Telecom Expense Management Program Cost Justification ROI

Integrated Telecom Management, and Telecom Expense Management (TEM) programs produce savings from three main areas.

Cost justification of a TEM program will flow from three main areas.

  • Reductions in spending on telecom services
  • Labor efficiencies
  • Indirect savings

Savings from Reductions in Spending on Telecom Services

Telecom bills are likely to have billing errors due to errors in how contracts and special pricing arrangements are applied to bills. In addition, mistakes in how Move, Add, Change Disconnect (MACD) activity is captured and reflected on a phone bill can lead to overcharges.

Between 4 and 80 different telecom carrier employees can get involved in MACD activity. These people must assign the correct contract, tariff or other special pricing to the service that was ordered. In some cases, services are not connected properly from the carrier’s network to the customer’s equipment. Carrier personnel may inadvertently disconnect services when they work on other orders. In other cases, after fulfilling a disconnect request, assets may remain on bills. With each hand-off, there can be errors in what was entered and how it is implemented.

Savings also come from cost avoidance and reductions in future spending. This will include negotiation of lower rates and better contracts. With fixed services there are savings from elimination of unused services, and grooming of existing services to higher capacity offerings at lower cost. For example, replacing six or eight T1 lines with a single T3 line is more competitive. A T3 line is equivalent to 28 T1 lines. Identification of services with no contracts can save money as well. Elimination of late payment penalties and service disruptions for late payments, nonpayment, or lost bills can also provide savings. Optimization of wireless services will match consumption of voice and data to optimal service plans that avoid overage charges or paying for a plan with large allotments of voice minutes and data services that are not used.

Savings from Labor Efficiencies

Organizations also find savings from automating manual processes or outsourcing to a provider that can perform work at a lower cost. This can include consolidation of invoices to reduce the volume of payments, automating invoice processing and outsourcing of procurement, inventory management, automating invoice management and validation and usage charge-back reporting.

Indirect savings

Savings from indirect areas may be difficult to quantify, but it is worth noting. This savings category can include unifying processes and improving collaboration, consistent application of procurement policies to drive volume discounts, better information for improved contract negotiation and sourcing decisions, freeing working capital, and redirecting staff to focus on income producing projects and areas where they add more value.

Conclusion

Most organizations have telecom networks that reflect an accumulation of legacy technology with services that are no longer used, unnecessary expenses and items that contain billing errors. Automating manual labor intensive processes, savings from cost avoidance, refunds of carrier billing errors, credits and benefits from indirect savings add up quickly.

One final critical thing to note is that inaction will lead to forfeiture of savings. The Statute of Limitations for filing a billing claim is six years for local billing and two years for long distance issues in most states. This means each month of inaction leads to claims and issues that are lost forever. In addition, telecom service providers now have aggressively insert contract provisions that limit the time that customers can file refund claims to six months. Timely action is more critical than ever to secure your savings through telecom expense management.