Are You Overspending on BYOD Stipends?

Spend Matters welcomes this guest post by Matt West, director of telecommunication services at NPI, a spend management consultancy, focused on eliminating overspending on IT, telecom and shipping.

The growth of BYOD is slowing and may have already peaked, according to some industry experts. Earlier this year, the Yankee Group reported the percentage of enterprises with 1,000 employees or more that allowed them to use their own mobile devices peaked at 81% in Q2 2012. Over the past 2 years, the percentage has dropped by double digits.

The economics of BYOD have also shifted since 2012, especially those related to the calculation of stipends – a common method for reimbursing employees for corporate use of their personal devices. This has typically been done by calculating the average monthly cost of using the personal device (voice/data plan) and then offering reimbursement of a certain percentage of that cost. Example: if the average cost of the device is $90 and the enterprise reimburses the employees for 80% of that cost, the employee is paid a stipend of $72 each month.

But, what happens when the average cost of using the personal device goes down? Current trends show that wireless carriers are facing tougher pricing competition as new plans are brought to market. In these cases, the economics are drastically altered. An 80% stipend on a $70-per-month average cost brings the stipend to $56.

Unfortunately, many enterprises are paying stipends that are above fair market value based on outdated average device costs. Additionally, how and when companies should reimburse employees for personal device usage has become a topic of debate – and some of these debates are finding their way to the courtroom. This has made some CIOs nervous as the list of BYOD risks grows longer. It also serves as a reminder that it’s imperative for corporations to develop a clear and concise BYOD policy.

If you have a corporate BYOD policy, it’s time to re-evaluate and realign BYOD stipends based on current market data trends. This exercise will ensure your business is paying (and not overpaying) a fair stipend rate. Furthermore, it will provide an updated view of how BYOD is benefitting your enterprise as the economics evolve.

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