Realizing their recurring telecom service costs as being one of their most expensive monthly line item outlays, a grocery store chain based in North Carolina was prompted to contact Profit Advisory Group (PAG) to request a professional audit on current spending and accurate billing on all of their telecom services including local, long distance, cellular and DSL.
Telecom Audit Overview
This particular PAG audit required pulling data for a large company consisting of close to 250 separate locations. Their total annual spend for all telecom services at all locations was approximately $2.25-million at the outset of the audit.
Some challenges presented included the need to collect data from a total of 17 different vendors and the fact that client-vendor relationships could be described as practically non-existent. The objectives of the audit process included:
- Reduction of costs
- Consolidation of all invoices
- Development of a contract strategy to encompass all separate locations
- More flexible, client-friendly conditions and terms
- Development of solid client-vendor relationships
The first step in paring down the company’s telecom spending was to determine how much was currently being spent and for what. This was accomplished through the Data Collection & Analysis process utilized by PAG to create an inventory of all vendors, all contracts and all invoices. All services for which the client was being charged were carefully uncovered and inventoried and all contracts were reviewed, making note of expiration dates and all terms and conditions. Current invoices were then reviewed to determine compliance with those contracts.
Profit Advisory Group then worked with both the client and the vendors to consolidate existing services wherever possible and the allocation of costs to the appropriate cost center. Competing vendors were asked to respond to an RFP (Request for Proposals) based on:
- Client’s business needs and requirements
- Services being currently used
- Specific technical requirements
The analysis of these proposals was directed at evaluating contractual terms and to ensure the ability of each supplier to satisfy the client’s needs and requirements. Extensive studies were also undertaken to ensure that the network was the correct size to accommodate not only the client’s current needs but future needs as well. A contract strategy was then formalized and implemented.
Quotes were submitted by existing service providers in order to maintain the current business and to ensure that the terms being offered were the best in class for this client. PAG got together with each existing vendor in an effort to improve client-vendor relationships and to foster more open communications. A schedule was implemented for regular billing reviews and updates with vendors being held accountable to provide these.
Telecom Audit Results
Upon completion of the entire process performed by PAG, this client was able to reduce their annual $2.25-million telecom expense by $657,000, or almost 30%. They were able to accomplish this without changing vendors and were also able to obtain more favorable terms on the new agreements.
These new terms now allow them to make future changes without penalty and to cancel any unused services at any time without penalty. Bandwidth will be maintained at the right size for the client, who will now be paying only for services actually being utilized. Implemented optimization has been instrumental in furthering cost reductions.
[author_bio username=”Ken” name=”yes”]