When you execute a contract for corporate telecom services, you lock your company into a long term arrangement that probably costs more than it should. The contract you sign will likely include a confusing mix of telecom jargon, pricing structures, tariffs and service guides. Every bill you pay will typically include 10 percent or more in overcharges and unchallenged errors. Of course, you can change this dynamic, but it will take time, effort, and a vigorous program of telecom expense management (TEM).
Diligent TEM can maximize your expense dollars; but it can be a complicated process, even for an experienced procurement professional. Commissioned sales professionals often negotiate telecom contracts. They have a lot to gain, so they push new high tech services that you might not need. Bundled or discounted prices might be based on temporary or less than favorable rates. As telecom bills can be difficult for an accounts payable department to decipher, it’s often easier to simply pay them and move on.
You Must Change The TEM Thought Process
Hopefully the next time you sign on the dotted line, you will change your thought process. You will negotiate the best deal and your end product will be a contract that ties in the services your company needs, while including the savings your company deserves. Unfortunately, it might not work out that way if you have neither the time nor expertise it takes to stay on top of the telecom expense management.
You company will likely end up signing a telecom contract that sets up services you don’t need, promotes over payments, and funnels excess dollars from your expense budget into your solution provider’s profit column.
Until you make a decision to stop the cycle of telecom providers taking advantage of you, the dynamic will continue throughout the life of your current contract and into the next.
Get Started Now
If you’re ready to begin maximizing your company’s telecom expense dollars, you don’t have to wait until your current service contract expires. The 7 important steps discussed below will help you get started right now.
- Contract Strategy
- Procurement Policy/Sourcing
- Technology review
- RFP/Contract Negotiation
- Ongoing inventory/invoice management
- End of life asset disposal
It will take a commitment of time and effort to sort out any deficiencies in your telecom service program, but once you begin the TEM process it will be easier to keep up the momentum and the savings.
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The Seven Stages of Telecom Expense Management
Stage 1: Audit/Service Optimization:
“Where are we now and how much is it costing us?”
80% of corporate telecom bills contain costly errors. They may include overcharges for the services you have or outdated charges for products you no longer use. Mistake-ridden telecom bills aren’t necessarily a plot to dig into your company’s deep pockets. Errors are are often the hybrid byproduct of telecommunications company mergers, acquisitions, reorganizations, and incompatible tech and billing systems.
Is your company giving away telecom expense dollars?
If your company doesn’t perform regular TEM billing audits, you are may be overlooking the high potential for errors. You are likely accepting the resultant dollar loss as the cost of doing business. A billing audit focuses on the details that might otherwise get overlooked. Here are a few facts to consider.
- Telecom is typically a top expense line item for corporations
- Telecom bills are structured so that they are difficult to understand
- Research shows that nearly 80 percent of telecom bills include costly errors
Are you asking the right questions?
Finding and correcting telecom billing errors requires an in depth analysis of the details. You begin the process by reviewing your services and equipment. You continue the analysis by comparing current services–line-by-line–to the charges on your bill.
Your primary savings will come from focusing on two key aspects: billing mistakes and cost reduction opportunities. All billing errors should be challenged. A successful challenge can generate a refund or credit of paid dollars and a reduction in future bills. Examination of cost reduction opportunities can lead to future savings due to the the potential for eliminating unnecessary or redundant services that may have been overlooked.
Stage 2: Contract Strategy:
“What are our current options and how do we maximize these moving forward?”
Your contract contains the key details of your corporate telecom system. From reviewing its provisions, you should be able to assess the services, equipment, rates, volume, and expenses you’ve committed to over the life of the agreement. If your corporation has changed, any contract based on past needs should be amended to reflect the current situation.
Even if your telecom provider doesn’t allow mid-contract changes, you should review and analyze the terms now. When it’s time for renewal, you will know what services should be eliminated or improved. You can begin negotiations early, renegotiate the terms of the existing agreement, or find an alternate supplier that will better meet your needs.
Stage 3: Procurement Policy/Sourcing:
“How are we buying and who are we buying from?”
Tech requirements vary widely depending on division, department, and employee functions. If not properly monitored and controlled, this disparity can lead to waste and increased telecom expenses. It’s important to review, update, and formalize your current procurement policies and suppliers.
While some employees may require the latest in high-speed wireless, remote access, cloud based storage, software as a service, and other technological advances, others might need only the basics. Things get complicated when employees with the ability to opt-in to the latest technology also have the authority to execute the contract for services. With no formal policy in place, bills for newly acquired services could easily be forwarded to accounts payable and paid without question.
A formal procurement policy is a must for maintaining control over who supplies technology to your company and who has the authority to buy it. When procurement is decentralized, it can give telecom vendors an advantage. The division of authority presents them with ready and willing groups of tech consumers with corporate-backed procurement financing. It makes it easy to push new services, encourage new contractual obligations, and sabotage your company’s efforts to control telecom expenses.
Stage 4: Technology review:
“What changes are we going to make and when are we going to make them?”
Technology changes rapidly; but you need a formal technology review to track the trendy vs the necessary. Your business could benefit from cloud based apps, a Bring Your Own Device (BYOD) policy, or a Voice Over Internet Protocol (VOIP) phone upgrade. The latest technological advances may sound exciting, but what technology does your company really need? Where and when will you need it? Your technology review should come up with hard answers to these important questions.
Your comprehensive technology review should focus on these 11 steps:
- Understand your company’s current position on the technology curve
- Research all available technology options
- Develop a long term telecom strategy. Review it periodically.
- Identify all potential service providers
- Follow up with Request for Information (RFI)| Request for Proposal (RFP) | Request for Quote (RFQ)
- Analyze responses and calculate total cost of ownership (TCO) models
- Evaluate cost vs benefit value and solution compatibility
- Make an informed decision
- Implement the solution
- Insure disconnect or disposal of retired technologies
- Insure total cost of ownership accuracy and fix discrepancies
Stage 5: RFP/Contract Negotiation:
“Who should we use and how much is it going to cost.”
As you negotiate your new telecom contract, you will find that it’s far easier when you have all of your talking points in order. You should be thoroughly familiar with your company’s current contract. You should know your future telecom requirements and the funds allocated to accomplish your goals. You should also review the service track records and pricing structures of the companies that supply the services you need.
As you settle on your final options, you might be surprised at your results. You may decide to distribute your telecom business among several providers. Or you could decide that the company with the best overall solutions, the best in class pricing, and the best track record for all telecom options is a small provider you never considered before. It’s possible that a leaner, more efficient telecom company will be more amenable to executing a contract with more concessions, discounts, and favorable arrangements then you imagined.
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Stage 6: Ongoing inventory and invoice management:
“Is everything we put into place still operating as planned?”
Every contract has a honeymoon period when all parties are satisfied with the results of the union. It’s up to you to make sure that your company’s sense of satisfaction with its new telecom contract doesn’t diminish over time. To encourage the pricing, perks, and level of service your new contract promises, you must:
- Continuously monitor for contractual compliance and unexpected problems
- Review all invoices for accuracy
- Maintain asset awareness
Your system of telecom inventory and management will work best if a single procurement manager–or at least a single department–reviews all invoices, services, and proposed technology acquisitions. The responsible manager should audit all bills. If new technology or service is put into place, the manager should insist that it be amended to the existing contract instead of introduced as a freestanding contractual obligation. Diligent monitoring will help keep expectations moving along as planned.
It’s important to note that for optimum expense control in Stage 6, on going inventory and invoice management is crucial. Proper analysis and implementation could minimize or eliminate the need for future comprehensive reviews of telecom products, services and providers.
Stage 7: End of life asset disposal:
“Who may buy these from us and how much are they worth?”
Every piece of equipment–even with the advances in technology hardware–has a reasonable life expectancy. When it reaches a point of inefficiency and no longer meets your company’s needs, it’s important to have an end of life asset disposal plan in place.
Your disposition guidelines should establish a protocol for evaluating an asset’s usable life and possible market worth. It should lay out the appropriate steps for disposal, recycling, or tax deductible donation to a nonprofit.
Maintaining Proper Telecom Expense Management
As you may have recognized, Stage 4: Technology review; Stage 5: RFP/Contract negotiation; and Stage 7: End of life asset disposal, will occur as frequently as the introduction of newer services and technologies make it necessary, when contracts are up, and when new competitors become viable solution providers.
Telecom expense management is not an easy process, nor is it a one size fits all solution. It is a complicated industry filled with jargon, and because of this businesses get taken advantage of. It’s time to stop over paying for telecommunications with a comprehensive TEM strategy.