Where's the BYOD Payoff?
Companies may be bleeding corporate dollars in the name of
BYOD productivity gains that don't really exist, says Nucleus Research.
By Tom Kaneshige Wed, April 24, 2013
CIO — Companies
jumping on the bumpy "Bring Your Own Device" bandwagon might be the
real losers. That is, corporate dollars are falling out of their pockets. A new report from Nucleus Research takes a close look at BYOD
costs and finds that companies are financing the trend with little in return.
"The hard ROI of BYOD is a straightforward accounting
exercise that is being confused by the feel-good claims around productivity and
vendor proclamations that lack a financial foundation," writes Hyoun Park,
principal analyst at Nucleus and author of the report.
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BYOD, of course, was supposed to save companies
money. Let's start with its popular premise: Companies no longer have to buy
corporate smartphones and tablets. But this is flawed logic, because the cost
of devices themselves make up less than 10 percent of a company's annual
mobility spend, says Park.
Consider that an enterprise mobile phone costs $200 per
device and has an average lifespan of 18 months, at which point an employee
asks for an upgrade. This works out to around $11 per month. Tack on additional
20 to 30 percent savings for volume discounts and free backup devices. This
means that companies offloading the device cost to employees are saving only $8
per month under BYOD.
Here's the kicker: BYOD increases the other 90 percent of
the mobility spend, which includes voice and data, help desk, developers and
mobile management software.
BYOD's Big Spend
A typical business user will spend $80 to $90 per month for
a personal smartphone voice and data plan, which the company usually
reimburses. The careful reader will notice that this is ten times the cost of
the device itself. In comparison, a corporate-owned smartphone costs around $60
to $65 per month, thanks to bulk discounts, pooled data for voice and data and
texting, and special rates for international reporting, according to Nucleus.
The BYOD premium doesn't stop there, either. There is a
hidden cost to process expense reporting and reimbursement, which works out to
around $20. (For more on this, check out BYOD: If You Think You're Saving Money, Think Again.)
"In general, any reimbursement above $40 per month
means that the company is deliberately giving up money to support BYOD,"
says Park, adding, "Companies providing a standard $75 reimbursement (or
more) through an expense report process are giving up hundreds of dollars per
employee every year to support BYOD."
Unintended Consequences
In its BYOD report, Nucleus cites a startling legal case
that took place some six months ago: Massachusetts Eye and Ear Infirmary and
Massachusetts Eye and Ear Associates settled with the U.S. Department of Health
and Human Services for $1.5 million. What happened? Violations of the HIPAA
(Health Insurance Portability and Accountability Act) regulation due to the
loss of a personal laptop with identifiable health information.
In another example, some companies embroiled in a class action lawsuit against AT&T Mobility stand to
lose out on thousands of dollars because they can't participate in a $153
million settlement, says a source knowledgeable about the lawsuit. The reason
is because they moved to BYOD.
There's also growing concern that BYOD will open the
floodgates to employees suing their employers. Employees are questioning the
intrusion of corporate eyes on their personal devices and wondering if
companies are taking advantage of them through BYOD.
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"I anticipate a bunch of little [lawsuits], then
something big will happen that'll be a class action and become headline
news," CEO John Marshall at AirWatch, an enterprise mobile device
management (MDM) vendor with 6,500 customers, including Lowe's, United Airlines
and Best Buy, told CIO.com.
What About Productivity Gains?
Nucleus admits BYOD productivity gains are a moving
target—that is, they're hard to calculate. Of course, this hasn't stopped
companies from trying to calculate the return on investment. Cisco says its BYOD saves the company $2 million per year.
Also, Intel claims to be saving 57 minutes a day for 23,500
BYOD employees. Since the chip giant makes about $500,000 per employee in a
year, an hour savings a day per employee works out to around $700 million in
added productivity.
"This is a difficult estimate to believe," says
Park. "However, if true, a $700 million productivity increase is material
to the business and should be considered by the investment community as a key
differentiator."
A case for BYOD productivity can be made using a
time-tracking model similar to Intel's. Let's say employees spend a day to set
up their corporate-liable device, whereas no time at all (or at least not on
company time) to set up a personal device.
Since employees in a profit center are expected to bring in
around $250,000 per year, a day lost works out to be $1,000.
"This time lost is difficult to overcome based on the
costs and benefits associated with BYOD versus a corporate-owned program,"
Park says.
Tom Kanshige covers Apple, BYOD and Consumerization of IT
for CIO.com