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Seven Misconceptions About Mobile Device Expense Management

There are many myths and misconceptions that lead companies to believe they are powerless against the exploding use and expense of mobile phones and devices. We are going to try and clear up some of these misconceptions and demonstrate how your business can effectively manage and control what is believed by many to be an unmanageable and uncontrollable business expense category.

# 1 – I have already negotiated a great corporate contract.
Answer: Having a corporate contract provides companies with a number of benefits which include: No early termination penalties for devices under the contract, volume discounts and other assorted terms. It also provides you  with a false sense of security as well. These volume discounts are almost always based on the total dollar volume spent and not on the individual rate plans underneath its umbrella. By optimizing the individual rate plans, the discount will be applied against a smaller gross number, thus significantly reducing your cost. Typical corporate contracts provide between a 12-20% discount off the total bill.  METHOD’s audit and optimization will yield an average of an additional 25% savings. In short, even companies with the best large corporate contracts can benefit from optimization services.

# 2 – We have a pool of minutes and thus we don’t need to optimize.
Answer: Pooling plans can provide companies with significant benefits; however they can also provide a false sense of security in cost of use. Pooling is incredibly complex. Carriers do not just provide you with one big pool of minutes. In actuality a pool is made up of the sum of the individual contributing plans. This means each user either gets a plan that has a certain number of included minutes which other people can share, or they get a “bolt-on” plan which does not contribute minutes, but can take from the contributing minute plans. There are hundreds of different variations of pool plans which have different rates for data, night/weekend, roaming, international etc. If your company has 1000 users, the collective pool plan will have 1000 individual plans which make up the total. In addition as your company’s usage grows or contracts, having the wrong pool plan can actually cost you significantly more than if you were on individual plans. Using METHOD’s approach to mobile optimization to systematically analyze these different variations and combinations will assure you are getting the lowest cost per minute overall. On average, even companies with pooling plans can cut their usage costs by over 25%.

# 3 – I have my employees utilize their own phones and expense their business calls.
Answer: Due to the speed in which mobile phones have taken over telecom, many companies still allow their employees to own their own phones and expense their charges as T&E. This equates to waiving the white flag and believing mobile devices can’t be managed effectively. Although this removes the burden to manage it, it creates a number of problems including:

  1. Individuals are paying rates which tend to be 20% higher than corporate plans.
  2. Very little visibility and accountability.
  3. Management does not have the time, or tools to manage the expense effectively.
  4. Corporate liability- if your employee leaves the company, they take with them the number, their phone and quite possibly YOUR CUSTOMERS!

Over the past several years, METHOD’s clients have enjoyed substantial savings and new ways to control expenses derived from best-in-class technology, processes and independent, objective, expert advice which allows our clients to manage a very large mobile telecom expense just as you would any other. Everything from procurement, reporting, and policy management is available. Typically for just a few dollars per month per device, your company can get control and reduce overall costs by more than 25%.   

#4 – My vendor takes care of that for me.
Answer: “The wolf is guarding the hen house”. Although there are some good account managers and well meaning people, asking your vendor to reduce the revenue they receive from you is an inherent conflict of interest. Ask yourself if your company would train each of your account managers to contact every customer monthly and tell them how to spend less money with your company? Using a truly independent, objective cost reduction and expense management firm like METHOD, which is not compensated by the carriers, is the only way to know for sure that you are getting the best deal.

#5 – I don’t want to have to change carriers and phones and coverage areas to save money.
Answer: By utilizing METHOD, you do not have to. Optimizing your rates based on your specific usage patterns allows you to keep your existing provider. Stay away from any firm which advertises optimization but recommends switching all your phones to another carrier. Chances are they are getting paid by that vendor. If you use the right company to do this, the only thing that changes is a lower bill the next month.

#6 – I have a department which handles that.
Answer: Even companies with the largest telecom staffs can benefit from bringing in an outside professional Cost Reduction and Expense Management Company like METHOD. Most companies manage the costs on Excel spreadsheets and are doing it along with many other jobs.  The combination of our technology and METHOD’s industry insiders will provide your existing telecom team the tools they need to be more effective.

#7 – We manage it pretty well, how much savings could there be?
Answer: A lot. On average each user spends approximately $100/month on mobile service. On average, METHOD will reduce this cost by 25% or greater. This means: Monthly savings = $100 x .25% = $25/month per device or $300/year savings per device. 1000 devices equals over $300,000/year in savings with relatively little effort by the company. If a company operates on a net profit margin of 10%, every dollar saved is equal to $10 in new sales. 1000 devices = $300,000/year in savings or the equivalent of adding $3,000,000 to the top line.

Over the years we have seen a total quantified savings of over $1.6 million dollars in annualized savings and over $200,000 in one-time credits and refunds as a result of their work.  METHOD continues to provide ongoing support and process efficiencies in addition to quantified savings.

- Eileen M. Dano Tkacik, Director of MIS

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