Spend Matters welcomes this guest article by James Martino, chief executive officer at Avotus Corporation.
Would your business willingly pay 50 cents for a service that was offered at 10 cents? If you are using wireless services, you might be doing just that. In the constantly evolving world of mobility, the need for carrier-spend optimization continues to be of paramount importance within the enterprise. With major shifts in carrier rate plan offerings, migration trends away from unlimited data plans and more flexibility on pricing for voice and text, never before has there been such a need to organize, analyze and optimize your mobile spend. And you need robust tools to help you vigilantly manage against overspend.
For example, when reviewing a typical voice rate plan, the effective rate-per-minute (ERPM) calculation is a metric that can help determine the overall cost of usage for your voice services from a wireless provider. Simply put, it is the calculation of the cost to acquire the needed voice minutes monthly and then the actual utility of peak minutes that decrement your voice allowance. This calculation is relative to one user or thousands that may be in a shared pool configuration.
“Many IT organizations fail to keep up with managing the dynamic variables associated with wireless voice,” explains Randall Light, CEO of Ovation Wireless Management, Inc. “As a result of not proactively managing the wireless voice utilization as compared to spend, enterprises often pay 25-45% more for wireless services.”
As the chart below illustrates, 10 cents per minute is the published cost per minute on a $50 rate plan with 500 minutes included. If your usage for a given month is below 500 minutes, your ERPM rises rapidly as the minutes that you used fell short of the 500 allowance.
Breakage is another term to describe purchased but unused services. At 100 minutes for example, the “effective” rate is 50 cents per minute, not 10. Likewise, if you go above your allowed pool for an individual user or for multiple users sharing minutes together, overage charges apply that also drive your costs higher.
The breakage game – when is 10 cents a minute not 10 cents? When you are not using your plans optimally, this can lead to significant overspend. Managing usage to plan is a good way to minimize costs without sacrificing service options or coverage.
As a larger share of telecom spend has shifted to wireless assets, businesses often require assistance in managing, tracking and securing wireless assets. Businesses should seek a solution that includes usage management, asset tracking, contract optimization, sourcing and wireless help desk. In short, businesses need complete visibility.
The Robust Data Future for Carriers and Need for Client Spend Management
The same approach as ERPM can be applied to data plans to be sure that your effective rate per kilobyte is as optimal as possible through the management of utilization percentages and proper pool sizing. Data usage is somewhat more complicated to forecast. However, trends should be relied on and pools created to accommodate the usage plus cushion or a percentage of extra capacity.
Data usage is expected to grow by 14 times over the next decade. The future of revenue for mobile carriers lies in the consumption of data on a more robust and faster basis in the years ahead. Some sources are forecasting that with faster device operating systems, new technology and more mobile applications to enjoy and deploy that a typical user may use nearly 1 gigabyte of data per day. This contrasts sharply with today's usage where users are running at levels that are a fraction of that forecast.
More smart devices in the workplace have meant the doubling of KB usage year over year and more apps to drive business. All of these contribute to the growth. As a real eye-opener, 5G speeds are being touted to be almost 100 times the speed of 4G. Imagine not waiting on content to appear coupled with the natural speed of users demanding more, all which will increase consumption.
To prevent unnecessary expense and head off opportunity cost, a sound utilization and effective rate management program for all services should be deployed for organizations large and small. Managing voice and data costs today is very important. In the future, it will become even more critical. Companies should prepare to manage continued growth in wireless spend and identify ways to avoid overspend pitfalls.