Tips for taming runaway telecom expenses

The ferociously competitive telecom sector offers a vast array of services — but is also spawning dysfunctional practices. Organizations are scrambling to keep up with bewildering rates, plans and gizmos as they upgrade their communications networks and equip their increasingly mobile workforces for their own business battles.

A lot of money is falling through the cracks. Enterprises lose 12 to 17 per cent of their telecom spend due to ineffective management, according to a recent Aberdeen Group report. Errors abound, particularly on the supplier side. “Accurate telecom billing is an oxymoron — the industry is by definition out of control,” says Larry Van Etten, senior manager of telecom expense management (TEM) at IKON Office Solutions, an integrated document management solutions provider based in Malvern, Pa. Over the course of four years, Van Etten wrestled down telecom expenses by 39 per cent, saving the company millions of dollars. “Carriers don’t fix a bill unless you tell them it’s wrong, so you need to be looking,” he says.

So where to look? Some telecom experts provide direction on the best nooks and crannies to sniff out savings.

Get yourself organized
“The first step is to identify all assets,” says Lisa Maerowitz, vice-president at ProfitLine Inc., a San Diego-based TEM outsourcer, pointing out that many clients say they don’t know where to start to tackle the issue or even know what they have. At IKON, Van Etten says his group inventoried every cell phone in the company and associated an employee ID with it, then did the same for landlines and network circuitry with location IDs.

Mobile is a particularly chaotic area. Many companies treat cell phones and other wireless devices as personal items, allowing employees to pick their own cell phones at local dealers and expense the charges. Pooling minutes, validating bills and analyzing telecom spend is very difficult in this scenario. Experts agree mobile devices should be managed as corporate assets.

Many companies don’t have cellular use policies in place with their human resources departments that specify employee responsibilities or allowable personal use, says Roberta Fox, senior partner at the Mount Albert, Ont.-based Fox Group, a telecom consultancy. This leaves the door open to potential problems with staff. For example, if someone makes a dubious $800.00 call to Timbuktu, the finance department can’t challenge the bill if there’s no policy governing overseas calls or the employee claims the call was work-related.

Contracts: Aggression counts
The endless plans, rates, tariffs and carriers to evaluate can be overwhelming. There are 1,200 different pricing plans provided by mobile carriers in Canada, according to a recent study conducted by the Fox Group. “Plans can be radically different across carriers even for the same customer segments,” says Fox. “You could be losing big bucks if you’re on the wrong plan.” Craig Sands, a Toronto-based executive director at Accenture, a global management consulting and outsourcing company, points out there are also regional disparities in eastern and western Canada. “There’s a tremendous difference between Bell, Telus, Rogers and so on.”

Fox says the study also found that carriers consistently don’t advise customers there are better plans available — so the only way to find out is to ask many, many questions. Experts are unanimous on this point. “If you’re on a three-year plan, ask what kind of better plan the carrier can put you on to keep you as a customer,” says Fox.

Businesses should review all contracts to find out when they end, as many have built-in renewals, warns Henry Dortmans, president of Angus Dortmans Associates Inc., a telecom consultancy based in Oakville, Ont. “We recommend companies go look at other providers a few months before they end,” he says. Fox says 2007 is a good year to review contracts, as the CRTC plans to introduce mobile phone number portability. “If you’re not happy with your carrier, you can move without changing phone numbers — this has been a big hindrance in the past.”

Networks: Look into the guts
In the rush to upgrade their networks, many companies have unused lines lurking in the background, quietly gobbling money. “Just in the passage of time and changes to the way businesses operate — for example, moving from modems to access the Internet — has resulted in unrequired lines,” says Michael Dunne, a senior consultant at Angus Dortmans. “These are sitting around unused in offices and may just be plugs in the wall, but companies are still being billed 45 bucks a month — ka-ching, ka-ching.” Sands recommends a network optimization review, as this problem may go beyond forgotten lines to network switches and backbones. “There’s circuitry that’s not being used or devices that only turn on for minutes a day,” he says, pointing out there may be better ways to handle the network traffic going through devices by consolidating or redeploying workloads to both maximize efficiency and reduce telecom costs.

Billing errors: Scrutinize with suspicion
The sheer complexity of telecom services generates significant numbers of billing errors. About 10 per cent of invoices contain errors, says Maerowitz: new rates not applied, billing for the wrong service, payments applied incorrectly, wrong quantities, and on and on. “For every page on a bill, there’s one error — that’s the mentality you need to adopt,” says Van Etten.

Changes in operations or services are key areas to check. “We found most of our savings in the set-up of new services,” says Van Etten. At the opposite end, disconnected services often result in billing errors, says Dortmans, pointing out that staff rarely check to see if the loop has been closed between a cancellation order and its removal from bills.

There is a larger disconnect. Finance people rarely understand telecom charges, but IT staff rarely look at the accounting, says Dortmans. “They should review this jointly by looking at the invoices, inventory and plans to make sure they all match. That’s a simple tip but few companies do this because it’s a lot of tedious work,” he says.

QuickLink: 076029

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