In most areas of business, inaction can be just as impactful as action. Enterprises typically view the cost of not acting as an opportunity cost, or, at most, an indirect bottom line impact. But for enterprise mobility, not acting has both direct and indirect cost implications from lost financial, technical, operational, and strategic value. In fact, the direct monetary cost of not acting is actually higher than the cost of Managed Mobility Services. How can that be? Let’s dig into the numbers…
By Blue Hill estimates, unmanaged direct mobility costs can be 20% overweight compared to a managed environment. For the average billion-dollar revenue company – with $5 – $10 million in telecom/mobility spend – expense management alone can be a million-dollar savings opportunity.
Unmanaged environments generate significant costs from fees (such as late fees or overage charges), as well as service order placement and support. Apart from monetary costs, not acting also presents opportunity costs from lost productivity and technical debt. Potential revenue-generating activities are re-allocated to overhead or administrative tasks, and device downtime is frequent and lengthy. Finally, the enterprise does not have a coordinated, long-term mobility strategy in place, and thus faces strategic costs.
The cost of not acting can be substantial. But what if the enterprise does act, using in-house resources to match the capabilities provided by a third-party MMS vendor? Typically, it will spend more, and receive a lower level of service than an MMS vendor can provide. Between helpdesk, email, security, and invoice management, enterprises devote two-to-three full-time equivalents for every 1,000 devices based on Blue Hill discussions with enterprises. Based on an average annual salary of $63,000 for an entry level telecom engineer, and a 1.3 multiplier for the fully loaded cost of an employee, this results in a labor cost of approximately $164,000 – $246,000 per year.
Direct mobile costs, fees, and service order costs can be reduced somewhat, compared to an unmanaged environment, but at the expense of using IT resources for low-value, high-effort tasks such as resolving carrier disputes or sorting through bills – tasks that are not a core use of IT resources. Finally, in-house support costs are significantly higher than the support costs for Managed Services, as support is often bundled into the MMS contract. To achieve the same level of service in-house would require significant internal support resources. While enterprises may be able to re-create the capabilities of an MMS vendor in-house, they will typically do so at a much higher monetary, opportunity, and employee cost compared to a dedicated MMS vendor.
Managed Mobility Services comes out ahead. Overall, Blue Hill estimates that the direct device and data costs of a standard enterprise can typically be driven down to less than $60 per device per month through a coordinated, well-managed, and effectively-sourced approach. But cost savings are not the most impressive part – more impressive is the return on investment generated over a three-year period by Managed Mobility Services.
Based on conservative Blue Hill estimates, the cost reduction from IT resources and carrier expenses alone can result in a 3-year ROI of 184% based on an assumption of 20% carrier savings in the first year that reduces as the environment is optimized, as well as 50% IT overhead savings. Blue Hill has seen carrier savings in excess of 40% and an elimination of direct in-house IT mobility support, which would increase this ROI substantially. Blue Hill notes that, even with conservative estimates, Managed Mobility Services can provide higher levels of service compared to in-house management, and a three-year ROI ranging from 150% – 450% by reducing monetary, opportunity, and employee costs for the enterprise.
There is a clear cost of not acting for Managed Mobility Services. Blue Hill describes this problem in greater detail in our recent report, aptly titled, The Cost of Not Acting for Managed Mobility Services. Blue Hill did the math: Managed Mobility Services provide a higher level of service than in-house or unmanaged environments, while delivering a significant three-year return on investment.