Telecommunications bills may seem =
like a=20
rather mundane part of an =
enterprise=E2=80=99s budget.=20
But, mundane or not, telecom expenses are =
a=20
noteworthy expense deserving of proper =
management.=20
In a November, 2006 report, research firm =
Aberdeen (
News=20
- Alert)=20
Group said that, on average, telecom and =
related=20
network services eat up 3.6 percent of =
enterprise=20
revenues.
That=E2=80=99s certainly nothing to =
sneeze at.
The report, =E2=80=9CThe Cost of =
Doing Nothing: The=20
Total Telecom Cost Management Benchmark =
Report,=E2=80=9D=20
is based on a survey conducted during =
September,=20
2006 of various sized enterprises and how =
telecom=20
expenses impact them.
Aberdeen also referenced previous =
research it=20
conducted for additional =
perspective.
The report examined in-depth how and =
when=20
enterprises engage in telecom expense =
management,=20
and the impact that management has on =
cutting=20
costs by, for example, eliminating billing =
errors.
It turns out that whether or not =
telecom=20
expenses are managed depends at least in =
part on=20
what type of telecom expenses are in =
question.=20
Aberdeen found that, on average, 67 =
percent of=20
enterprises proactively manage wireline =
expenses,=20
but only 57 percent apply similar =
oversight to=20
wireless costs.
Telecom cost management, or its =
absence, also=20
depends on the extent to which enterprises =
prioritize this as a cost-saving activity. =
Cream-of-the-crop =
enterprises=E2=80=94those Aberdeen=20
refers to as =E2=80=9Cbest in =
class=E2=80=9D=E2=80=94proactively manage 90=20
percent or more of their telecom =
expenses.
A lot can be at stake then telecom =
expense=20
management is not employed.
=E2=80=9CEnterprises forfeit 12 =
percent to 18=20
percent, if they do not have a proactive =
approach=20
to cost management that leverages =
technology and=20
process improvements through business =
process=20
outsourcing, hosted or licensed =
software,=E2=80=9D=20
Aberdeen said in the report.
A key element of telecom expense =
management=20
is the ability to pay invoices on or =
before their=20
due dates. Aberdeen uncovered a surprising =
figure=20
in the course of its research: 65 percent =
of=20
survey respondents said they incur payment =
penalties.
Late fees =E2=80=9Cmay seem =
insignificant at .5=20
percent to 2 percent, but the impact over =
several=20
months produce an average of 2.9 percent =
late=20
payment penalties,=E2=80=9D Abderdeen =
noted. =E2=80=9CThe=20
effective yield is higher if one considers =
the=20
compounding effect, redeploying these =
funds to=20
reduce corporate capital requirements or =
putting=20
the funds to work in an investment at =
today=E2=80=99s=20
interest rate of 5 percent.=E2=80=9D
Clearly, even a basic thing like =
paying bills=20
on time can have a big impact. Although =
telecom=20
expenses management can go far beyond the =
basics=20
in its ability to save enterprises money, =
focusing=20
on the basics is critical to getting=20
started.
Automating as many processes as =
possible is=20
also a key element of successful telecom =
expense=20
management. Aberdeen reported average =
labor cost=20
savings (after costs of the programs) of =
21=20
percent when enterprises use business =
process=20
outsourcing, and 31 percent savings when=20
invoice-processing software is used. =
Other methods for reducing expenses =
by=20
engaging in telecom expense management =
include=20
reverse auctions (average cost reduction =
of 33=20
percent) and service order management=20
software/outsourcing (average savings of =
12=20
percent).
Aberdeen found that, during the past =
20=20
years, the trend has one of deflating =
telecom=20
expenses, but those potential savings are =
offset=20
by ineffective cost management on the part =
of=20
enterprises, which generally find that =
their=20
spending on telecom services continues to =
rise.=20
This is true of traditional wireline =
services=20
and wireless; in the case of the latter, =
per=20
minute and unit cost per minute expenses =
are=20
decreasing but companies nonetheless see =
their=20
expenses going up.
=E2=80=9CEnterprises need to =
establish policies and=20
metrics to control these expenses as part =
of a=20
Total Telecom Cost Management (TTCM) =
program that=20
covers all telecommunications =
expenses,=E2=80=9D Aberdeen=20
advised.
The report further advises =
enterprises to=20
engage in telecom expense management by =
taking the=20
following specific actions, designed to =
achieve=20
=E2=80=9Creduction of telecom costs and =
process=20
improvements for reductions in labor =
expenses and=20
management of telecom =
expenses.=E2=80=9D
- Centralize procurement for all =
telecom=20
services with a single service order =
management=20
system=20
- Aggregate all telecom expenses using =
an=20
invoice-processing system=E2=80=94using =
business process=20
outsourcing, hosted, or licenses =
software=20
- Track specific telecom expense =
metrics, such=20
as monthly expenses from the supplier =
and=20
average expense per employee=20
- Use specific metrics to track labor =
costs=20
associated with telecom expense =
management, such=20
as service order management, and Move =
Add Change=20
Disconnect (MACD) management
When it comes to telecom expenses, =
Aberdeen=20
stressed in its report that any =
enterprises not=20
taking actions to manage expenses is =
losing=20
money.
=E2=80=9CThe cost of not acting is =
real,=E2=80=9D Aberdeen=20
emphasized in its report. =E2=80=9CEvery =
dollar brought=20
under management, drives savings to the =
bottom=20
line.=E2=80=9D
Complimentary =
copies of=20
Aberdeen's report are available for the =
next eight=20
weeks at www.aber=
deen.com/link/sponsor.asp?cid=3D3611.=20
Related =
Articles
-
What is TEM (Telecom =
Expense=20
Management)?
-
Solving Business Process =
Problems=20
with Telecom Expense =
Management
-
TEM Market Expected to =
Reach $1.5=20
Billion by 2010
-
The Telecom Invoice: =
Another Piece=20
of the TEM Pie
-
Telecom Expense =
Management: A=20
Primer
-
Telecom Revenue to Grow =
an Average=20
9 Percent Annually Until =
2009
-
Telecom Expense =
Management is All=20
About the =
Inventory
Mae Kowalke previously =
wrote for=20
Cleveland Magazine in Ohio and The =
Burlington Free=20
Press in Vermont. To see more of her =
articles,=20
please visit Mae Kowalke=E2=80=99s =
columnist=20
page. Also check out her Wireless Mobility=20
=
blog.
=
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