DFN: Helpful ideas about how companies can reduce their telecommunications costs.
Five ways to reduce telecom expenses
Date: December 22nd, 2009
Author: Jay Rollins
For larger enterprises, one of the biggest impacts you can make to your operating budget is to get your telecommunications expenses in-line. Telecommunications bills are some of the most confusing bills to read and interpret and even more difficult to get consistent and predictable. Here are strategies you can use to reduce the insanity.
Use VARs to help curb third-party billing
Value Added Resellers (VARs) and agents in the telecom space add a lot of value; one of the biggest benefits has to do with restrictions of third-party billers. Most carriers allow third-party billers to add to the bill without notifying you first. A common practice is for a third-party service company to call and ask if you want a new call waiting service; you tell them no and yet, somehow (by accident of course), that service starts appearing on your bill. It is such a small amount in the grand scheme of things that it can go unnoticed. Some of these telecom bills can be hundreds of pages long and taking the time to go through every line item sometimes requires several full-time resources. Even alerts set up for bill increases in your accounts payable system can miss these services because they don’t trigger the threshold for investigation. Before you know it, you can be spending thousands of dollars on services that you did not ask for or want. Some VARs, such as DynaLink and Access Point, have a policy that prohibits any third-party billing.
Seek out reputable agents
Consider telecommunications agents, such as SinglePoint Solutions, as a partner that operates much like a valued employee. These agents have tremendous expertise in the telecom marketplace and add value by looking at everything you spend on telecommunications. They take this information (at little or no cost) and compare your spend to rates in the marketplace. Because agents deal with almost all of the carriers and VARs, they can be a bit more unbiased in their recommendation. They can also coordinate implementation tasks to take them off of your department’s plate, freeing up internal resources for more value-added tasks. In addition, all agents should have Web portal applications that give you a dashboard-like view into all of your telecom spend so you can easily do some “what if” simulations.
Agents get a commission, so shop around for reputable agents (word of mouth is usually the best way to find a good agent).
Some agencies will do bill pay for you; however, be cautious about leveraging this service with these companies. If the agency were to ever go under, you may be out a month or two of telecommunications bills.
Avoid program chasing
Sometimes a carrier will create a discount program to try to lure you back; these savings are only temporary and will come back to bite you later.
Also, beware of agents or other telecom service providers suggesting that you move to new services and be sure you know what savings they are talking about. An agent wanted to switch us from our current local provider to a new provider, even though there really wasn’t that large of a savings up front. Upon further investigation, we learned that our current service was no longer paying commission to the agent, and the carrier they wanted us to switch to was offering a $200 per line commission bonus for each line converted. The switch would have generated a lot of cash for the agency, but it would have created more headaches for our organization than it was worth.
Look for found money vendors
Several companies work off of found money. Basically, the company will go through your telecommunications bills and find lines that are no longer used, unnecessary services, and services you were being overcharged for and suggest changes to make to save that money. If you implement the changes, the vendor takes a percentage of the saved money for up to 12 months.
For example, the vendor finds a line you have been paying for over a year that has never been used. The line cost is $100 per month. These vendors will try to recoup any costs from the past year or so and cancel the line. They would look for 40%-60% of the money that was returned to you from past overbilling, as well as $40-$60 per month for up to 12 months for the line that was cancelled. This may seem expensive, but it was money that you never would have found without the vendor’s help. It should also tell you something that, if there are companies that perform these services, these overbilling practices happen very frequently.
Consolidate your bills
It can be very helpful and save you money to have all the bills go to headquarters instead of individual business units, stores, facilities, etc.
One practice carriers employ in retail or with regional healthcare clinics is to send salespeople to these locations even though you may have enterprise agreements in place. The salesperson goes to the facility manager and says, “Your contract is about to expire; let’s look at what we can do for you.” Then they wow the facility manager with new services, and they end up signing a new contract without knowing that there is an enterprise agreement in place. The challenge is that phone service is such a commodity and a must have that these facility managers typically sign if the business case the salesperson presents shows they are saving money. Tell your VAR or your agent to inform the carriers that they are not to send any representatives to any of your facilities. In addition, inform your facilities that no phone service contract is to be signed at the facility level.
(Volume pricing from your carrier/provider is, hopefully, common sense by now, so that is why I did not list it.)
Telecom carriers can bury you in paperwork — so much so that it is easy to get lost in the sheer volume of bills you have to go through. Hopefully, these steps will bring your organization some savings.
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A successful IT executive with 15 years of technology leadership, team building and value creation, Jay Rollins has served as VP of IT/CIO of several mid-sized companies and technology start ups. He has varied industry experience including gaming, media and entertainment, healthcare and ecommerce. Jay received an MBA from Bentley College in Waltham, MA and founded PicoMatrix in 2008.