What's the real cost of mobile devices? Understanding the total cost of ownership

What are the hidden costs of mobile devices? 

When most enterprise leaders discuss the cost of mobile devices, the discussion is usually focused on the initial purchase price. However, this perspective overlooks the myriad of additional expenses that accrue over the device's lifecycle. According to industry research, 60-70% of the total cost of a mobile device occurs after the initial purchase. These hidden costs are embedded in management, administration, repairs, and the lost value at the end of the device's life.

Understanding these factors is crucial for IT, procurement, and finance leaders who want to build a smarter, more sustainable mobile strategy. The total cost of ownership (TCO) for mobile devices goes far beyond hardware and not just the upfront expenses, it includes every hour, process, and resource tied to managing the mobile fleet throughout its lifecycle.

How to find the hidden costs of enterprise mobility and how lifecycle management can reduce TCO

The most significant portion of TCO comes from the management and administration of mobile devices. This includes everything from Mobile Device Management (MDM) software costs to the human resources needed to oversee and maintain the mobile fleet running smoothly. On average, enterprises spend around $60 per employee annually on MDM software, a figure that can rise with more advanced needs.

Industry benchmarks show that enterprises spend around $60 per employee per year on MDM software, and that cost rises with more complex mobility needs. Add to that the time IT staff spend enrolling, securing, supporting, and replacing devices, and it’s clear why admin costs dominate the equation.

Then there are repairs and replacements. Repairs constitute another substantial hidden cost. The average smartphone requires about 1.3 repairs during its lifecycle, with screen replacements being the most frequent and costly. The administrative burden of handling these repairs, including downtime and productivity loss, adds another layer of expense that is often underestimated and the "hidden" costs become impossible to ignore.

End-of-life value: leveraging residual value for cost efficiency

Many enterprises overlook the potential savings from the residual value of mobile devices. After two years, high-end devices, particularly those from premium manufacturers like Apple, can retain up to one-third of their initial purchase price. Effective end-of-life processes, such as device return and resale programs, can recapture this value, significantly reducing the overall TCO.

However, realizing these savings requires robust processes for managing device returns, data erasure, and ensuring devices are in good condition for resale. Protective measures such as screen protectors and cases can help maintain device condition and maximise residual value.

In short, residual value isn’t just a sustainability win, it’s a bottom-line advantage.

Data-driven insights: proving the case for smarter lifecycle management

Data is a powerful tool for making the case for smarter lifecycle management. By leveraging data-driven insights, organisations can quantify the hidden costs and potential savings within their mobile strategy. For instance, our research indicates that while direct hardware savings are limited due to competitive market pressures, significant TCO reductions can be achieved through improved management practices.

Organizations that adopt circular tech principles and automation can reduce costs and enhance sustainability. Automating administrative tasks and adopting self-service functionalities can free up valuable human resources, allowing for a more efficient and cost-effective mobile strategy.

Practical steps to reduce the total cost of ownership for mobile devices

Here are some practical strategies to help enterprises take control of their mobile costs:

1. Implement Lifecycle Management Tools: Utilize advanced MDM software to streamline device management, minimize downtime, and optimize resource allocation.
2. Leverage Residual Value: Establish robust processes for device return and resale. Utilize protective accessories to maintain device condition and maximize resale value.
3. Automate Administration: Adopt automation for routine administrative tasks to reduce human resource costs and improve efficiency.
4. Outsource Where Feasible: Consider outsourcing certain aspects of mobile device management to specialized providers who can deliver cost savings and efficiency gains.
5. Educate End-Users: Train employees on best practices for device care and maintenance to reduce repair frequency and extend device lifespan.

Organisations that reduced their TCO

Several organisations have successfully reduced their TCO by implementing the strategies outlined above:

• A European manufacturing company reduced its mobile device management costs by 30% by adopting a comprehensive lifecycle management approach. By leveraging residual value through a structured device return program, the company recaptured significant value and reinvested it into other strategic initiatives.
  
  
• A large public sector organization automated its mobile device administration tasks. This move not only reduced administrative overheads but also improved device uptime, contributing to enhanced productivity across the workforce. 

These examples prove that focusing on lifecycle efficiency pays off in both financial performance and employee experience.

What practical steps can enterprise take to lower mobile TCO?

By understanding and addressing the hidden costs of mobile device ownership, enterprises can achieve substantial savings and optimize their mobile strategies. Effective lifecycle management, underpinned by data-driven insights and practical strategies, can help organizations take control of their TCO, driving both financial and operational efficiencies. As a thought leader in mobile lifecycle economics, Techstep is committed to helping enterprises navigate these complexities and realize the full potential of their mobile investments.