by Jeff Muscarella

Telecom cost control – how to get the most savings for the least amount of effort and risk

Jun 14, 2017
Technology Industry

What's the easiest and fastest way to reduce telecom costs?

Man happily throwing money up in the air against green background
Credit: Thinkstock

If there’s one thing telecom has taught us over the last decade, it’s that there’s nothing easy about telecom. It’s a notoriously difficult category of spend to keep in check – especially as it relates to cost and usage. Voice, data and network costs span multiple providers and geographies. Invoicing is usually decentralized, and the details are unintelligible. Carrier and provider offerings are all over the map. And, even with commoditized pricing for most services, the majority of enterprises still overspend by 30 percent or more.

Companies that set out to reduce their telecom spend are often confronted with a grim reality – it’s difficult and resource-intensive. It takes a startling amount of work to achieve savings that are meaningful to the bottom line.

So, how can companies make telecom cost control “worth it?” Which cost control tactics yield the biggest savings for the least amount of effort?

First, it’s important to note there are two paths when it comes to telecom cost control. One is the upgrade path. The savings can be transformative, but it’s usually high-risk, disruptive and requires a large-scale investment. The other is the optimization of current telecom investments – a far less disruptive and risky choice. While both paths can be traveled simultaneously, those companies that are looking for immediate cost reductions should focus on optimizing their current state.

There are four primary areas where telecom savings can be achieved by optimizing existing telecom investments:

  • Carrier Contract Optimization: The optimization of pricing/rates, discounts, credits and business terms. If you haven’t optimized your carrier agreements in the last 18 months, if you have grown significantly or if you have satisfied your minimal annual revenue commitment, now is the time to re-optimize your carrier contracts.
  • Subscription and Service Optimization: The optimal selection of provider/vendor plans and services based on actual and forecasted usage, and grooming of zero-use lines and services. While some businesses can get away with performing this exercise on a quarterly or semi-annual basis, it’s best done monthly for most enterprises.
  • Compliance Monitoring: Invoice auditing to identify and remediate billing errors. In addition to adherence to contractual pricing, compliance monitoring should also cover adherence to discounts, penalty waivers, incentives and other cost-related contractual terms. This is an ongoing management activity – meaning telecom costs need to be monitored in real time (“Are our invoices correct?”) as well as ad hoc based on customer-specific triggers (“Did we receive new activation credits for last quarter’s account growth?).
  • Demand Management: The optimization of internal policies related to service usage and device management to deter rogue spending (“Are we continuously aligning plan/service selection with actual usage?” and “What corporate policies are in place to regulate and normalize spending?”). This should be performed monthly.

Based on these four areas, where can companies drive the most savings over the longest period of time for the least amount of effort? This is where things get interesting. The two most commonly executed tactics – compliance monitoring and demand management – yield average savings in the 3 to 10 percent range. By comparison, contract optimization yields 15 to 30 percent and subscription/service optimization yields 10 to 25 percent.

To really move the needle on telecom cost reduction, and in a way that focuses on immediacy, companies perform contract optimization right away, then do an immediate service/subscription optimization pass. It’s a one-two punch that often drives 25 to 50 percent savings. These tactics also tend to be less frequent and time-consuming compared to others.

In other words, less effort for more savings – what’s not to love about that?