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BYOD: If You Think You're Saving Money, Think Again

Added on Apr 05, 2012 by Tom Kaneshige
Tom Kaneshige About the author

Tom Kaneshige

Tom Kaneshige covers Apple and Consumerization of IT for CIO.com. Follow Tom on Twitter @kaneshige. Follow everything from CIO.com on Twitter @CIOonline and on Facebook. Email Tom at tkaneshige@cio.com

It's the battle hymn of the mobile worker: They want to use their personal iPhones, iPads and Android devices instead of company-issued BlackBerry smartphones and PlayBooks to get their jobs done. It's part of a growing trend called BYOD, or bring-your-own-device.

While CIOs might gloat at BYOD's perceived cost savings--no more BlackBerry purchases!--they'd be wrong to do so. Aberdeen Group found that a company with 1,000 mobile devices spends an extra $170,000 per year, on average, when they use a BYOD approach.

"Organizations that simply say BYOD is about productivity and have completely ignored the cost structure are playing with a blank check," says Aberdeen analyst Hyoun Park.

This is a splash of cold water on the hot BYOD trend.

Mobile BYOD was supposed to get CIOs out of the vicious hardware-buying cycle, or at least offset costs.

Case-in-point: Cisco's cost savings from BYOD is in the neighborhood of 17 percent to 22 percent. "We don't pay for it, and our users are happier," Lance Perry, Cisco's vice president of IT, customer strategy and success, told attendees at the Consumerization of IT in the Enterprise Conference and Expo in San Francisco last month. "Isn't that a beautiful thing?"

But Cisco is th exception, not the rule. BYOD's dirty little secret is that most CIOs aren't seeing cost savings. In fact, mobile BYOD often costs more in the long run than company-owned mobile devices.

So where's the money going? Here are five hidden costs in mobile BYOD.

Hidden Cost: The Monthly Premium Hit

Traditionally, CIOs haven't had much to do with mobile devices. But mobile devices have become strategic lately and thus have fallen into the CIO's purview. This means many CIOs are probably not familiar with a wireless expense management cost structure, which is extremely complicated.

"They approach BYOD from a limited perspective," Park says.

A company can purchase hundreds or thousands of smartphones and receive a volume-discount rate, including some free replacements. Under a BYOD program, a company doesn't get these benefits. However, this isn't a big deal since employees are paying out of pocket for the hardware anyway.

The problem really comes into play with the wireless service. A company that chooses to own mobile devices can buy services in bulk from a single carrier and increase its discounting power, whereas a consumer signing up for a two-year plan pays a much higher rate.

Aberdeen's research shows that a company seizing a volume-discount rate and optimizing plans for certain employees spends an average of $60-per-month for a smartphone's wireless voice and data services. Whereas the average BYOD reimbursement for a smartphone is $70-per-month.

Hidden Cost: Expense Reports

As mentioned earlier, many CIOs aren't on the wireless management ball. These companies spend an average $80-per-month for a company-owned smartphone, or $10 more than a BYOD smartphone. At first glance, this seems to prove BYOD's cost savings, right? Wrong.

You'll have to tack on the hidden cost of reimbursing BYOD employees. Typically, an employee files a monthly expense report for their wireless bill. A single expense report costs about $18 to process, says Aberdeen. Suddenly, the cost of a BYOD smartphone bill runs around $90 per month.

It should be noted that an employee who files an expense report with multiple expenses, including the wireless bill, will still only cost the company $18 to process. That is, mobile BYOD expense reporting will incur this hidden cost only if the expense report was filed solely because of the wireless bill.

BYOD employees often expense their entire wireless bill rather than itemize it. "There's absolutely no visibility into what's personal and what's corporate," Park says. "Even though companies may say they take care of this by putting in a ceiling or fixed expense amount, it doesn't mean they've optimized the cost structure. It just means employees know how high they can go."

Hidden Cost: Security, Management, Data Loss, Oh My!

When a company buys mobile devices in bulk, it can set up a process to automate deployment and management in a scalable way. In a BYOD scenario, an IT person has to input each individual device into a system, punching in phone numbers, IMEIs (international mobile equipment identity), and employee information.

Aberdeen doesn't provide a cost to this labor-intensive practice. Nevertheless, "It's a pretty realistic pain-point for a company dealing with BYOD on an ongoing basis," Park says.

Then there's a boatload of security and compliance costs associated with mobile BYOD. Typically, BYOD brings iOS iPhones and iPads into BlackBerry shops. This means CIOs will have to invest in a multi-platform mobile device management solution and other software, maybe even a VPN (virtual private network) layer.

"The cost of compliance--ensuring governance, risk management and compliance--is also more difficult when devices must be chased down individually," Park says.

One can see how BYOD could become a nightmare for CIOs. Avanade, a business technology services firm, which surveyed more than 600 IT decision makers late last year, discovered something rather alarming: More than half of companies reported experiencing a security breach as a result of consumer gadgets.

Hidden Cost: Who's Helping the Help Desk?

Then there's the hidden cost in help desk support.

With BYOD, IT departments are caught between the proverbial rock and hard place: IT doesn't control the actions of the carrier or the devices, yet is still being held responsible to support BYOD employees, even if IT isn't getting additional resources to do so.

The flip side is to unload BYOD support onto employees. The thinking goes, they are on the hook to repair their own personal devices. Got a problem with your iPad? Head to the nearest Apple Genius Bar.

As BYOD becomes more pervasive and mission-critical, this kind of self-service won't hold up. "You don't really have control of the device and data if employees are solely responsible for managing the device," Park says. "At that point, the company has abdicated control of some of its assets."

Bottom line: CIOs will have to invest in help desk support for BYOD.

Hidden Cost: Multi-Platform, Multi-Department

Let's face it, mobile BYOD means more platforms to develop apps for and support. Sure, many CIOs don't allow reportedly leaky Android devices into their BYOD programs. Nevertheless, BYOD may eventually lead to internal, native iOS app development for both the iPhone and iPad.

The cost of internal app development can rise dramatically with BYOD. Companies that "go native" must invest in each platform in the BYOD portfolio.

BYOD not only requires multi-platform support but multi-department support, too. "BYOD requires significant cross-departmental overhead to ensure that everyone involved in employee administration, from HR to IT to security, is on the same page," says Rainer Enders, CTO Americas for NCP engineering, a VPN solutions provider.

When a BYOD employee gives notice or is terminated, HR and IT must work quickly to de-provision the personal device off the corporate network, Enders says. This process is much easier if the company owns the device. Another cross-departmental concern arising from BYOD is when a part-time employee or contractor wants to connect their device to the network.

It's likely a company will have to invest in, say, a liaison or some other multi-department communication process to handle BYOD issues.

The High Cost of BYOD

All tallied, BYOD doesn't look pretty from a cost perspective. A typical mobile BYOD environment costs 33 percent more than a well-managed wireless deployment where the company owns the devices, according to Aberdeen.

"Despite all the talk about BYOD being cheaper, that's not what is actually being deployed," Park says.

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