According to a report published by Research and Markets, the global telecom expense management market (TEM) is positioned to grow 14.2% over the next decade to reach approximately $5.62 billion by 2025. Companies are struggling to manage telecom expenses well, and they need help.
Here are the two questions I hear most often from executives tasked with reducing telecom costs:
(1) What can I do right now to cut telecom costs without risking outages and quality of service degradation?
(2) And where can I drive the most savings for the longest period of time with the least amount of effort?
To answer the first question, there are four primary tactics for optimizing a company’s existing telecom spend (WAN, mobile, VoIP, POTS, conferencing):
- 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’ve grown significantly or if you have satisfied your minimal annual revenue commitment (MARC), now is the time to re-optimize your carrier contracts! Average savings: 15 to 30%.
- 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. Average savings (when performed for the first time in a while, or immediately following carrier contract optimization): 10 to 25%.
- Compliance Monitoring: Invoice auditing to identify and remediate billing errors. In addition to adherence to contractual pricing, compliance monitoring also covers 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?). Average savings: 3 to 7%.
- Demand Management: The optimization of internal policies related to service usage and device management to deter rogue spending. This should be performed monthly. Average savings: 3 to 5%.
Now, to the second question – “Where can I drive the most savings?” Look at the average savings numbers above and the answer should be obvious.
To move the needle on savings – 25 to 50% in some cases – companies should focus first on carrier contract optimization and subscription/service optimization. That’s not to say they shouldn’t perform demand management and compliance monitoring; they should. But if time-to-savings and maximum ROI is a priority, certain activities should be prioritized!