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 so proud of the fact that their MPLS network contract renewal was costing them 50% less than their old contract,” recalled Barry O’Brien of Partner Consulting, a Connecticut-based unified communications firm. “Then they had us take a look at the contract they had signed with a well-known international carrier as well as their actual bills. Management’s pride quickly turned to embarrassment!” 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 so happy about was merely a result of discontinuing the old service. Partner Consulting was able to secure a six figure refund check for their client as a result.
Common TEM Challenges
Every business needs communication channels, and in today’s world, those channels are many. And telecom expenses make up a substantial portion of overall operating expenses for most businesses today.
Naturally, telecommunications can include a wide range of vendors and solutions, meaning an equally wide range of contracts to digest and understand. Telecom contracts can be quite confusing, to say the least, so many executives end up signing on the dotted line without really understanding what they’re signing up for – using bottom-line costs as a measuring stick to determine whether it fits in the budget and basic services breakdowns to figure out if they’re getting what they need.
This confusion leads to the afore-mentioned problems of paying for services you don’t really need, even paying for solutions that your business doesn’t utilize (or could at least get for a significantly lower fee by shopping around for providers with service levels more aligned with your needs for those specific features).
Finally, some businesses get trapped in the, “If it’s not broken, don’t fix it,” conundrum. When everyone’s pressed for time, it can seem fruitless to spend countless hours evaluating and comparing vendors, not to mention scouring over contracts. Because it’s not broken, billing errors may be going unnoticed, causing a leak in your company’s finances that could go on for years if not detected.
Benefits of TEM Solutions
A good TEM system is a necessity for enterprises for the critical oversight needed for expenses related to voice, mobile, and data. Mobility, which has become a pressing concern for enterprises facing the integration of BYOD policies and other mobility initiatives, has only added to the need for enterprises across many industries to get a handle on telecom spending.
Rather than handle the full spectrum of evaluation, negotiations, contracts, billing management (and auditing), and related processes with spreadsheets and other time-consuming manual processes, a good TEM system alleviates most of these demands by streamlining and centralizing telecommunications – making it easier to detect billing errors, eliminate late payment fees, and pinpoint unauthorized usage, all of which can add up to a big impact on the bottom line.
In other words, it just makes sense. Not only good business sense, but good, old-fashioned common sense.
What to Look For in a Good TEM System
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 TEMS 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 texting 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. TEMS software keeps the process automated but you’ll always be better served by having someone helping to interpret the numbers. Barry O’Brien calls it personal analysis by “IHB,” intelligent human beings. There’s no substitute.
TEMS is not a one and done process but over time, you won’t need a math degree to count the savings.