Are cell-phone cuts pound-foolish?

If California's reputation as a predictor of nationwide trends holds true, the move toward mobility and flexibility in state and local government operations is now at a crossroads.

That’s what several analysts say in the wake of California Gov. Jerry Brown’s first executive order, which instructed agencies to dial back their number of state-funded cell phones by at least 50 percent.

As of the end of January, 40 percent of state employees have cell phones. The directive would eliminate approximately 48,000 cell phones, bringing the percentage of employees outfitted with the devices down to 20 percent. Most importantly, Brown said in a statement, with each cell phone costing an average of $36 a month, according to the state's Department of Finance, the mandate would save the state about $20 million.

“General technological trends point toward more mobility and flexibility in government operations, and smart phones are crucial tools for this trend,” said Andrew Brandt, manager of state and local programs at FedSources. “On the surface, this move may seem to put California at odds with that trend.”

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Dialing up savings

California is grappling with a $24.5 billion budget deficit, and Brown, who was elected governor in November, has not hesitated to propose budget austerity that would slash state spending by $12.5 billion, including an 8 to 10 percent cut in take-home pay for most state employees.

“In the face of a multibillion-dollar budget deficit, a cell phone may not seem like a big thing,” Brown said in a statement announcing his order. “But spending $20 million, and perhaps more than that, on cell phones can’t be justified.”

Shortsighted?

Industry analysts say they understand Brown’s move, but they worry whether the decision is a knee-jerk reaction that could ultimately end up being penny-wise and pound-foolish.

“It’s fair to say that there are government employees out there who have cell phones who probably don't need them,” said Shawn McCarthy, director of research at IDC Government Insights. “If the end-user is not on the road a lot or does not need to be in close contact with a home office at random times, then cutting that person's cell phone is probably a good thing. But this is a case-by case situation. Taking a blanket approach to all or most employees is not the best way to make this complex decision.”

Analysts contend that Brown also runs the risk of incurring a decrease in the efficiency of government operations, a drop in employee morale and unintended costs.

Cell phones are “certainly fair game as an area to look for savings,” said Alan Shark, executive director of the Public Technology Institute, a nonprofit organization that focuses on using IT to improve government services. “However, this is about more than finance, and it’s about more than technology. Mobile phones have become the tool of choice for communications, and that is being severely restricted.”

Brandt said Brown is sending a clear message that he is out to tackle frivolous expenses, and by reducing the number of state-owned cell phones, he “will surely be able to limit some of the unnecessary expenses that have grown out of this program.” However, Brandt added that “he is also potentially handicapping 48,000 employees to their desktops.”

Brandt said mobility, social media and networking are among the top 10 priorities for states, according to the National Association of State CIOs, and many state and local organizations have started to consider social media a part of a larger communications plan.

That push is fostering “an expanding network of inexpensive yet useful phone applications for advanced devices,” Brandt said. “By reducing the mobility and instant connectivity among state workers, a perception of an out-of-touch administration, especially amongst tech-savvy Californians, is not beyond the pale.”

Moreover, Shark said, California risks losing the productivity perks that cellular devices offer. They not only provide voice communications but also e-mail, text and applications. “If you start disconnecting state and local employees from that communication path, you are definitely going to see inefficiencies in workload,” he said.

“That’s especially true if employees have to go out of the office on business occasionally but then have to travel back to the office to make calls or view e-mail," Shark added. "That’s a hard cost that needs to be considered.”

And there are other costs that need to be considered in any return-on-investment analysis. “If it means more people are working in the office, it could mean installing more phones and possibly more switches, depending on the numbers,” Shark said, noting that many organizations scaled back their land lines in years past to save money because their employees had access to cell phones.

Elizabeth Ashford, a spokesperson for Brown’s office, is quick to point out that the new executive order directs agency heads not to arbitrarily eliminate cell phones but to make a careful assessment to determine who really needs one.

“Gov. Brown is asking state agencies to identify what their core business needs are and how cell phones are being distributed to align with them — and then look for savings within that,” she said. “There’s no attempt to stymie any sort of progress in mobility and technology. It’s really just an issue of what a tough and devastating budget situation we’re in.”

She added that agencies are also being asked to focus first on eliminating contracts that don’t require an early termination fee, which could be anywhere between $175 to $350 per phone, depending on the complexity of the device.
     
Finding a workaround

After agency officials and employees start losing access to cell phones, they’re likely to seek out and find workarounds — some beneficial and some fraught with risks. “The growth of mobility will not be slowed by this change,” McCarthy said.

Shark said he’s already seeing some agencies in California begin to start looking for those solutions. “I think we’re going to find some very ingenious workarounds,” he said. “That way they can communicate and be mobile and still be able to let the governor say, ‘We saved $20 million in cell phone use.’” 

Those solutions could be increased reliance on voice-over-IP solutions via a wireless laptop or tablet PC or a cellular air card that an employee already carries. Or employees could use highway hot spots, where users can get Internet connectivity.

McCarthy warned that if California employees start switching immediately to VOIP solutions, the state would need to determine quickly “whether its networks can handle the extra traffic. “                           

State employees who don’t need a dedicated cell phone could also use their own personal cell phone — something private-sector and some public-sector organizations already encourage — and receive reimbursement for any minutes used for government business, which, McCarthy said, “might still be cheaper than providing them with a dedicated phone.”

That was one of the solutions put in place in Corpus Christi, Texas, which cut its number of cell phones for city employees by 50 percent in May 2010. Those without a city-issued cell phone are allowed to use their personal phones when necessary for official city business and must submit expense reports to get reimbursed.

However, Shark said he worries that allowing employees to use their personal phones will introduce more security risks to an organization, especially if the cellular device is also used for e-mail or data applications.

“What happens if that device gets stolen or lost?" he asked. "These employees could end up being unwilling conduits for malware getting into the agency system. These devices are not going to have the same level of security as government-issued devices because they’re not being supported by an IT department. They’re being supported by someone who may or may not be very tech-savvy."

"And that means they’re not likely to have the encryption in place or the authentication protections or the know-how to use the kill-switch if it does disappear," he added. "Letting everyone do their own thing without basic security policies in place could open a Pandora’s box of trouble.”

Most analysts agree that other government agencies will be inspired by California’s lead on this issue. “California has historically set technology trends in all levels of government,” Brandt said. “If California successfully implements this without substantial backlash from state employee unions, both the federal government and state governments will be using California as a test case for proving — or disproving — the criticality of mobile phones to the operation of government.”