We’ve all heard the statistics that telecom is a large chunk of the IT budget, typically one of the top five expenses, and it’s not being actively managed. So what does this really mean for corporations and government agencies? Well, it really equates to millions of dollars in wasted spend for the average Fortune 1000 company. That’s money that could have been used to strengthen a company’s financial position, save jobs, improve services or fund desperately needed IT projects.
Telecom Expense Management (TEM) is an often overlooked practice, but its cost-saving benefits cannot be ignored. It provides a way to track your telecom inventory, facilitate orders, monitor spend, and automate invoice processing as well as auditing. To help you get started, here are five ways TEM can help your company save on telecom costs in a down economy.
No. 1: Get a handle on wireless expenses
Wireless spend has exploded in the past few years. BlackBerry devices and cell phones for corporate use are ubiquitous, but along with these advances come a management nightmare. Security concerns over sensitive data on devices, overage charges, text messaging charges and device procurement all become a very real issue. This is also an area that most companies mismanage.
For example, a Fortune 500 travel provider recently conducted a wireless audit across their organization. They discovered expenditures of over $40,000 per month on text messaging charges alone. Their employees were sending and receiving text messages without any type of plan in place, and each text was incurring a 10-cent to 30-cent charge. This company is looking at saving over $1.5 million a year in wireless expenses alone.
Another area of high cost is the overuse of 411 (directory assistance) on wireless devices where the charges are typically $2 to $3 per call. Communicate these costs to the employees and encourage or mandate the use of free 411 services such as Google’s 1-800-GOOG-411.
No. 2: Centralize ordering and provisioning
Many large enterprises allow various offices and locations to perform their own telecom ordering. However, allowing too many employees to work directly with service providers will cost you in the end. Your greatest leverage is knowing your inventory and obtaining volume discounts. It is crucial to centralize ordering through a single department, with specifically-named individuals listed in the contracts who are responsible for purchasing control. That way, if unauthorized personnel submit orders that are accepted, the carrier will be held responsible for the charges.
For example, after a large hotel chain centralized ordering and provisioning into one department, the new TEM team uncovered that 18 active T1s were coming into one conference property-that’s 17 too many. After further investigation, it was revealed that individual employees were ordering the lines each time a large convention was hosted at the property. No one from the hotel knew to check the existing inventory and the service provider was happy to receive the orders.
In addition to centralizing orders, look at consolidating the number of vendor invoices. Savings can often be found just by reducing the overall number of checks produced.
Validate Your Expenses
No. 3: Validate your expenses
Ideally, your telecom expenses should be checked against either current employee lists or locations. There are too many situations where companies continued to pay for wireless devices belonging to former employees or for locations that are closed. Look at the high-impact areas first on the invoices, such as the most expensive circuits, long and expensive calls, “high talker” wireless users and zero-usage devices.
For example, one Fortune 1000 retailer found they had over 50 devices with no usage, but monthly charges of close to $40 each. Upon investigation, it turned out that the charges stemmed from phones procured for a department that did not need them. No one cancelled the phones and they were billed monthly for over a year before the discovery, which totaled over $26,000 in wasted dollars.
No. 4: Negotiate contracts better and monitor expiration dates
Knowing what telecom assets you own and leveraging the information for volume discounting is only half the battle. The other half comes from smart negotiation tactics and an awareness of when contracts are up for renewal. Pay attention to the fine print for auto-renewal clauses, which are easily removable but often overlooked.
For example, a local store of a large retail chain contracted circuits from a provider without notifying IT, and filed the paper contract away in a desk. No one was tracking the contract expiration date and it wasn’t until it resulted in a $23,000 per month overage on the invoice that the contract was renegotiated and tracked.
There are many tools and services available just to help with contract negotiation with service providers. Take advantage of technology and “reverse-auctions” where carriers can bid for your business in an online session. Better negotiation of contracts can produce significant savings, often in the millions, depending on telecom spend.
Recycle Old Wireless Devices
No. 5: Recycle old wireless devices
Not only is this good for the environment but, most importantly, it is crucial for security reasons. Perform a quick Internet search and you’ll come across many articles about devices sold on auction Web sites, with the confidential corporate information still on the units.
Carrier changes, device upgrades and employees turning in devices when they leave a company all create a situation where organizations often have a closet full of old devices. Find a company with strict security mandates that wipe the devices clean of any data and provide your company a cash rebate. These rebates vary by device type and age, but the dollars can be used towards procuring new devices.
Trying to get a handle on telecom expenses often is a dreaded task, as it involves research to collect information on locations, employees, circuits, devices, etc. But the reward can be substantial. Start small; many of the ideas presented here can be implemented quickly and produce an immediate impact. Particularly in this economic environment where each dollar counts more than ever before, you can be the hero of your IT department by delivering bottom-line benefits through TEM.
John Shea is Chief Marketing Officer at Rivermine. John brings over 17 years of high technology experience to Rivermine. Prior to Rivermine, John served as vice president of product marketing, management and corporate strategy for Nuance. John joined Nuance during its early stages in 1998, and helped ramp the company from four customers to over 1,000 during his six-year tenure. He was also heavily involved in Nuance’s initial public offering, which resulted in a market valuation of over $5 billion.
Earlier in his career, John was a member of the initial Intel Pentium Processor marketing team that helped ramp product shipments from zero to over 10 million units per quarter in two years. He has also held marketing and technical positions at OnLive Technologies and Booz, Allen & Hamilton. John holds a B.S. in Engineering from the University of Notre Dame, and a Masters degree in Business Administration/Management from NorthWestern’s Kellogg Graduate School of Management. He can be reached at [email protected].