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How to Manage Telecom Costs
Introduction
Aggressively
managing vendor costs is not a high priority for most companies; as their
primary focus tends to be on serving customers and building their business.
If the vendor costs are reasonable and stable and the service adds value,
most companies view vendors as “no brainers.” However, some simple things can be done to
greatly reduce telecom costs and show a high return. Every dollar saved is an
extra dollar in profits that can be re-invested in the business or returned
to the owners.
Why Telecom Costs?
Every
business has these costs; they’re substantial and can be dramatically
reduced.
Every
business needs to communicate with the outside world – this requires
internet connections, long distance calls, toll free numbers, conferencing,
T1s and PRIs, and good old fashioned phone lines.
Telecom costs often run to $1,000 per employee per year. With aggressive
management costs can fall to $500 per employee per year.
Opportunity Knocks Today
There are
many reasons why telecom costs can fall. Historically the big telecom
companies are expensive regulated monopolies with very reliable products but increasingly
poor customer service. This explains the fair number of billing errors. The
second big reason is that most companies don’t know the details of what
they’re paying for; primarily because their bills are unclear and there
are so many services. The last big reason why costs can fall is that there is
a lot more competition in certain types of services and businesses can take
advantage of de-regulation and competition to negotiate much better rates.
What Steps Do I Take?
To avoid
unnecessary expenses, most companies make sure their provider’s latest
bill is in line with the previous bill. To drastically bring costs down, one
needs to conduct periodic reviews. This can be done internally by the person
most knowledgeable about your company’s telecom needs or outsourced to
Berlin Pacific.
An in
depth review you can help you with questions like:
Am I:
- Buying excess capacity?
- Getting the best rates?
- Unclear about inventory?
- Wanting proof of savings?
Key Step List:
Inventory- The number one task is to create
an inventory of the services you’re paying for. Have a list of each
service, including how much it costs and what it is for. Have whoever is in
charge of telecom create this list.
Check
for Billing Errors– Check the cost of each service against the quotes you got
and contracts you signed.
Check
for Unused Services- Periodically evaluate your services. Lines that are no longer in use
are still billed to companies. Keeping on top of which of your current
services you need, can end up saving you a lot of money.
Negotiate
New Rates– With many commonly purchased services, rates have recently fallen
quite dramatically. It is possible to ask one’s account managers for
new deals, or use competitive quotes to get a new deal. Of course most
businesses don’t have the time to stay current on the latest pricing
and what can and can’t be negotiated, so outsourcing this can help.
Tracking–
It is
important to follow up with telecom vendors. They don’t always cancel services,
fix billing errors, give credits, or implement the contracts you’ve
negotiated. Keeping a file listing everything can help, and regular e-mails
or phone calls following up are important.
What Next?
Many
executives and decision making parties simply don’t have the time to
decipher vendor bills, create and review a thorough inventory, request
changes, and ensure their vendor implement their requests. If you can relate
to this feeling, it might be worth spending time to evaluate your organization’s
needs. Outsourcing this process may potentially be a good idea for your
company.
Anders Mikkelsen is the Managing Director for Berlin Pacific.
Berlin Pacific is a telecom efficiency consulting company that helps small
and medium sized businesses cut costs and improve business operations.
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