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The Financial Impact of Device Return Programs
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Welcome to the third chapter in an eight-part series on “Understanding the Total Cost of Ownership (TCO) of the Corporate Mobile Estate” brought to you by the Sakon Mobile team. In part 1 we looked into the different component services of device procurement and discussed how decisions that the enterprise makes can affect the cost of service delivery and mobile enablement. In part 2 we evaluated the impact that Forward and Reverse Logistics can have on the TCO for mobility, as well as the productivity and cost benefits that can be delivered through a managed service provider’s logistics capabilities. In part 3 we will examine an often overlooked element of mobile TCO, corporate device return programs.

Device Return: From a service delivery perspective, device return includes both the policy and services deployed to both enable (and encourage) employees to return end of life corporate liable devices in a timely fashion.

Common Problems

1) Not Having A Formally Managed Device Return Policy & Program

Many enterprises suffer from not having a formally managed device return program, resulting in devices that are misplaced or stored in an ad hoc fashion rather than being returned to the enterprise for secure recycling, disposal or re-monetization at end of life. Not only does this severely limit the ability to generate additional revenue from corporate liable devices that are returned in good condition, but it also dramatically increases the potential for personal data, sensitive personal information (SPI), personally identifying information (PII) and corporate information to be exposed. IBM Security’s 2019 Cost of a Data Breach Report notes that “human error” breaches, defined as including employees who “have their devices infected or lost/stolen”, was “responsible for about one-quarter of [all] breaches” in their 2019 study[1] with an average cost of $3.5 million in North America. If the enterprise is subject to the Global Data Protection Regulation (GDPR), an additional penalty for a data breach can be added to the above costs, with GDPR mandating “administrative fines up to €20,000,000 or in the case of an undertaking, up to 4 % of the total worldwide annual turnover of the preceding financial year” for the most serious transgressions.[2] Clearly, then, there are a number of sound business reasons for establishing a device return policy and program.

 

2) Enforcing Compliance With Your Device Return Program

Given the enormous potential downside that can stem from not addressing end of life devices properly, it comes as no surprise that many enterprises already have a formal policy in place regarding device return. What is somewhat surprising, however, is that the presence of a formal mobility policy stipulating what is expected of employees when a corporate liable device reaches end of life is not sufficient to guarantee widespread compliance. In the majority of Sakon MMS engagements, the client already has a well-established policy that has both been communicated to and accepted by the employees who receive corporate liable devices, and yet the business struggles to retrieve more than 20% - 30% of the end of life corporate devices.

There are typically two critical points of failure in the device return process:
 
    • New or replacement device orders are not linked to a return request for an existing device, and
    • Enterprises do not have an easy way of alerting end users and management that an expected device has not been received

Finally, in some states, smart devices are considered hazardous waste and improper disposal can result in tens of thousands of dollars of EPA fines per violation per day.[3]

Best Practices

  1. As part of any device deployment or replacement activity, provisions should be made to ensure that end of life devices are returned to the proper group where they can be wiped securely prior to disposal, recycling or re-monetization. In some cases, this can be as simple as including a return shipping label in the package with the new/replacement device for the end user to return the end of life device.
  1. New and replacement device transactions need to be linked to the return of the end of life device. This approach requires integration (MDM, Procurement, HR) and service orchestration that are typically beyond the capabilities of internal IT and best addressed by an MSP.
  1. The ability of reporting to encourage corporate end users to behave in the desired manner is often overlooked. One very effective approach is to push a report to business unit managers with the names of employees who have received a new or replacement device but have failed to return the end of life device. Finally, in some environments it may be appropriate to perform a payroll deduction in the amount of the device that is not returned after a given time period.

Financial Impact

In Figure 4 below, we calculate the potential revenue returned by a formal device return policy, which, even for a relatively modest population of 2500 devices, adds up to a potential return of $480,430 during a new device rollout. By leveraging a MSP with expertise in this area, the typical enterprise can expect to see a 60% - 70% increase in the number of devices returned at end of life as well as a higher average valuation for the returned devices.

 

No Formal Return Policy vs Sakon Return Policy
Device Population 2500
Device Type Iphone 8 64 GB
Retail Price 449.00
   
Original Policy % Devices Returned 20%
Sakon Policy % Devices Returned 90%
   
Original Policy Residual Value  20%
Sakon Policy Residual Value 52%
    
Original Policy Reclaimed Revenue $44,900
Sakon Policy Reclaimed Revenue $525,300
    

Figure 4: A formal device return policy can provide significant financial benefits.

Cost Questions:

  1. Is your company able to uniquely associate a device with a specific end user?
  2. What would it take (in terms of time and effort) to create a report that lists every device and accessory assigned to a specific end user?
  3. Can your company identify devices that should have been returned as part of the new or replacement device procurement process and automatically alert end users and their line manager(s) that action is required?
  4. Does your company have the ability to allocate the cost of devices that are not returned to business units or individual employees?

 

How Sakon Mobile Helps Enterprises With Device Return:

The Sakon Mobile Platform allows you to track, monitor, and optimize every single device in your mobility ecosystem from acquisition through end of life all in one platform. You will be able to see every piece of information related to each device, so you can answer key questions such as:

  • When was the device ordered?
  • How much did you pay for the device?
  • Which Carrier was used to order the device?
  • Who was the end user that owned the device?
  • Who was the manager / supervisor of that end user?

With Sakon you not only get a platform to track, monitor and analyze your mobile ecosystem, you also get a dedicated team that will help you implement a device return program along with policies to ensure compliance. With our program you will see a significant increase in percentage of devices returned as well as a higher average valuation for the returned devices.  If you are interested in learning more, request a demo of the Sakon mobile platform today! 

From Sakon's Strategic Partner: Mobile ReCell
"For any company contemplating device recovery options there are several key areas to focus upon. Best practices indicate that a clear, concise Mobile Device Policy which outlines the responsibilities of the end-user with regards to the physical device, the use of the device and the data that resides on the device or its applications is crucial to promoting the correct end of life device behavior amongst end users. From there, it's critical to associate each device with a specific user.
Aligning the workflows for procurement with automation focused on device recovery, including the use of variable return options ranging from emailed shipping labels to full return kits, allows organizations to create expectations for their end-users to follow. With the processes such as this in place, organizations have more detailed data regarding their recovery efforts which can be used to send scheduled, automated email reminders to users (and their managers) who have not returned their device within the provided timeframe.
Upon completion of the device recovery process, companies now have detailed information on the actual devices received (make, model, storage size, etc.) as well as the physical condition of the device. This helps to ensure that the proper device was returned and makes it easier to reconcile the actual data against expected data. Ultimately, clearly defining and automating the device recovery process will drive user accountability and process adoption throughout the organization and result in significantly improved end of life device recovery and monetization."
mobilerecell
Benjamin Jones
CEO, Mobile ReCell
 
 

Next, in Part 4 of “Understanding the Total Cost of Ownership (TCO) of the Corporate Mobile Estate,” we look at End User Support Costs. 

Appendix:

[1] https://databreachcalculator.mybluemix.net/executive-summary pg. 7

[2] https://gdpr-info.eu/art-83-gdpr/

[3] https://mcfenvironmental.com/hazardous-waste-violations-beware-epa-fines-have-increased/