BlogROI for Telecom Expense Management: A Framework to Develop the Business Case

ROI for Telecom Expense Management: A Framework to Develop the Business Case

March 14, 2019, Expense Management

Updated March 2019.

ROI is More than Fixing Billing Errors

When challenged to provide a business case or justify the return on investment (ROI) of implementing Telecom Expense Management (TEM), IT and telecom executives often focus on hard dollar paybacks, such as refunds for billing errors. However, there are also a range of additional, often-overlooked benefits such as increased employee bandwidth, better performing mobile devices, and more. These can be harder to predict, since organizations typically have a difficult time quantifying or reporting on these gains. However, by taking a broader view, these additional gains can be estimated as well.

What Analysts Say About Telecom Expense Management ROI

Here are two different takes on how to estimate TEM ROI:

  1. AOTMP research shows that on average, fixed TEM programs generate 7.7% in annual savings and mobile programs achieve 9.4%.1
  2. The Enterprise Technology Expense Management Association (ETMA) reports that initial hard-dollar savings can be as high as 15%, while cost avoidance against future spend can drive that number upwards of 30%.

While the numbers from each analyst group vary slightly, it’s clear that organizations are realizing an ROI. The difference is likely caused by the respective variables each uses to calculate ROI for a telecom expense management implementation.

A More Complete ROI Framework for TEM

According to ETMA, tracking ROI and building a business case for a TEM program addresses changes across four main categories:

  1. Telecom Savings– resulting from fixing billing errors and reducing spend
  2. Labor Efficiencies– reallocating resources to higher IT functions thanks to automation, consolidation, and help desk resources
  3. Indirect Savings– resulting from improved policies, workflows, and decision making
  4. Security Compliance– enhancements and increased adherence to mobile policies resulting in decreased risks and costs associated with security breaches

ETMA has created a worksheet to help organizations create metrics that can illustrate the true possible savings within each of these categories.

Below is a summary of potential savings based on their report:

Savings Category Potential Savings
 
Spending less on telecom services
Recovery of refunds for billing errors 2% – 15% of expense
Cost avoidance by reducing future spending 5% – 30% of expense
Labor efficiencies
Automation, consolidation & helpdesk FTE re-allocation to high-priority initiatives
Indirect savings
Improved procurement policy, workflows and decision making 1% – 3% of expense
Security
Security enhancements, global compliance, application of mobile policy and accounting rules globally Likelihood of a breach X cost of lawsuit or penalties

TEMIA’s report, TEM, WEM and MMS Programs: Developing a Sustainable ROI, Cost Justification and Business Case, goes into deeper detail on how to align savings calculations with corporate policies, as well as provides practical approaches on how to realize these benefits. It also contains a worksheet to help you baseline where you are today, so you can best calculate your potential return on investment.

The full report can be downloaded here.

Freeing Up Employee Time

One of the foremost yet hard-to-measure benefits of a good TEM program is that it can free up employee time, allowing employees to shift from time-consuming and repetitive tasks to higher-value jobs and strategic initiatives. Typically after a TEM implementation, employees move on from tasks such as checking invoices to analyzing usage to find savings. Not only does moving into these more contextual roles allow employees to provide more value to the organization, it can provide career growth and new opportunities for the employee as well.

To help calculate labor savings, Blue Hill Research suggests:

“TEM as a managed service typically allows organizations to gain 1 FTE (Full-Time Equivalent) of labor for each 1,000 mobile devices or 2,000 circuits and land lines managed when help desk, invoice processing, line-item audits, service orders, payments, and billing disputes are considered.” 

When Do I Begin Seeing Savings?

With most TEM programs, returns on hard-dollar savings typically start right from the beginning of the engagement. Typically most of the optimizations and efficiencies will be discovered in the first year. However, when calculating the overall value, it’s important to take the length of the whole program into account. Gartner reports that “Cost optimization, coupled with business process transformation and growing resources in digitalization, is a key focus for many large and multinational corporations which often seek ROI within two to three years for net-new contracts on TEM deployments.” 2

The Cost of Delaying a Program

Don’t forget to consider the cost of not doing anything – or delaying a decision. When looking at ways to reduce telecommunications and IT expenses, there can be hard costs associated with not acting. Carrier contracts are increasingly limiting the allowable time for customers to file claims for refunds – that limit is typically six months for long distance services and two years for local billing. Also, telecom Service Provider Contracts are becoming increasingly stringent on the time allowed to file a claim for billing errors.

Ultimately, the cost justification process should focus on areas that add value for the organization. Cost avoidance savings are usually the primary part of justifying a program and evaluating its ongoing performance. Remember to consider the importance of labor efficiencies, indirect savings, and security considerations when making a business case for TEM.

The moral of this story is to move ahead on TEM initiatives. Build your case across the four areas to gain a truer sense of how your organization will be impacted. There are more dimensions to ROI than just lowering your telecom bills. That is a great start, but a successful TEM program can drive improvements across the organization in terms of improved decision making, productivity, security, and innovation.

To learn more about quantifying the benefits of a TEM program, download TEMIA’s report.

Additional Sources:

  1. AOTMP: Research Paper – Going Beyond Invoices and Expenses, September, 2015.
  2. Gartner: Research Paper – Competitive Landscape: Independent Telecom Expense Management Providers, 2016