As corporate spending on wireless increases, companies are moving from a relatively hands-off approach to wireless into increased scrutiny and management of their wireless expenses-and according to one company, the minutes and data they don’t use could be costing them more than they think.
Surprising, but consistent
According to John Garvin and John Stapleton, co-founders and principals of TelAdvisor Group, it would be cheaper for companies to allot their employees fewer minutes and have them go over the allotted parameters, rather then buy large buckets of minutes that go unused.
“They’re paying for much more service than they’re actually consuming,” Garvin said. When the actual cost of what companies uses was compared to what they were paying for was analyzed, “what we found was that the majority of them were spending more than three times the amount that they thought they were paying for service based on their contracts,” Garvin noted.
TelAdvisor Group analyzes more than $1 billion in telecom spending each year for a customer base of mostly Fortune 500 companies, Garvin said; the company serves as consultants and negotiators for its customers in helping them reduce telecom expenses, including wireless. The company’s findings were counter-intuitive, Garvin and Stapleton acknowledged.
“It was very surprising to us,” Garvin said, adding that the company has run its analysis for nearly 10 companies recently and “every time we do the analysis, we come up with the same thing.”
Increasing control over usage
Corporate wireless spending is expected to continue to grow, particularly as more companies begin using data applications that offer on-the-go access to sales and technical data or various business processes. Companies are moving away from a laissez-faire approach in which they allowed employees to choose and expense their own plans and devices into a more tightly controlled environment.
However, plans for business customers typically mirror the consumer wireless model: a set number of per-month minutes, or a pooled amount of minutes that are shared among multiple lines. As the costs of service rise, companies are putting more limits on different types of use and also trying to figure out other ways to reduce costs.
Underage costs significant
“There’s overage that comes into play, but the ‘underage’ is the much more significant cost,” Garvin said.
In addition, the unlimited data plans that carriers typically push to corporate customers might be the right plans for some employees, Stapleton said, but not when the actual usage of data is very small.
“We typically find that unlimited is not being used unlimited,” Stapleton said.
Meanwhile, the two added, there is convergence going on-but it’s more centered around Voice over Internet Protocol services, although wireless applications do factor in.
“Where we’re seeing the majority of convergence going on right now is in wireline voice and data,” Garvin said.
New billing model needed
Carriers around the world work with similar models as domestic operators, the two men said. However, they believe that instead of accepting a consumer model as wireless costs escalate, businesses will demand that carriers move to a model where the companies are billed for their actual usage-as most services are billed-instead of what they think they might use. Companies also need to negotiate into their contracts the flexibility to move employees to plans that are more suited to their actual usage.
Since the recent consolidations in the industry, the large telecom players are beginning to include wireless under master customer agreements that govern other types of services, Garvin said. This has allowed some additional flexibility for business customers as carriers chase their business, he added.
“It’s a really complex process to manage your wireless expenses, and because of the increase in usage, CIOs are really starting to pay attention to this cost,” Garvin said.
