IT Juggling Act

By  Susan Nunziata — April 29, 2010

Corporate liable or individual liable: Who pays for the smartphones in your enterprise?


The consensus is: There is no consensus.

When it comes to policies about who pays for smartphones in the enterprise, organizations use a wide range of models, oftentimes simultaneously.

In addition, many organizations are in a state of flux about their policies going forward, as they contemplate a democratization of smartphone use in the enterprise.

Mobility deployments that require a specific type of hardware and application -- such as those needed for, say, field service and repair or transportation and delivery -- will likely continue to be corporate-owned and managed for the foreseeable future.

Elsewhere in the corporate hierarchy, though, the situation is complicated. While plenty of organizations continue to provide corporate-owned smartphones to top executives, sales teams and selected mobile workers, there's a growing push by these users to widen their choice of device.

Meanwhile, enterprise IT executives tell us that the number of employees at all levels of the organization demanding to use personal smartphones for business purposes is growing.

In March 2010, we fielded an online survey to Mobile Enterprise subscribers on "Corporate-Owned Versus Individual-Liable Smartphone Use in the Enterprise." The 188 enterprise executives who responded represent corporations, government agencies, healthcare facilities and educational institutions in North America across a range of verticals and all corporate sizes.

It's no surprise that eight out of 10 respondents (83.2%) have approved and support the use of BlackBerry devices in the enterprise. However, the percentage of respondents whose companies have approved and support additional smartphone platforms is notable: 45.4% sanction the iPhone, 38.9% support Windows Phone and 21.6% embrace Android (See Fig. 1).

Employees may be permitted to connect to corporate networks using the platform of their choice, but that doesn't always mean the organization pays for it.

The four smartphone liability models covered in this survey are defined as: corporate owned (employer provides employee with device, pays all bills); individually liable/fully reimbursed (employee buys device, monthly contract and is fully reimbursed by employer); individually liable/partially reimbursed (employee buys device, monthly contract and receives fixed monthly reimbursement from employer); completely individually liable (employee pays for device, monthly contract and receives no reimbursement from employer).

Respondents are all over the map when it comes to payment models. Nearly three quarters of respondents (74.5%) say their corporation owns the BlackBerry devices and services used by employees, while 46.3% says their Windows Phone devices are corporate owned; fewer than a third (31.9%) say their iPhones are corporate-owned, and just over a quarter (27.5%) say Android devices are corporate-owned (See Fig. 2).

Only 39% of respondents use the corporate-owned model for all smartphone users; 13.9% say none of their smartphone users have corporate-owned devices (See Fig. 3). For most, each of the liability models is in play for some percentage of smartphone users.

According to a December 2009 report from Aberdeen Group, 59% of the companies identified by Aberdeen as "Best In Class" plan no changes to their policies in the next 12 months. A quarter (25%) say they will allow some employees to use personal mobile devices in the enterprirse and 13% say all employees will be permitted to use personal devices. Only 3% say no one will be allowed to use personal devices.

About 8,000-8,500 of the 70,000 employees at Las Vegas, NV-based Harrah's Entertainment Inc., have some type of mobile devices, says Mark Cross, Senior Manager IT Mobility and Strategy. A third of these mobile users have smartphones, most of which are BlackBerry devices.

Right now, the company -- which operates in the highly regulated gaming industry -- uses a completely corporate-liable model for all of its mobile devices. Users have a finite list of supported devices and carriers from which to choose, and only corporate-liable users are permitted to access the company's network.

However, Cross says, "We're changing the direction of the ship." The enterprise is transitioning into a mix of corporate-liable and individual-liable devices. BlackBerry will remain the corporate-owned platform, while the new individual-liable model will allow employees to choose any other smartphone, so long as it supports Good Mobile Messaging. The corporation will pay for the individual license to activate Good Mobile Messaging for that user. The employee pays all other costs, including device, accessories and the carrier's monthly service charge.

"We think that we have the opportunity to save anywhere from $500,000 to $750,000," says Cross. Since most of his corporate-liable smartphone users already carry a personal device as well, Cross expects that some will surrender their corporate-owned device in favor of their personal device, which he expects to save the organization money.

At the same time, Cross says, "It's a little scary for us. We're not sure how many people are going to come out of the woodwork, potentially." He's projecting a potential 3,000 additional individual-liable smartphone users to come on board within the next 18 months. Cross says Good Mobile Messaging will protect Harrah's data on the IL devices, and he is looking at additional security and mobility management tools.

At Philadelphia, PA-based Tasty Baking, the model is completely corporate-liable. The company has 50-70 BlackBerry users, primarily executives in sales and IT. "We make all the decisions about which model they get, which carrier to use," says Brendan O'Malley, VP of Sales. "We pay all the bills, and take care of all the support. Having just one central account really helps to manage that."

For any mobile line-of-business applications beyond basic email and calendar tools, O'Malley says, "it's got to be corporate ownership."

He also cautions that there may be hidden costs in accommodating an individual-liable model in which employees are partially reimbursed. "People think it's cheaper to let employees only expense costs that are corporate," he says. While this model may open up smartphone use to more employees and potentially improve their productivity, O'Malley says "You can waste a lot of time that way." Employees would have to go through their phone bills every month and highlight their business calls, and someone else would need to review and approve those statements. "That's invisible time to the organization."

At Munson Healthcare in Traverse City, MI, Joseph Dechow has about 100 smartphone users. Munson Healthcare runs a multi-hospital system in 20 counties as well as a large home-care agency. Dechow, Manager IS Infrastructure, says most of his 100 smartphone users now have iPhones. Employees are responsible for purchasing the devices and Munson splits the cost of the device and the monthly service. The employee's share of the expense is automatically deducted from their paycheck each month.

"The fact that we're splitting the cost allows people to have one mobile phone for both personal and business, but it allows us to remain compliant," says Dechow. "We're splitting the expense without having to go through lots of paperwork. It also makes our people responsible. I don't seem to have the problem I used to have with lost and damaged and physically abused phones that I used to have a generation ago. The cost sharing is also a responsibility sharing."

Not every employee can participate, however. "People have to go to a pretty high level to get permission," says Dechow. "We don't just let anybody get a corporate-subsidized phone."

Even government agencies are re-evaluating their smartphone models. For example, in late March 2010, the National Association of State Chief Information Officers (NASCIO) recommended that state CIOs consider permitting the use of personal smartphones in the workplace. "The classic dilemma that officials are faced with is balancing risks and rewards when considering enterprise policies for the use of personally owned smartphones," said NASCIO Executive Director Doug Robinson in a prepared statement. "With the caveat that the proper security measures are in place for state networks and services, the trend towards allowing personal smartphones for state business use is an opportunity for states to increase productivity, user convenience and lower acquisition costs."

For more enterprise perspective on this topic, visit

About This Survey
This online survey, "Are Your Smartphones Corporate-Liable Or Individual Liable?," was fielded to Mobile Enterprise subscribers in March 2010. The 188 respondents represent enterprises of all sizes and span a range of industry verticals. The four smartphone liability models covered in this survey are defined as: corporate owned (employer provides employee with device, pays all bills); individually liable/fully reimbursed (employee buys device, monthly contract and is fully reimbursed by employer); individually liable/partially reimbursed (employee buys device, monthly contract and receives fixed monthly reimbursement from employer); completely individually liable (employee pays for device, monthly contract and receives no reimbursement from employer).


comments powered by Disqus

RATE THIS CONTENT (5 Being the Best)

Current rating: 0 (0 ratings)



Must See


EKN Research: How Mobile is Driving Personalized Context and Engagement

Retailers and hospitality enterprises are well aware that mobile technologies must be driving consistently high standards of in-store or in-location customer engagement. These are key imperatives for customer relevance, financial gains, loyalty and brand advocacy. However, more often than not, such standards break-down in stores due to a wide variety of reasons. Download this benchmark report to understand how mobile is driving a more personalized engagement and key business pains, performance and capabilities related to in-store customer engagement.