Companies are growing ever more reliant on their telecoms and network services. Whether empowering a mobile workforce, delivering business critical applications or simply communicating with clients and colleagues, telecoms services are and will always be a business critical resource.
At the same time IT budgets are shrinking, and with telecoms spend typically occupying between 10 and 20 per cent of total IT budgets (Gartner) this area is not immune to cost pressures. In the current climate all savings are welcome, and yet whilst a great deal of effort is spent in negotiating headline unit prices, many firms still lack a comprehensive approach to managing and optimising the ongoing operational spend.
Spiralling bills and a lack of oversight are still all-too-common, which is often the result of weak controls and poor management of the entire telecoms lifecycle throughout a business. This is only set to get worse as BYOD (Bring Your Own Device) continues its inexorable rise in 2013.
The complexity of the telecoms environment can make firms unwilling to delve into the area, despite the potential savings. The figures suggest an average overspend on telecoms bills of between 30 and 40 per cent, which shows that there are significant savings to be made if companies can overcome their fear of managing and optimising their telecoms cost base.
There are a variety of reasons why large organisations can struggle to keep a handle on telecoms spend, and one of the biggest factors is often the scale of this spend. Communications spend often involves multiple suppliers and contracts, and the sheer volume of billing data in large organisations means that trying to reconcile invoices at a device and tariff level is near to impossible without specialist tools. Telecoms billing is one of the more granular issues businesses face, so it is perhaps unsurprising that organisations often miss obvious cost savings, for example by continuing to pay for unused lines.
Similarly, some organisations’ efforts to reduce this complexity can also result in wastage. Take an example of a multinational organisation which has a large contingent of mobile workers who frequently undertake international travel on business. To avoid the risk of individuals running up huge data roaming bills, the company purchases a data roaming package and for the sake of simplicity it is applied to all employees’ handsets, even those who never travel for work. This is a clear example of waste, but such scenarios are more common than one might think.
The spread of spend is also a problem. Telecoms spend is usually spread across multiple departments in several different countries. Even though contracts may be centralised, purchasing and management is often performed at a country, departmental or even individual level, making overall management more difficult.
Rapid development too is increasingly becoming a factor. The rising complexity of organisations’ telecoms positioning is being driven by changing work patterns, as more people work from home or on-the-go. A mobile workforce demands network availability anywhere and anytime, and the use of mobile devices and apps for business activities necessitates the expansion of telecoms infrastructure. Areas such as cloud computing, unified communications and M2M are changing how organisations deploy their telecoms estate.
How value leakage occurs
Although technological developments can help companies keep better control of spend, in some cases they can also have the opposite effect. Intricate tariff schemes are commonplace and often vary from country to country for businesses with a global footprint. Manually reconciling invoices against these models is near-impossible, and ensuring users are aligned with the best tariff for their needs can be extremely challenging.
Given this complexity, it becomes much clearer how easy it is for mistakes to be made on invoices or for poor tariff choices to result in overspend. In fact, Gartner has estimated that 15 to 20 per cent of telecoms bills contain errors and that 80 per cent of businesses will overspend on mobile bills by an average of 15 per cent through to 2014. With the current pressure on IT budgets showing no signs of abating, this is particularly unwelcome news for CIOs and IT managers.
Each time a new mobile device or service is added to the company’s telecoms inventory, complexity increases, which is compounded by the fact that many companies make use of multiple telecom providers, all charging different rates for their services. It soon becomes clear why telecom expense management is far from straightforward.
Ironically, while rates are actually decreasing across the telecoms industry, many businesses fail to see these rate decreases in their own invoices because they are not managing their telecom expenses as effectively as possible. Without proper attention, telecom costs will rise as complexity grows, and it can be increasingly hard to bring them down again later.
The telecoms expense management (TEM) market has changed over the past few years to move beyond invoice auditing into telecoms lifecycle management (TLM), which focuses on the reduction of an organisation’s total telecoms cost of ownership.
TLM services can include anything from asset and invoice management – which ensures up-to-date inventories and accurate billing – to dispute and contract management – managing the recovery of over-billing and supplier contracts. TLM can identify many potential sources of revenue leakage, such as unused or under-used services, individual bills which could be reduced by different tariff bundles or even the availability of better rates elsewhere on the market.
In order to be effective, TLM should constitute a proactive, ongoing activity built closely aligned with the IT department. Even in small organisations, telecom expenses can end up generating enormous amounts of data, quickly overwhelming staff tasked with keeping down costs and turning them into simple data processors who can’t possibly see the bigger picture.
Outsourcing the task is an option for firms lacking the capacity or expertise to conduct TLM in house, and for organisations which decide to renegotiate telecoms contracts or go to market, specialist consultancies can manage the process and ensure that the resulting deal provides best value.
From procurement to payment, TLM can deliver significant return on investment by helping organisations optimise their telecom spend, and gain visibility and control over telecoms asset ownership, service inventory and usage charges. Put simply, TLM can help to manage investments in telecommunications and mobile devices by delivering greater insight into how costs are calculated, where the money is being spent – and where savings can be made.