Most enterprise IT shops deliver better network communications services than the business actually needs, according to Info-Tech Research Group. During today’s worsening recession, slashing network and telecom costs might be the key to significant costs savings without a significant impact on performance.
In a strong economy, IT leaders tend not to nitpick when negotiating their telecom and mobile service contracts, overspend on support and maintenance costs, and overlook important financial auditing processes regarding their telecom bills, according to Info-Tech’s report.
Mark Tauschek, senior research analyst with the London, Ont.-based consultancy, stressed the fact that cost savings are around when it comes to network and telecom expenses. IT just has to find the dead weight.
“Companies generally overpay for stuff and don’t even realize it,” he said. “They might be paying for services they don’t have to pay for, such as mobile phones that the carrier never bothered to cancel from their bill.”
Tauschek said that most corporate telecom bills contain financial errors, resulting anywhere from five to 35 per cent in overcharges. A regular financial audit on enterprise telecom bills will expose duplicate charges, maintenance fees for contracts no longer in use, and potentially hidden costs related to disconnected services.
A financial audit might also find sales tax charges in areas which might be tax-exempt, he added.
Recently, Forrester Research Inc. revealed its best practices for IT organizations looking to cut costs quickly. Paul Roehrig, a principal analyst with the firm, advised IT leaders to think about which technologies and service coverage they actually need and try to get rid of unnecessary spending. For example, rather than signing on with a gold-plated service level agreement, enterprises would be wise to scale back to silver and bronze services.
“If you’re asking for the highest levels of services from everyone across the enterprise, when the reality is that everybody can function well without that, you are wasting money,” he added.
In today’s climate, Forrester said, enterprises need flexibility from their service providers and vendors. IT leaders should not forgive vendors who don’t help them out when they need it most.
“It’s going to earn them some good will a year and a half from now,” Tauschek said in reference to the service providers.
This kind of thinking can also help IT leaders to renegotiate their telecom and service contracts, he added. On deals that are coming up for renewal, Tauschek advised companies to push for better short-term pricing and provisions for annual or semi-annual price reviews to ensure discount levels can stay consistent throughout the contract.
And with the exception of really large enterprises — which often have a lot of negotiating powers with the mobile carriers – most companies are overspending on corporate cell phones, Tauschek said. Organizations that are issuing BlackBerry or other smart phone devices have increasingly been forced to develop cost containment strategies for their rollouts and draft up formal policies documenting appropriate usage.
Info-Tech also estimated that about 80 per cent of workers in North America own a personal cell phone supported by a low-cost rate plan.
Companies that choose to reimburse employees for the actual minutes they use to conduct business can reduce both spending and management costs for IT, Tauschek said. He referred to this strategy as a growing practice among small and mid-sized enterprises (SMEs).
“You can typically get a better deal this way than going to the carriers,” he said. “You tell the user what kind of voice and data plan they can get and then cover those costs. If your employees want to spend more, they’ll have to pay for it.”
Other tips from Info-Tech include buying edge routers and switches from the secondary hardware market and replacing expensive T1 WAN links with lower cost ADSL connections.