So, you’re looking to cut IT and/or telecom costs for 2021. Well you know, based on my previous articles
here and
here, that you
will indeed be able to cut costs and save money. But have you compared the reasons for ongoing cost management vs a one-time savings audit?
First, let’s talk about the basics. Previously, I’ve talked about the reasons that IT and telecom cost-savings are possible. To recap, here are a few of those reasons:
1. IT has bigger priorities — By far, this is the No. 1 reason companies overspend on IT and telecom. The IT department is busy… very busy. With major priorities like cybersecurity, end user support, key applications support, new technology evaluations, moving to the cloud, COVID-19 response, and so on, IT simply doesn’t have the time and can’t afford the expertise it takes to stay on top of IT and telecom expenses. This task falls to the bottom of the list. Yes, this job is on someone’s task list — maybe a telecom billing clerk (primarily concerned with cost allocation), a telecom engineer (a technician by skill who can’t dedicate time to becoming a telecom billing expert), or an IT manager (who for the same reasons above, can’t do this job effectively or consistently over time).
2. Change — This comes in a variety of forms, for example:
- New technology gets implemented, but the old technology doesn’t get disconnected
- Your company moves a location to a new address, but the circuits/lines at the old address never get disconnected
- A telecom admin responsible for telecom billing leaves the company and the documentation to manage these expenses is lost. The replacement isn’t trained on telecom billing and doesn’t have the documentation, so never gains necessary expertise. So much of this skillset’s knowledge gets left behind
3. Invoices — Invoices are lengthy. They’re hard to read. They’re nondescript. That is, they often don’t have a clear description of what service you’re paying for or locations served. Knowing what to look out for takes experience and expertise.
4. Pricing — New technologies and alternative vendors appear in the market regularly. Customers get comfortable with current vendors and simply don’t have the time (see IT priorities) or expertise to shop for a better deal.
Ongoing IT & Telecom Cost Management Vs a One-Time Audit
I could go on and on with my list of reasons why companies should be able to save money on their IT and telecom costs, but let’s get to the crux of this article: the question of whether a company should employ ongoing cost management services or do periodic savings audits. Here are four reasons why you might want a professional to monitor your ongoing IT and telecom costs rather than just doing a one-time savings audit:
First, when you do a savings audit, you save money going forward… but you miss out on savings you could have had in the past. Some companies elect to do periodic savings audits every two to three years. In reality, that every two to three years ends up being every five to seven years, so significant savings is lost over the years.
Second, a one-time savings audit probably costs you more than ongoing cost management. That’s because for a one-time audit you’d normally pay a large one-time savings contingency fee; this would compare to the small monthly fee you’d spend on ongoing cost management to insure that you keep costs to a minimum each month. So, considering that you’d pay a large fee for a one-time audit and you don’t get savings back to the original point of possible savings, that alone might be reason enough to consider an ongoing cost management service. But let me continue with a few more thoughts.
Third, most vendors have a time limit for billing errors. If you’re an AT&T customer, for example, six months is typically the farthest you can go back to claim a credit for a billing error. If you’re only doing audits every two to three years (or longer), you won’t be able to go back and recover those billing credits… and that will add up for years!
Fourth, you’ll find a lot of value in the extra services that normally come along with an ongoing cost management relationship but that you wouldn’t get with a one-time audit. Here are a few examples:
- Contract Management/Tracking — Most ongoing providers include contract management as part of their service because it’s a natural part of the process of paying bills and looking for savings opportunities
- Inventory Management — In my previously noted articles, I’ve made it clear that a poor inventory management process leads to paying for unused services, and this can go unnoticed for years!
- Real-Time Market Analysis/Benchmarking — The market changes from time to time because of new technologies and new competitors, etc. If savings opportunities present themselves in the form of reduced pricing, a cost management provider can make the customer aware of these savings opportunities for immediate implementation
- Significantly Reduced Consulting Costs — OK, so now you have a company monitoring your invoices, inventory, and contracts that also knows the telecom market and alternative technologies. In other words, this provider knows most of what it needs to know to provide you with the help that you may need from time to time! This could come in handy should you ever be considering a new technology or new market competitor, for example, and you want some consulting assistance. Your provider would likely have experts or consultants who already see most, if not all, of your telecom and IT picture and so they would be positioned to help you make important decisions at a fraction of the cost (and time) it would take for a consultant to do the same but starting from scratch. This becomes a low-cost, high-return engagement.
In full disclosure, our company provides ongoing IT and telecom cost management services. But, given that it also provides one-time audits and consulting, I’m uniquely positioned to be able to share these observations with you. Now it’s up to you to determine what makes the most sense to help your organization reduce your costs in 2021 and beyond. Would that be ongoing cost management or a one-time savings audit? The choice is yours!
"SCTC Perspective" is written by members of the Society of Communications Technology Consultants, an international organization of independent information and communications technology professionals serving clients in all business sectors and government worldwide.
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