Getting a Handle on Your Communications Expenses
Let’s face it, telecommunications can be confusing. From under- or over-procured services and costly legacy technologies that are hard to locate, to carrier billings that never align with what was promised, gaining transparency in telecommunications can be a challenge for even the strongest IT department.
For the past 25 years or so we have seen it all. Recently, however, with our clients we have seen a significant increase in mobile devices being used in the enterprise. It did not take long for the consumer, who enjoyed great features with their smartphone, to bring that same technology into the enterprise. Businesses are now aware of these shifts and bowing down to the user’s preferences for them to collaborate effectively wherever they are. According to Pew Research, while only 35% of Americans had smartphones in 2011, that percentage grew to 68% in 2015, and in 2017, 92% of Americans had smartphones.
Telecom spending is one of the highest expenses for businesses and corporations, yet it is the least understood among enterprises today. It’s sad to say, but landline carriers have made the bills so complex, that Accounts Payable departments just pay the amount being billed with no questions asked. Bills are laden with surcharges levied by phone companies, state subscriber line charges, telecom relay services charges, property tax allotment fees, universal service fund, universal connectivity fee, carrier cost recovery fee, federal charges, local charges, city tax, state tax, utility tax, gross receipts tax, 911 fees… and the list goes on and on. These fees vary depending on your geographical area, and may not be charged at all, but are essentially user fees imposed by local or state governments.
Many businesses lack a streamlined process for handling telecom invoices. In the early days, enterprises would have large stacks of invoices that one department would look over and validate, then it would go to another department for payment processing. Errors are more likely to occur during these tedious tasks being carried out manually across multiple departments. In order to streamline this activity, large enterprises have turned to Telecom Expense Management (TEM).
TEM is defined as the management of wireless and wireline service and asset expenses. If your company is thinking about purchasing a TEM solution, here are a few items to consider and questions to ask of your TEM provider:
- Is the TEM provider vendor-independent, and can it design a custom solution for your enterprise?
- Will the TEM provider prepare recommendations to ensure alignment with your company’s current and future strategy?
- How much optimization experience does it have, and what sector is it most prevalent in?
- Will it identify all devices and/or services that your enterprise is paying for but is no longer using?
- Does it have a clear understanding of bidding and contracting periods and cycles as well as how these relate to potential savings opportunities for your enterprise?
- Does it have an in-depth understanding of the taxes and fees associated with services being billed and their appropriateness?
- Be wary of carriers offering to be your TEM provider or provide a “free audit” of your wireless and or landline services. This is like letting the cat in the hen house. Once they are in, they will be offering up their services, their rate plans, etc.
- Ask the TEM provider if it receives any commissions from carriers for recommending their rate plans to the enterprise.
- Does the TEM provider offer best practice solutions to your employees and stakeholders to ensure proper review of telecommunications expenses in the future?
- Besides just finding billing errors, ask if it right-sizes technologies and obtains credits to positively impact your company’s bottom line.
Invoice reconciliation and payment processing is only one piece of the audit/optimization puzzle. Digging into contracts, understanding jurisdictions, benchmarking against the industry, studying patterns -- all this is what you should be after and concerned with. You should also look for a provider with 100% vendor independence and no additional “back-side” compensation from any vendor or carrier from their recommendations.
With multiple vendors -- national and regional -- and with service endpoints in multiple locations, not to mention legacy PBX/Centrex services, there’s plenty of opportunity for cloudy costs and unexplained services. I hope this has helped you think about the need to understand, stabilize, and gain visibility into all aspects of getting a handle on your telecom expenses.