wireless company and geographical location, many organizations do business with several wireless services provides in order to meet the diverse needs their users. In this situation, instead of asking employees to use ten different carrier-provided web procurement portals it makes sense to consider using a single portal provided as part of a wireless expense management solution. Such a single portal will aggregate the catalogs of multiple wireless carriers. The advantages of this approach should be obvious.

Whichever way you procure mobile devices and manage wireless expenses, it’s essential to update your inventory of devices and user assignments with adds, changes and disconnects that take place every month.

In my next post on the topic of wireless expense management, I will write about designing and implementing an optimal help desk and user support function.

One of the most of important advantages of migrating from employee-owned mobile devices to company-liable mobile devices is reduced cost. For an equal amount of services and features, the average personal plan is 33% more expensive than the average individual business plan. Companies can achieve additional cost savings and reduced administrative expenses by migrating from individually billed business plans to pooled plans that allow multiple company liable devices to share the same large allotment of minutes or other services. Often, a wireless expense management solution is required to optimize the pool plan according to usage patterns over time and allocate pool charges accurately across multiple cost centers. Many telecom and IT professionals find that reporting employee usage of wireless services on a regular basis to cost center managers eliminates the perception that telecom services are free and allows managers to hold their reports accountable for excessive or inappropriate use. This, in turn, drives cost conscious behavior among users of wireless services. Reporting of this kind is made possible by the adoption of a wireless expense management solution.

Company Liable Mobile Devices: Managing Invoices and Allocating Expenses.

Along with the many benefits of assigning company liable mobile devices to employees comes a considerable administrative challenge. Part of this burden involves managing a number of invoices from different wireless services providers. Because the amount of call detail on these invoices is so large, receiving a paper bill is usually impractical as a single paper bill is often hundreds of pages long. To add insult to injury, many wireless carriers charge their customers an extra fee for the privilege of receiving their invoice on paper. It is much better to receive wireless services invoices in electronic format every month. Carriers can send a CD, allow you to view your invoice online or send an EDI file you can load into a wireless expense management solution.

Regardless of the invoice medium you choose, to keep expenses under control over the long term, you must set up a rigorous process to audit mobile phone invoices for accuracy every month. Your monthly audit process should reconcile the inventory of devices, confirm user assignments and validate the invoiced rates. Confirm that last month’s disconnect orders have been processed and that you are only being charged for active devices. Check to ensure all contracted discounts are being applied. Make sure that all taxes and surcharges are legitimately assessed and correctly calculated. Set up automatic thresholds to identify instances of excessive use. All of this is more effective and less time consuming to manage with a wireless expense management solution.

You may also have or be given responsibility for allocating wireless invoices across your organization’s cost centers every month. If your users are all on individual plans, it’s easy. 100% of a line’s charges are allocated to an individual cost center. For users on pool plans, use a two step process: first sum the charges for pool plans, charges for add on lines and charges for peak overages, then allocate the sum evenly across all lines in the pool. Next identify non pool charges and assign them to the appropriate line. It is important you do not allocate non pool charges across all lines. This will not meet your organization’s accounting standards. Also, no cost center manager wants to be charged for costs that do not belong to his or her cost center, so allocating non pool charges across all lines is likely to provoke a negative reaction from cost center managers. Once pool and non pool changes have been properly allocated, assign each line’s charges to its cost center.

Again, one of the most effective tactics we have found to control costs is reporting employee usage of wireless services on a regular basis to cost center managers. This eliminates the perception that telecom services are free and allows managers to hold their reports accountable for excessive or inappropriate use. This, in turn, drives cost-conscious behavior among users of wireless services.

For any sizeable portfolio of mobile devices, the processes described above are impossible to manage effectively with an Excel spreadsheet or similar tool. You have to use a wireless expense management solution to get the appropriate level of accuracy and rigor for the investment of a reasonable amount of time.

In my next post on the topic of wireless expense management, I will write about designing and implementing an optimal wireless device procurement and approval process.

By Hai Yen T. Nguyen, Analyst, ProfitLink Telecom Expense Management