In a tight economy, outsourced mobile management services help some enterprises keep costs in line
While vacationing in the Caribbean in 2009, the unthinkable happened to Sean Poccia, Senior Director of Information Services for Comag Marketing Group. A laptop containing sensitive corporate information was stolen from his villa.
The incident was reported to the local police, the paperwork filed, and then a series of protective measures were executed to scrub all the intellectual property from the stolen system and trace the computer should the thief use it to send an email or cruise the Internet.
Embedding hidden security programs within mobile computers and triggering location tracking safeguards may be yesterday's news.
What is front-page material is that these measures are part of an extensive outsourced mobile management strategy spearheaded by Poccia, who joined Comag, in Charlotte, NC, about two years ago. The laptop may still be on permanent vacation somewhere in the Caribbean, but a data breach was avoided and a replacement delivered by the time Poccia returned to the U.S.
When Poccia arrived at Comag, outsourcing was not even on the table. Plans were to launch a new CRM system to help manage newsstand distribution of some 250 publications from Hearst, Conde Nast and others. Comag distributes these through 137,000 retail outlets and 47 airports in all 50 states and Canada. "The system would help manage the retrieval and collection of data from the field and move from an email and spreadsheet-oriented system," Poccia notes.
Unfortunately, the CRM project fell flat because the internal service structure couldn't adequately support the sales staff and merchandisers. When Poccia decided to upgrade the project with new laptops and handheld devices, he also made the radical suggestion to outsource all mobile service and support.
He sold the concept to superiors by stressing that outsourcing would eliminate the need to add workers during a recession, drive down costs, improve governance and policy management for Comag's 220 mobile workers, and give line managers more time to focus on core responsibilities.
"It does not do us any good to run a support desk, or manage asset tracking, replace hardware, and perform other support tasks when it doesn't drive revenue," says Poccia.
Mobile outsourcing comes out
Mobile managed services worldwide are expected to generate $29 billion in revenues by 2014, pushed by such factors as the convergence of fixed and mobile networks and a global economic slowdown, according to Informa Telecoms & Media, a London-based research company.
It's difficult to isolate how much of this growth is related specifically to outsourced mobility management. The category of mobile managed services can include telecom professional services and outsourced telecom activities, notes Informa Senior Analyst Paul Merry. However, a tough economy is casting an attractive light on mobile outsourcing as a way to avoid capital expenditures.
"Outsourcing as a cost-cutting mechanism is obviously important right now, although a fairly short-term thing if you realize that most managed service contracts [run] about five years or so," Merry says.
Short term or not, the fact that outsourcing mobile services can have a dramatic impact on a company's bottom line is a strong incentive to take the plunge. At Comag, for instance, the improved efficiencies that come from its outsourced arrangement translate into hard dollars saved.
"Whatever we do, I try to add 5% more efficiency to every employee," which amounts to about 24 minutes per employee per day, notes Comag's Poccia. A mobile computer system that is out of service for just 24 minutes a day may not seem a big problem, but if you extrapolate that across more than 200 people, then the company has wasted close to $1 million per year in lost productivity, by Poccia's estimates.
The multi-billion-dollar Chubb Group of Insurance Companies had two key reasons for outsourcing its mobility management: Keeping a lid on costs, and reducing the complexity associated with managing the wireless services and devices supporting its vast mobile workforce.
The company contracted with Rivermine, Inc., a telecom services company, to manage the company's 3,000 mobile devices and lines of service. Basically, Rivermine works as Chubb's agent to deploy and upgrade devices, evaluate user requests to find the right device and service for an individual, and then negotiate the best price with multiple carriers.
Rivermine also set up an online store where Chubb employees can manage and buy their own products, in accordance with company policies and user restrictions.
"They have the administrative responsibility of rejecting and accepting orders," says Bill Stickle, Chubb's outsourcing manager and business owner. Rivermine generates monthly reports on invoicing and carrier activities, which are used for expense forecasting, and makes recommendations on whether a device and phone service is a good fit for a particular application.
It is not unusual for a large global company to spend $40 million - $60 million per year on total telecom services, so it makes sense to shift the management of these services and contracts to an outside expert, eliminate the burden on internal IT departments, and reduce costs.
Kinks in the road
There are roadblocks to widespread adoption of outsourced mobility management. For example, many companies are reluctant to give up control to third parties. In the U.S., "there is an historical aversion to anything related to 'farshoring'," says Informa's Merry, who notes that this attitude may be wrapped in a bit of politics and protectionism among U.S. companies.
Security is another major issue that may limit just how much can be outsourced. Chubb, for example, maintains its own internal security group. Since it is in the insurance industry, the company must comply with state and federal regulations governing sensitive personal data such as medical and health records.
It's essential to have a strong and clear service level agreement (SLA) that dictates exactly which services are to be managed, and how these services will be executed. Notes Poccia: "Since vendors are held to a very strict SLA, we can hold their feet to the fire much better than we could [if we were managing mobility] internally."