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Getting Wireless Costs under Control

Vendors have made communication costs so complicated that many companies would rather ignore them. A good first step toward taking control: restructure the line items on expense reports.

22Sep

After several years of extensive investment in enterprise applications and fiber networks, many companies say they just don't have the budget for widescale wireless network implementations. That may be true, analysts say, but with so many wireless devices, cell phones, Wi-Fi routers and gateways, and possibly illicit laptop wireless access cards already spread throughout your company, the genie may be out of the bottle. It may be less a case of finding money to invest and more a matter of reining in costs you didn't know you had.


"The basic process begins with understanding where the money is going," says Ken Dulaney, vice president of mobile computing at Gartner. "Communication costs are one of the most uncontrolled areas for most enterprises. Vendors have made it so complicated that people ignore it."


Peter DeNatale, CIO at the Mentor Network, a human-services organization in Boston, tried to get a feel for his company's wireless expenditures last year. "I had one of my staff dig the numbers out of accounts payable, and it took her a month just to get the figures for a single month," he says. Per employee, cost overruns (paying for too many or too few minutes, or racking up roaming charges) were rarely significant, but in the aggregate, they represented a sizable chunk of Mentor Network's seven-figure wireless bills. However, DeNatale says he does not have the time or staff to hunt for that buried treasure on a regular basis.


Dulaney suggests that cutting such wireless costs begins with getting a clear picture of what your costs actually are. "The first thing I would do is restructure the line items on my expense reports to capture these connectivity issues." Most expense reports and budgets, he says, lump all communication expenses together, whether the fees are for telephone calls or wireless Internet connectivity or BlackBerry E-mail service. "Is the $10-a-night line item just for phone calls home, or does it include wireless broadband service from a hotel room? You have to know these things if you expect to negotiate better deals with carriers," says Dulaney.


Armed with more explicit data about your communication costs, you can begin to aggressively negotiate with your suppliers. Ideally, you want to consolidate — for example, getting one fixed price for wireless hot-spot usage across the country, whether in hotel rooms, conference rooms, or airport lounges. It's also important to understand usage to ensure that you don't pay through the nose for excess bandwidth and minutes. "Many enterprises pay for unlimited service on BlackBerries, but few users send and receive more than 2 megabytes of data a month," he says. "At $50 a month, that's $25 a megabyte, when it could be as little as $1 a megabyte. You are spending way more than you should."


Whether you decide to go outside for help or handle things yourself, the worst (and most expensive) thing you can do, according to Dulaney, is to treat everyone's wireless communication needs the same. In fact, he says it can be downright "destructive." While it may be tempting to standardize — installing wireless capabilities on every laptop computer and giving every employee a monthly account, for example — Dulaney says that "you have to understand people's travel patterns. If they travel once a quarter, you can find less-expensive solutions than that."


He suggests that companies approach wireless communication costs as they do employee health-care offerings. "We propose managed diversity: have options for people and then manage the costs in a different way," he says. "Give people a budget of certain amounts they can spend per month and give them elective choices. They can do what they like if they just don't go over the preset amount. You will get better optimization, a cap on spending, and happier employees." (For more on controlling wireless costs, see "Ripe for the Picking?" in the Fall 2004 issue of CFO IT.)

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