Mobile networks, usage, devices and their associated costs have always been challenging for IT and Finance teams in large businesses to control and support. Mobile devices, especially smartphones, are with their users most of the time, both for ‘work’ and in their ‘personal life’; sitting (often unprotected) outside of the safety and control of ‘ring-fenced’ corporate IT networks.
Unlike most forms of corporate IT expenditure, mobile costs are also highly sensitive to end user behaviour. The roll out of 5G services, the rapid migration to remote working and the increase in data consumption from video communications are driving significant changes in this user behaviour, which in turn is generating excess mobile network costs.
This Insight Report provides a high-level guide to the most common ways that businesses overspend on mobile airtime, and how Utelize’s Managed Mobility Services can help your business to identify and remove excess cost on a sustainable basis. Helping to free up significant telecoms budget for reinvestment in IT transformation.
Why do large businesses overspend on mobile services?
If you’re reading this report, then you probably already suspect that your business may be overspending on mobile services and devices, but maybe you can’t put your finger on exactly where or why? Or possibly, like many businesses, your mobile spend might be regularly over budget and you’re tired of not being able to explain exactly why to your CFO or CEO?
One of the challenges with negotiating and managing mobile, is that most people view mobile as a simple ‘commodity’ – “just how difficult can it be to manage the costs?” Tens of millions of people do it every year online and in shops up and down the UK, including most of the people that are likely to be involved in the sign-off process for your own business mobile contracts. “You just compare the cost of the different providers monthly rental and the device costs over your desired term and select the cheapest one – job done!” And at a consumer level, that’s probably fair.
In a large business however, mobile is often significantly more complex. Usage profiles often vary significantly across different business users and business contracts and associated data plans and services need to be tailored to meet real business needs and rapidly changing usage profiles. Prior to Covid-19, the use of roaming data was one of the key drivers for excess spending, however with Covid the management of UK data usage, inventory and unused services are now as important to controlling costs.
Put simply, most businesses fail to appreciate the complexity of mobile usage and different requirements across their organisations, and as a consequence they regularly overpay for services. Furthermore; as most businesses rely almost exclusively on renewal negotiations to deliver their mobile costs savings; they often give little regard to other approaches to managing mobile spend, and so can also miss significant opportunities to optimise costs.
It is not in doubt that procurement activities can generate significant savings, however it is the level of savings that are generated from these negotiations, which reinforces the notion that mobile cost control is simply about negotiating the best pricing. In short, at face value, mobile procurement activities are almost always seen as successes, and so it’s rare in our experience for IT, Finance and Procurement teams to stand back and evaluate why it was possible that they were able to secure such large savings in the first instance.
Most simply see it as a well executed negotiation and set about looking at the next contract to review. Fast forward two to three years and the exercise gets repeated, another large saving gets booked and the cycle starts again. This can be seen as a ‘procurement first’ approach to IT and mobile cost management.
The problem however is that those large ‘booked’ cost savings (normally 20-30%) rarely make their way through to the budget line on the P&L intact, and often costs quickly start to rise as soon as the ink is dry. By the time the next contract renewal discussions start, costs have typically returned to or even exceeded the level they were at when the last negotiations were completed. Most businesses however never look back to see whether negotiated deals actually deliver the promised savings or review longer term trends to identify these changes in spending. Breaking this cycle of two-three contract negotiation savings, and implementing a continuous approach to the management of mobile costs, usage and inventory is the true key to unlocking sustainable cost savings.
Most Common Business Challenges That Lead To Overspending
Whilst every business is different, there tend to be common reasons why large businesses overspend on mobile services. Below we’ve highlighted some of the most frequently occurring challenges that lead to excess costs.
Negotiating Mobile Contracts Based On Price
The terms and commitments that go alongside the headline pricing can make an enormous difference to how effectively a business can manage mobile costs and usage.
Not Fully Understanding Usage Profiles & Business Mobile Requirements
Without a detailed insight into mobile usage profiles it’s impossible to model how a new tariff or service will impact costs or whether the business is genuinely paying for what it needs.
Commencing Negotiations Without A Clear Mobile Strategy & Business Requirements
Mobile and remote working, 5G, video and unified communications all have an significant impact on a businesses’ mobile requirements; however most businesses fail to model different future scenarios, instead basing decisions on current usage trends – leading to inappropriate contracts and terms that can’t cope with future changes.
Failing To Identify & Remove Wastage From Unused Services And Connections
In a typical business, between 5 and 15% of all mobile services and connections simply never get used, however a lack of continuous monitoring or inflexible contract terms means this wastage cannot be removed.
Poor Or Unclear Mobile Policies With Limited Ability To Monitor Or Manage User Behaviour
With rapidly increasing mobile network performance with 4G and now 5G, users can easily consume vast amounts of mobile data, often without realising they are doing so. Few businesses provide users with sensible policies on usage, or proactively remind or educate users on their actual monthly usage.
No Formal Processes Or Tools To Manage Mobile Spend And Billing Each Month
As mobile services can be complex to bill and set up, it is common for mobile networks to incorrectly charge for mobile services. Without a formal process for validating charges and invoices, businesses often fail to identify billing errors leading to large levels of excess cost over the term of an agreement.
Poor Inventory Management On Devices, Connections And Users
Managing costs, usage, behaviour and devices, requires businesses to maintain an accurate record of users, leavers and joiners. All too often however this vital information is not joined up with mobile reporting, leading to both cost and potential security issues.
Not Commencing Mobile Contract Negotiations Early Enough To Be Able To Change Vendors Or Leverage Competition Effectively
Businesses that leave negotiations to the end of their agreement almost always fail to negotiate competitive renewal terms and lose their leverage with their incumbent providers.
Not Using The Right Mobile Technologies & Tariffs To Fit Users’ Real Requirements
There is no such thing as a one size fits all solution for effective mobile management. For example, shared data is highly effective for relatively low levels of usage across a large number of connections; however it is extremely expensive for connections with high data consumption. With Covid and higher levels of remote working, many businesses also recognise the need for different mobile networks for different users. Businesses that fail to negotiate different tariffs and network options, often have lower satisfaction levels and overspend on mobile services.
Managing Mobile Device Administration, Preparation & Logistics Manually Without The Right Tools And Resources
Most Common Reasons Why Businesses Overspend On Mobile
The mentioned common challenges and a lack of proactive mobile management in turn lead to overspending in a number of ways:
- Paying for unused services and connections
- Not optimising tariffs during the contract term
- Regular exceptional and uncontrolled data usage and excess data costs (e.g. “bill shock”)
- Changing usage profiles that no longer align with negotiated commercial terms
- Incorrect deployment of services & technology
- Inappropriate contract commitments and performance penalties
How To Plan An Evaluation Of Your Enterprise Mobile Spend And Usage
In our experience, many businesses repeatedly overspend by 10-20% or more on mobile services; and in most cases these savings could have been released long before their contract renewal; had the business implemented a continuous mobile optimisation model. As a result, of the 20-30% savings that might be achieved from “negotiating” a new deal with the network, the reality is that at least half (and probably more) of this saving was actually pre-existing wastage and hidden cost. The mobile carrier simply adjusted their pricing to mask these issues and make it look like the price was the main issue.
With mobile services, there are many ways to save money. However, they are often only accessible through proactive management or a ‘management first’ approach. And in many cases there’s nothing stopping your business from identifying and implementing these opportunities today, no matter when your network contract is due for renewal.
Some of the most effective and simple approaches that we deploy as part of our Large Enterprise Managed Mobility Services include the following.
Consistently Manage & Measure What You Need And Use
Tracking spend, removing wastage, checking invoice accuracy, monitoring and managing excessive usage and maintaining an accurate inventory will help your business to consistently identify excess spending and keep costs optimised throughout the contract term, often releasing 10% or more from your budget.
Consider Deploying Alternative Technology Options And Commercials For Different ‘Use Cases’
All too often businesses deploy a ‘one size fits all’ approach to mobile technology and services. That means that the same tariffs and technology are applied to all users regardless of their usage profiles and needs. For example when a business uses a ‘shared mobile data plan’ for all connections and users. In practice however, there are normally 1-2% of users (i.e. outliers) that account for 20% or more of usage and costs, and these users don’t typically align with negotiated commercial terms.
For example, the Top 1% of mobile users often consume 20-30% of all mobile data, and would be better suited to high capacity or unlimited data plans than more expensive shared data. Tailoring services and commercial terms to meet the needs of these users or ‘use cases’, or indeed questioning the need for this usage can dramatically reduce costs and even improve productivity.
Review The Operating And Support Model For Telecoms
Consider how effectively your business is really supporting and deploying services and devices, and establish what your real support costs are. For example, is your IT help desk reactively supporting mobile device orders and request? Are they a cost-effective resource for this type of work? Are they empowered with the right tools to build, deploy and manage a refresh of mobile phones and tablets for hundreds of your users?
All too often mobile support processes simply evolve organically over time and are not challenged; or IT teams just don’t have the right tools and systems to effectively manage services and devices on top of other IT priorities. As a result, it’s common for both network and resource costs to increase over time; for errors to be made when provisioning services, and that has a knock on effect on future costs. For example if the wrong tariffs, profiles or settings are applied, this can materially increase costs and even create security risks and vulnerabilities.
Identify Hidden IT & Telecoms Budgets
With the increase in BYOD and cloud services, it’s become more common for IT expenditure to be generated (unchallenged and un-managed) in other departments’ budgets and even in employee expenses. This can hide substantial IT spending, but also create un-managed budgets and even security risks. BYOD expense claims for example can often exceed the cost of the corporate services that they were supposed to remove or reduce in the first instance, however as these costs sit outside of IT’s visibility the business has lost control.
Procure More Flexible Terms Not Just Better Pricing
Procurement is critically important to effective mobile management, however it should always be invoked from an ‘optimised’ position, once the business has identified and ideally removed its hidden costs. Generating procurement savings of 30% on a £10 pm line rental, for a service which is unused, is still £7 of unnecessary cost if not addressed. By working with IT to identify and sanity check how services are used today and to model likely changes over the contract term, procurement can negotiate more flexible and appropriate terms that will deliver value for money today and ensure the business can easily adapt to change in the future.
Could Your Business Release Mobile Device Cost Savings?
Extend your IT team, reduce mobile costs and enhance end-user support with our Managed Mobility Service For Large Enterprises.
