BYOD and Expense Management

This is the third post in my series on Bring Your Own Device approaches to end user computing. In my first article I enumerated the different types of approaches you can take to BYOD. In my second post I talked about different support models for BYOD. In this article I want to examine options around managing the expenses of employees who bring their own devices.

During their use of a personal, BYOD, device for work purposes, employees will incur expenses. They will incur the cost of making phone calls, of sending texts (SMS) and of consuming data services. They may incur the expense of having a monthly plan. They may have to pay sales tax (e.g. New Zealand’s Goods and Services Tax: GST).  One thing is for sure: if they are using their personal device for work purposes they are likely to incur more expense than if they were using it for personal use alone. How much more will probably depend on the jurisdiction or market. In market’s such as New Zealand with relatively high costs for mobile data and few “all you can eat” plans the difference could be quite high. In other jurisdictions or markets with affordable “all you can eat” plans, the difference may be minimal. What is clear is that we face a situation where the expense of using these devices is moved from the employer to the employee. So how, if at all, can an employer reimburse or recompense the employee for this difference?

If I think through the different models of expense management that have been suggested in the literature then we see:

  1. Nothing. There is no contribution from the employer, and the employee bears all expenses associated with using their personal device at work. Whilst this may seem unfair (isn’t the employer getting something for nothing), if associated with the approach of making BYOD available to those who don’t have mobile devices (type 1 in my first article) it could be seen as what an employee has to pay to get that level of convenience, especially if the extra expense is not significant.
  2. Standard corporate expense claims. Employees must fill out standard corporate expense claims on a regular basis for the expenses they have incurred while using their device. While this is definitely fair, it is likely to be both onerous on employees and expensive to process for your finance team due to the likely volume and frequency of these claims.
  3. Standardised subsidy. Provide a standardised subsidy to BYOD users of a certain dollar amount per month equivalent to what the level of additional expense  is likely to be. This has the advantage of being simple, clear and consistent (and therefore easy to administer). It has the disadvantage that some people are likely to benefit and some will lose out.
  4. Individualised subsidy. Each manager determines and justifies what level of subsidy individual employees receive based on their perceived need nd actual usage. This is likely to be complicated and lack transparency, leading to employee dissatisfaction and high administration costs.
  5. Pay for all the usage. All of the usage for the device is paid for by the employer, using a corporate plan. This has the advantage of simplicity – it is exactly the same model for ongoing expense as most enterprises use today to pay for mobile phone usage. It has the advantage that you can take advantage of negotiated rates for phone charges – usually significantly better than the rates that consumers pay. Its disadvantage is that you are therefore unable to make any additional saving on mobile phone usage through a BYOD strategy, in addition you may end up paying more because you are paying for all of the personal mobile usage as well.
  6. Split billing. This is basically the same as option 5, but the organisation also uses an expense management system or service to allocate usage and plan charges between the company and an employee. There are expense management software applications that can figure out which calls an employee makes are personal and which are work related (based on configuring which called numbers are which). These can then integrate with the billing feeds from your service provider to arrive at an amount that the employee should reimburse the organisation for. Some service providers provide expense management services which can handle the allocation for you, can provide split billing for plan charges and can also charge the employee directly.

When considering which of these methods to manage employee expenses within your BYOD approach there are a number of factors to consider:

  • What are the tax implications of the different methods? Depending on the type of BYOD you choose, the method of expense management and the tax regulations of your jurisdiction your organisation or its employees may attract additional taxes. In New Zealand, for instance, certain combinations of BYOD types and expense management methods will attract Fringe Benefit Tax (FBT).
  • If you are paying for part or all of the service usage on a device, what are your policies around reasonable personal usage?
  • Many enterprises have negotiated telecommunications costs that are significantly lower than the equivalent costs to consumers. If you are making employees pay the bill for voice and data services, and are then reimbursing or subsidising them, you may be unwittingly increasing your telecommunications bill, and passing unnecessary costs onto your employees.

You can see from these considerations that the choices around BYOD types can have far-reaching implications for the costs of delivering services to employees. Without an adequate examination of these considerations and implications your BYOD strategy could encounter significantly higher costs than expected!

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