Telecom Cost Management

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Telecom Cost Management Featured Article


August 13, 2007

Tackling the Communications Expense Beast with Telecom Cost Management

By Mae Kowalke, TMCnet Contributor


For both Fortune 500 firms and small businesses, managing telecom costs can be a daunting task. Companies often use many different telecom and network services and receive hundreds or thousands of invoices each month. How can a company maintain visibility into all these business expenses? In other words, how can a company avoid losing track of the telecom forest for the invoice trees?
 
The answer is to employ the services of a telecom cost management provider. Not only will doing so greatly simplify management, but also will save the business as much as 25 percent in telecom expenses.
 
How are these savings realized? In many cases, simply by correcting billing errors. By some estimates, more than half of all telecom service invoices contain some type of error. These errors can result in companies paying 7 to 12 percent more than they should. Finding and correcting these errors alone, though, often is not worth the time spent on the task when businesses try to tackle the problem on their own. A telecom cost management company can make correcting errors cost-effective through a process called validation.
 
Effective telecom-related service and equipment inventory management is another important key to most telecom cost management solutions. An enterprise is not a static entity, and most changes require some alterations of telecom services (office space, staffing, organizational matters, location, business model, etc.). Without a telecom cost management system, which can automatically identify each line item of the invoice against your inventory, these changes can cause major problems.
 
Keeping track of changes can be a daunting task. For example, if the operations or human resources department removes a service item (such as a cell phone, conference bridge, or  calling card), someone has to make sure that change is reflected on the invoice. Only a good telecom cost management system can track these changes effectively. Unneeded services represent an average of 12-15 percent in overspend for a typical organization.
 
Savings can also be realized through optimization processes. This involves examining all the different services and providers used, and selecting the most cost-effective rate plans. Most companies do not have the internal resources needed to perform this optimization process. Instead, it makes sense to assign this task to a telecom cost management provider. This provider will take into consideration all communications-related services—including mobile/wireless, long-distance, local phone, conferencing, virtual private network, PBX, e-mail, voicemail, and so on—and advise the company on the optimal business decisions needed to minimize expenses.
 
Finally, companies can save money on their communications spend by outsourcing the management tasks involved to a telecom cost management provider. Outsourcing non-core business processes makes sense from a return on investment (ROI) perspective, since a variety of telecom-related tasks have become quite burdensome. Some of the processes that a company may choose to outsource include pricing and contract negotiations, service level agreement (SLA) enforcement, and dispute management.
 
Taken together, these methods of saving on communications expenses—validation, optimization, outsourcing—constitute what’s known in the industry as ‘total telecom cost management,’ or TTCM. This holistic approach to communications expenses focuses on the bottom line by determining the best way to trim expenses without sacrificing functionality. In fact, trimming expenses through TTCM offers the advantage of helping companies become more nimble and competitive.
 
Considering the fact that a mid-market enterprise spends about $26 million each year on telecom services (figures from a recent Optelcon white paper, cited from Aberdeen (News - Alert) Group research), and the average Fortune 500 company spends $116 million each year on these types of expenses, it seems clear that the time to implement TCM is now.
 
To learn more about how your company can benefit from TCM, please visit Optelcon’s Telecom Cost Management channel on TMCnet.com.
 
Mae Kowalke previously wrote for Cleveland Magazine in Ohio and The Burlington Free Press in Vermont. To see more of her articles, please visit Mae Kowalke’s columnist page. Also check out her Wireless Mobility blog.


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