Optimising Telecoms Expenditure through a Coordinated Telecoms Expense Management (TEM) Programme
For a large business, telecommunications will always be a significant budget item, as efficient and effective telecommunications are essential to a successful business. It is possible however, for telecoms expenditure to become bloated and inefficient.
Spiralling bills and a lack of oversight can result in poor controls and general bad management of the telecoms life cycle in a business. This is only made worse as the technology becomes more complex and trends such as growing usage of mobile broadband, telecommunications convergence, and Bring Your Own Device (BYOD) make reporting and management even more difficult.
According to Nebula’s recent whitepaper on expenditure wastage in the South African telecoms sector, “Expenditure wastage in telecommunications is a huge problem in the corporate sector of South Africa. This is true even for large, leading corporates in financial, retail, manufacturing and professional services industries where this wastage could amount to between R5 million and R50+ million per annum. The average wastage on telecoms spend within the business sector is in the 20% region, which costs the SA economy an estimated R20 billion each year.”
If one wants to avoid wastage in telecommunications spend, it is essential to take a comprehensive approach to auditing and controlling the operational spend. One can do this by implementing a Telecoms Expense Management (TEM) programme.
A properly implemented TEM programme will give you greater visibility of your telecoms expenditure across the business, whilst identifying abuse or areas for improvement. It should also combine telecoms expense reporting with specialist analytical skills to give you contextualised and customised results.
When trying to take control of telecoms expenses, businesses will need to consider the following factors:
• The need to conduct a complete baseline profile of the business and its telecommunications services
• The focus areas within the business, in which telecoms expenditure can be optimised
• The value of supporting this initiative with an integrated and controlled information system; and
• The benefits of implementing a full TEM programme
Implementing a Telecoms Expense Management Programme
Every business is different, and there are many variables in a business which will affect the overall telecoms expenditure of the business. These variables range from the industry type and size of organisation, to the varying contribution of the different types of telecoms expenditure within the organisation.
All of these variables must be taken into account when implementing a TEM programme. The process is therefore a complex and multifaceted one. Utilising specialist firms and systems can streamline the process and provide guaranteed, effective results which many companies would not be able to achieve by themselves.
Telecoms Baseline Profile
In order to implement a successful TEM programme, a business must first do a full analysis of its baseline profile so that it can identify which areas are causing problems and need improvement.
A comprehensive baseline profile will consist of:
– A Business Profile – looking at the nature of the business; what its key drivers are; how it utilises telecoms services.
– A Financial Profile – looking at the finances of the business; how much of the budget is allocated to telecoms; how is this expenditure being utilised.
– A Services and Vendor Profile – looking at what telecoms services the business currently has; who their vendors are.
– An Infrastructure Profile – looking at what telecoms infrastructure the company has; how it is being utilised; is it serving its function.
– A Usage / Consumption Profile – looking at how telecoms are utilised within the business; who utilises them the most / least, what the needs of the users are.
– An Environment Management Profile – looking at the processes and governance the company has in place around their telecoms services; SLAs and vendor sourcing process.
– How cost are recovered internally – whether all costs are absorbed by IT, if full recoveries are made from the business and what process improvements are possible.
– A Compliance Profile – looking at internal compliance needs with regards to areas such as ROCA, POPI, PCI, etc.
Once a baseline has been established across all these areas it is possible to begin optimising each area.
The 5 Keys to Optimising Your Telecoms Expenditure
There are several areas which a company can optimise in order to better manage their telecoms expenditure. The main target areas for improving telecoms expense management include:
1. Eliminate Waste
This covers removing infrastructure and services which are not in use, as well as consolidating services and infrastructure where usage is low.
2. Efficiency Improvement
This involves billing and accuracy validation and verifying that services are correctly billed for. It can include identifying consumption and configuration anomalies, making sure routing is optimised and looking at unit price optimisation, as well as ensuring that compliance is at the highest possible level.
3. Operating Model Alignment
This is comprised of ensuring that there is compliance around internal policies with regards to usage and recovery, security, architecture standards, and operating standards. It ensures there is external vendor compliance around discounts, penalties and SLAs, and covers the centralisation of operations and delivery as well as financial management and procurement. It also makes provision for full reporting.
4. Sourcing Optimisation
This looks at benchmarking in terms of pricing optimisation and licencing as well as billing rules around rebates, discounts, volume and term. It then looks at alternative suppliers, combined solutions and supplier consolidation in order to leverage consolidated buying power and improved SLAs.
5. Technology and service optimisation
This covers standardisation around equipment, maintenance and support, licence fees, SLAs, call out and support fees, and WAN and internet Connectivity. It also looks at leveraging new technologies for greater efficiency.
By implementing these changes within a business and implementing better management processes around telecoms expenditure, a company will soon see improvements in cost, effectiveness and efficiency of their telecoms services.
Using an Integrated System to Manage your Telecoms Expenses
When looking to manage a businesses’ telecoms expenditure, it is often advisable to do so using an integrated third party information system. This will give a company complete real time control over their expense management with comparatively little implementation and administration effort and cost, so that they are free to focus on their core business.
There are many benefits of using a third party system to manage your telecoms expense, some of which include.
By utilising an integrated third party system to manage telecoms expenditure a company can be sure that they have a thorough baseline profile and have correctly implemented the key processes for optimising telecoms expenditure. They will then see the full benefits of a successful TEM programme.
Benefits of Implementing a Telecoms Expense Management Programme
A business will experience many benefits once it implements an effective TEM programme. Some of these include:
Saving on communication costs – better management means less wastage and more efficient spending as companies can ensure they are getting the best price for their telecoms services. A company needs to be able to have a consolidated view of all costs incurred and services offered by all their vendors – not a single view per vendor.
Control over services and delivery –increased insight into how your telecoms environment is performing and how it can be improved, such as ensuring that you basic services are performing and being measured.
Increasing employee productivity – by correctly managing and allocating resources, employees will have access to an effective and efficient communications system. The power of reporting should not be underestimated and its value in gaining business intelligence is vast. It changes user behaviour and drives down cost and increases efficiencies
Improved customer service – an efficient and effective communication system makes it easier for customers to engage with employees.
Better reporting – The automation of data gathering, analysis and reporting saves a lot of time and effort, companies can track their usage and expenses more easily and therefore plan and budget with greater confidence.
Better Management – Most companies do not have the skills in-house to manage their environments efficiently – they do the basics, but gets stuck in such a rut that there are immense inefficiencies and wastage
Companies can ensure these benefits are realised by implementing a TEM programme that creates a solid business baseline, correctly implements optimisation across the key focus areas and leverages the insights gained from an integrated third party system in order to make better telecoms expenditure decisions.