Introduction
The cost-saving capabilities of a telecom expense management (TEM) solution are well-established.
Telecom expense management covers a wide range of services. From systematically and continuously maximizing resource availability, to streamlining business processes and eradicating inefficiencies to optimize your telecom environment.
But while industry gurus are clear to spell out how telecom expense management generates revenue, very few offer a true estimation of how much you stand to save.
Until now.
The Challenge of Estimating Telecom Expense Management Cost Savings
Estimating telecom expense management cost savings is notoriously difficult. It relies on a range of variables, each with the capability to dramatically alter the final figure.
It's a bit like a bank account. Countless factors determine the ROI you can expect from TEM, including:
- The amount of money you invest
- Who you choose to bank with
- The length of your commitment
- Interest rates
- Any additional rates and fees
The same wide spectrum of dependent variables exists when attempting to calculate the cost-saving capabilities of a telecom expense management service. But by presenting these factors in a clear, digestible format, telecom expense management providers offer some much-needed clarity.
What Affects Telecom Expense Management Cost Savings?
Five key factors influence a telecom expense management solution's cost-saving potential:
- The size of your telecom estate
- The make-up of your telecom estate
- The telecom expense management service provider you choose
- The services your telecom expense management provider offers
- The global preparedness of your telecom expense management provider
These individual elements, while distinct, combine to positively or negatively impact the savings you can achieve.
1. The Size of Your Telecom Estate
The telecom estate is the total sum of all your telecom assets and services. This includes fixed lines, IT infrastructure, mobile devices, and the user-owned devices that form your Bring Your Own Device (BYOD) program.
Organizations with larger telecom estates often have more to gain from a telecom expense management program. The greater the number of assets in your estate, the greater the number of cost-saving opportunities.
2. The Make-Up of Your Telecom Estate
Optimization is another core variable. If your telecom estate has undergone a series of moves, adds, changes, or disconnects (MACDs) since the last telecom expense audit, then it’s likely to be complex and tangled.
The less optimized a telecom inventory, the greater the chance that you're spending too much. This could be due to billing errors, over-charges, or charges for unnecessary circuits.
3. The Telecom Expense Management Service Provider You Choose
Just as no two banks are the same, no two telecom expense management providers are born equal. While one vendor may deliver a fully-managed service with dedicated support, another may provide a software-subscription service and leave all the heavy lifting to you.
How much control you need over your services is, ultimately, your decision. But in terms of cost-savings, vendors who work as an extension of your team, to audit every line of every invoice and follow through with every cost-saving dispute, will help you generate significantly more savings.
4. The Services Offered by Your Telecom Expense Management Provider
Telecom expense management isn't a fixed construct. A telecom expense management service can be comprised of any number of separate elements, including:
- Invoice management
- Inventory management
- Procurement support
- Telecom expense auditing
- Dispute resolution
- Managed mobility services
- BYOD implementation support
- Business intelligence and reporting
The services and support your telecom expense management provider offers are key to calculating possible savings. Some vendors offer limited basic services and a choice of optional extras. Others include a far more comprehensive, end-to-end package as standard.
But as a rule of thumb, the greater the number of services dedicated to identifying opportunities for savings, the higher your telecom expense management cost savings will be.
5. The Global Preparedness of Your Telecom Expense Management Provider
The final factor that can impact telecom expense management's cost-saving capabilities is the global reach and availability of your provider. Many vendors claim to offer global support, but they're often unable to deliver the same service in multiple countries due to a lack of in-region resources.
This can be a real pain point and, ultimately, it can impact the effectiveness of your telecom expense management service.
A Detailed Analysis of Telecom Expense Management Cost Savings
By consulting these five key factors, it becomes easier to understand how telecom expense management programs generate savings. But, so far, we’ve only covered the initial cost-saving implications.
One of the key benefits of a telecom expense management program is that it continues to deliver savings year on year.
How Telecom Expense Management Generates Cost Savings Year-on-Year
Potential customers often worry about the long-term value of a telecom expense management program. They worry that 18 months post-implementation when they've realized all the big upfront savings, they'll see diminishing returns.
But, this shouldn't be the case. A telecom expense management service provides ongoing value that routinely exceeds its monthly fee. It does this by ensuring that:
- Your invoices are accurate and paid on time.
- You can apply cost allocations consistently each month.
- Your inventory is optimized and easy to manage and search.
- All spend information, vendor metrics, and specific invoices are stored in the system for easy retrieval.
When delivered effectively, telecom expense management improves telecom asset visibility, streamlines business processes, and simplifies the telecom environment to generate savings continuously.
This not only prevents errors and over-charges but also maximizes savings over the entire contract lifecycle. And this, in turn, generates savings year after year.
What Does Market Research Say?
To gain a more accurate estimate of the possible savings, including those that you accrue continually, it's sensible to review market research.
Focus on trusted, neutral sources. As a world-leading research and advisory firm, Gartner offers helpful, objective insight into multiple facets of the technology sector. Their goal is to provide businesses with the visibility they need to make more informed decisions.
In its Market Guide for Telecom Expense Management Services, 2021, Gartner suggests that global enterprises want competitive pricing and guaranteed savings from their telecom expense management services.
But while Gartner provides in-depth insight into the opportunities and challenges in the telecom expense management space, even it fails to provide an accurate method for predicting telecom expense management cost savings.
The closest we can get to is from the Enterprise Technology Management Association (ETMA).
In its Telecom Expense Management Justification report, ETMA breaks down the cost savings of a telecom expense management program into its constituent parts. This reveals that:
- Savings from refunds and credits for billing errors can equate to up to 15%.
- Reduction in future spending can total a maximum of 40% savings.
- Optimization activities can easily exceed 22%.
It must be said that much of this activity overlaps and savings of up to three-quarters of current telecom spend is unattainable. But it's not uncommon for a comprehensive telecom expense management program to reduce telecom expenses by as much as 25-40%. And this often translates into millions of dollars of annual spend.
How a Global Healthcare Provider Achieves Ongoing Telecom Savings
To help make this case, it’s prudent to refer to a real-life example. This case study outlines the telecom expense management cost savings that a global healthcare provider achieved over five years.
The Challenge
A healthcare provider with over 50 separate campuses sought to minimize and control its rapidly rising telecom costs without sacrificing patient care. The team turned to Cass to help them discover where they could make initial cost savings before retaining our services for additional savings opportunities.
The Solution
Cass took up the handling, analysis, and processing of the organization’s telecom invoices and inventory to maximize resource availability and optimize the telecom environment.
By processing over 15,000 telecom invoices every month to locate discrepancies, we were able to save the provider thousands of dollars every month. We then drill down even further to uncover billing charges of less than $5 and numerous $1.50 charges – small costs that most vendors ignore. And this enabled us to save the client even more.
In our experience, it's these small but recurrent overcharges, the marginal gains, that offer the greatest savings. Each one is seemingly insignificant in isolation. But viewed as a whole, the costs quickly mount up.
Key Results
In the fifth year of its relationship with Cass, the client realized annual telecom savings of 5%, equating to hundreds of thousands of dollars. Throughout our five-year relationship, we've delivered positive ROI and a total telecom expense management cost saving worth millions of dollars.
Cass processes over 15,000 telecom invoices every month, which are linked to over 75,000 telecom circuits.
How a County Council Generates Continuous Savings via Dispute Channels
Although global enterprises stand to benefit the most from telecom expense management, any business of any size can take advantage of streamlined processes and an optimized telecom environment.
Our second case study breaks down the telecom expense management cost savings one UK-based County Council achieved with Cass.
The Challenge
The client was experiencing marked growth in its telecom spend. In-house telecom teams were unable to control expenditure. And, with further increases likely, the client sought outside help to manage its estate of fixed and mobile assets.
The Solution
After choosing Cass, the County Council had the necessary resources to analyze incoming invoices, identify discrepancies, and dispute excess charges. By working as an extension of its team, the Council has realized cost savings totaling nearly $530,000.
Key Results
- Savings represent almost 30% of annual telecom spend.
- Claims and refunds from incorrect billing represent one-third of savings.
- Significant savings accrued long after the initial service.
Want to see how much you could save? Try our TEM savings calculator.
The Challenge of Estimating Telecom Expense Management Cost Savings
Telecom expense management's cost-saving capabilities depend on several factors, not least the size of your company and your choice of telecom expense management vendor. But with greater insight into the variables that dictate how much you can save, as well as some practical examples, you should have a better appreciation for telecom expense management's cost-saving capabilities.
Knowing whether a telecom expense management solution is a good fit for your organization is always difficult. But it isn’t impossible.
By understanding the variables puts you in a better position to have meaningful discussions with potential telecom expense management vendors. Working together, you can discover the best fit for your organization and the best way to maximize savings.
Gartner offers some additional advice to help you make the best decision for your enterprise.
Select a telecom expense management vendor to optimize IT and telecommunications costs by evaluating the potential hard and soft cost savings they can offer. Suggest asking vendors to pilot their telecom expense management solutions, in addition to supplying recent references of other organizations of the same size, geographic spread, and service mix they've worked with. This should cover both standard and additional services.
Finally, Gartner recommends assessing a prospective telecom expense management provider's ability to drive efficiencies at scale and in complex landscapes.
