Are you working in IT procurement? Are you in charge of reviewing mobile device and network spend? Then this article might be of interest.
Who am I, and what do I know anyway?
In short, I’ve been working in telecoms management and procurement for over 25 years, typically with large corporates both in the UK and internationally. I’m actively involved in negotiating dozens of large mobile contracts each year, and I see first-hand where businesses get it right and where they fall into traps, that often lead to unexpected cost increases over the term of the agreement.
In this article, I’ve highlighted just a few of the key actions that successful procurement teams take to avoid expensive mistakes which make a big impact on mobile network and device costs. Often generating 20-30%+ cost savings in the process.
Rigid Data & Analysis Models
Too many businesses look at a snapshot of data and base their vendor proposal analysis and decision making on that one data set. The problem with this approach is that the use of mobiles is changing rapidly and at a quicker pace than procurement teams can renegotiate contracts. Whether that change is from faster networks (5G), higher use of video and collaboration tools (e.g. MS Teams) or greater levels of home working, if your modelling doesn’t look at different and changing scenarios then you’re at big risk of overspending when usage profiles shift (which they will).
Flexibility is your friend
Flexibility in contracts comes in many forms; however locking in all of your connections and 90-100% of your estimated mobile spend as a contract commitment invariably creates major issues when needs or usage profiles change.
Flexible contracts that provide the ability to shift users between a range of different tariffs or ones that include spend and connection commitments that allow for significant changes in the number of connections (e.g. 20-30% reductions) can make an enormous difference over the term of your next mobile agreement. Your mobile network is going to try and lock you in for the maximum spend and number of connections that they can get away with, don’t let them!
Many of your users don’t really need or use their business smartphone
Too many businesses fail to engage with users before issuing corporate phones and SIMs or when renewing contracts and upgrading phones. Covid-19 and collaboration tools like MS Teams and Zoom have transformed the way people communicate for business, and as a result, many employees simply don’t use their business smartphone as frequently as they used to.
This has created material opportunities to save money and realign IT budgets and support to better meet the needs of users, and it also reduces your IT carbon footprint. However, most businesses fail to complete a review of end-user needs before embarking on network renegotiations, and so inadvertently lock in this unnecessary spend.
Do you see lots of users in your business with two phones? If the answer is yes, then you’ve already got a great opportunity to save money and deliver a better experience for your end users, but you’ll need to challenge the status quo to get to the bottom of why employees aren’t frequently using their business phones. Put simply, about 5-15% of business users don’t really use their phone at all, and between 20% and 40% use them infrequently – that’s a much bigger opportunity for cost savings and carbon reduction than you’ll ever achieve by simply renegotiating tariffs.
The devil is always in the detail
If you don’t understand the fine detail of how mobile network tariffs work, what happens when allowances are exceeded or what rights the network has to make price changes during the term of the agreement, then you’re going to pay more than you expect over the term of an agreement.
Too many businesses just look at the headline line rental charges and discounts, and don’t analyse or model the more complex areas like roaming, excess data charges or UK to international calling. So guess what? That’s where the mobile networks hide their margin and nasty conditions that most don’t spot. And if your analysis doesn’t model different data usage and roaming scenarios, then the risk of overpaying jumps significantly.
What’s more, did you know that many mobile networks link parts of their agreement to online terms and conditions, which they can change over the term of the agreement without notice. For example they can re-categorise which zone a country sits in for roaming, increase the charges for usage that is not specifically stated in your agreement and even amend how CPI inflation changes are applied. Ignore this type of detail at your own peril.
Technology funds make no sense
If your mobile agreement includes a mobile device technology fund that you can use to buy devices then beware! When mobile phones cost £100 and a typical airtime bill was £20 per month for a connection, then it made sense to include the phone cost in the plan over 24 months. However, now that the airtime element is just £10 pm (or often less) and corporate smartphones commonly range from £250 – £600, then what is the point in trying to fund that device by artificially increasing the cost of your airtime bill by an additional £10 – £30 pm over 2 years?
A business iPhone can easily last 2-3 years and it’s rare that all phones need to be replaced at the same time, and wouldn’t you want choice when it comes to sourcing phones and associated support for those phones?
If you take a technology fund, you remove that choice. So, having a low monthly airtime bill and then purchasing phones as and when they are really needed makes more sense (in my opinion). Those phones can still be easily financed at low cost through leasing, residual value leasing or even a subscription model, if you don’t want the upfront capex costs, however all of those models are totally transparent – you pay for what you get.
This will be unpopular for many to hear, however, tech funds are simply unregulated loans by your mobile network that create hidden pools of cash, that IT teams can use to completely bypass procurement processes. These tech funds can only be used with your network to buy phones at prices that you have no control over. They therefore remove pricing competition, they often never cover the real cost of replacing all business devices anyway, and as they are funded through increased spend commitments and by inflating rental and usage charges, they often work out more expensive than separating device and network purchases.
Ask yourself, if a mobile network is going to give you £100,000 upfront to buy phones, are they going to take a big risk that they don’t recover that money or are they going to ensure that they always make a positive return? Tech funds nearly always lead to overspending, it’s just hidden from procurement and finance teams.
Want to rethink mobile cost management and procurement?
From revisiting BYOD policies to validating and analysing monthly invoices there are dozens of different ways that procurement and finance teams can help IT to reduce mobile costs and negotiate better and more flexible contracts. This articles just scratches the surface. Having an expert on your side when looking at your next mobile contract can also help, so if you’re interested in slashing your mobile costs by 20-30% or more then please do get in touch!