If you’re like me, you probably learned to count to ten in kindergarten. But when it comes to a company’s telecommunications infrastructure, you’d be surprised how many corporate executives have trouble with simple addition.
As a company grows, telco, like other IT investments, often gets treated as the necessary evil. “The new guy needs a new phone,” or “we need another broadband connection in Oshkosh,” is dealt with a simple nod of the head, a purchase order, and just another line on the monthly bill. But those lines add up and before you know it, you’re dealing with multiple systems and formats, receiving invoices from dozens of companies, and probably paying for things you’re not even using. That’s when executives usually learn to count to TEM, short for Telecom Expense Management.
“We had a client who was very happy when informed that their data network contract renewal was costing them 50% less than their old contract,” recalled Barry O’Brien of Partner Consulting, a Pixel Health unified communications subsidiary. “Then they had us take a look at the contract they had signed with a well-known carrier as well as their actual bills. Management’s joy quickly disappeared!” O’Brien’s firm discovered that the company had actually been billed for more than a year for the new, and the old network. The big savings they were seeing was merely a result of discontinuing duplicate billing. Partner Consulting was able to secure a six-figure refund check for their client as a result.
A good TEM system should cover three distinct areas; Audit, Sourcing, and Management. Let’s take a look at how a qualified telecom expense management consultant breaks it down.
Expense Audit
You can’t save money on your current spend until you know the services you already have, and how much they are costing you. An expense audit should include an examination of one year’s worth of billing statements from your various providers and the development an accurate inventory of your wireless and wireline resources. This should include a performance and capacity review (to determine if you really need everything you’re paying for) as well as a look at maintenance and “Move-Add- Change” charges. Barry O’Brien says clients need to take a close look at who owns what, who is using it, and how. “Expense audits alone typically reveal 20% or more in potential savings,” says O’Brien. “When a business is in growth mode, it’s easy to lose count of what you have, and then once changes start coming, invariably someone forgets to cancel old equipment or services.”
Sourcing
“You’re likely to find another 15 to 20% savings once you start looking at alternatives,” adds O’Brien. He uses this process to define what a company actually needs, put together a list of vendors that can meet those needs, and then seeks out various sources (Some consultants will charge you nothing for this service, earning their fee as a commission from the provider, while others will build this time into their overall TEM fee. Be sure to ask.). The sourcing process should also include negotiations with current service providers for credits and error resolution, renegotiation of contracts if necessary, and a complete inventory update.
Expense Management
Once you have the numbers, the inventory, and revised contracts that accurately reflect your needs, an ongoing monthly expense management system should be put in place. It should include reports on budgeting, trending, and troubleshooting and be capable of depicting a snapshot of expense and usage related trends. If an employee starts running up their cellular minutes, you’ll know it. If that Oshkosh office closes and someone forgets to turn off the broadband connection, you’ll know that too.
What makes one TEM consultant better than another? Before you commit, make sure they have both wireline and wireless capability. TEM software keeps the process automated but you’ll always be better served by having someone helping to interpret the numbers. O’Brien calls it personal analysis by “IHB,” intelligent human beings. There’s no substitute.
TEM is not a one and done process but overtime, you won’t need a math degree to count the savings.
