The Delta Dental Plan of New Jersey was spending about US$6,600 a month on its cell phone bills.Richard Young, telecom specialist for the Parsippany, N.J.-based company, saw this and knew he definitely needed to reduce costs. To help, Young ordered a booklet entitled “Seven Steps to Wireless Spend Policies” by Toronto-based Avema Corp.
“There are a great many tips in there that we can look to implement,” Young said. One suggestion the booklet offered was for companies to master the art of negotiation with vendors. If done properly, the process can equal significant cost savings in the area of cell phone bills.
Roger Yang, CEO of Avema and author of the booklet, said companies that negotiate cell phone rates with vendors and implement appropriate spend policies experience cost savings of up to 70 per cent.
If not, he said, firms could be overspending as much as 70 per cent on their cell phone bills.
Young said one area where he has saved his company money was pooling employees’ cell phone minutes. By implementing that measure, the company reduced its cell phone costs to US$5,000 a month but is still looking for ways to save more.
Another tip offered centered around the consolidation of multiple vendors into one. But companies also need to renegotiate rates year after year in order to take advantage of consistent competitive pricing.
Also, service does not have to be compromised if going with one carrier. “If there is one vendor you like, then see if you can get the same kind of pricing from [a competitor],” said Yang.
However, Andrea Neumann, telecom manager for Merrill Corp. in St. Paul, Minn., said consolidation of carriers is not feasible for her company.
“Cell phones are such a personal decision and coverage [area] varies. Not all providers meet the needs of individuals,” said Neumann. The company currently has about 1,000 cell phones issued to employees.
Yang added that companies can negotiate as much as possible for better pricing, but since price can only go so far down, telecom managers need to look at reducing costs in other ways. One way, he said, would be for companies to establish a spend policy and a way to enforce it.
“In large companies, many of them have not been as aware of the costs as they should be. When you have 500 to 1,000 cell phones, it is difficult to monitor and enforce these policies unless [companies] have the software to do it in a more automated way,” Yang said.
As well, he said there should be policies on spending based on an employee’s job function and expected cell usage.
Yang cited a company in the United States that saved 30 per cent on its cell phone bills by implementing policies where employees would have to pay anything over and above what the set threshold was for cell phone use.
Neumann implemented a similar policy at Merrill, where employees have cell phone reimbursements capped at US$150 a month and are not reimbursed for any personal calls. She added that capping will give her employees incentive to shop for better plans.
“I [had] employees who abused the system using as [many minutes] as they can knowing they would be reimbursed for everything. I had one employee that had four cell phones and billing US$1,500 a month on those four phones,” she said.
Yang added personal calls on company cell phones have been the biggest area of unnecessary costs to a company. Workers may not think much about cost when they make a personal call on a company cell phone but to their employers it means paying 50 per cent more than they should be.
“Land lines are free and long distance has gotten so cheap. People don’t think about it anymore [but] those habits have transferred over to cell phones, which still cost a fair amount to use,” said Yang. He cited the example of one company in England that banned personal calls and saw a 75 per cent reduction to its cell phone bills.
However, even business calls can get expensive and employees need to decide if a call can be made on their office phone as opposed to their cell phone.
“I’ve seen people take cell phone calls at their desk when they are next to their land lines,” said Yang.
He also said manual administrative work done by employees in managing all of a company’s cell phones has also driven up costs of telecom bills.