BlogTelecom Cost Reduction: The 4 Paths of Expense Management

Telecom Cost Reduction: The 4 Paths of Expense Management

December 22, 2016, Expense Management

Almost every enterprise faces a steep hill to climb as it relates to communication expenses – after all, it’s complex and can be overwhelming without the proper tools or support. Often, the promise of telecom cost reduction is how end users sell the program into the business. But to achieve this reduction, along with all the other benefits, there are a number of paths to consider.

The common term for addressing the expenses and achieving a reduction in spend related to telecommunications is TEM or telecom expense management. A solid TEM program allows enterprises to gain the visibility necessary to control costs and optimize their communications budget.

According to Gartner, there are over 300 TEM providers globally, so there’s no surprise that TEM takes many forms. This article distills it down to the four main approaches, or paths, for addressing telecom cost reduction as part of an overall program. From the most primitive to complex, anything you do to try to control and optimize expenses, inventory and services will produce benefits to your organization.

Let’s look at four paths to reduce telecom costs:

1. In-house, home grown – Creating your own approaches for controlling telecom costs is a start and certainly better than nothing at all. Companies can get a cursory view of their telecom landscape using home grown spreadsheets to track invoices, costs and vendors. If you have the discipline and resources to analyze your monthly invoices, you are certainly likely to uncover errors and inefficiencies.

The main advantage of running it all in-house is that there is a low barrier to entry. If you’ve got the people, in-house expertise and Excel, you can start. Some of the disadvantages are that you are re-inventing the wheel and dedicating valuable resources to a tedious non-strategic task. While this approach will work for a small business, the typical enterprise will often find that there are really too many vendors, monthly invoices, etc. to make a tangible impact. But again, it’s a start.

2. Software Only Approach – You can find software solutions designed to help you organize, track and automate processes related to telecom and wireless invoices as well as inventory and contracts. The advantages are that you’re using a proven approach which massively reduces time, errors and your ability to manage processes like MACD and chargeback. A turnkey, software-only approach is often appropriate for the organization that has in-house expertise, but is looking to streamline or minimize the impact in terms of hours spent on managing expenses each month. If used properly, you’ll have access to solid reporting and full control of the program.

3. Business Process Outsourced TEM – Instead of hiring an internal team of experts to manage expenses, many companies outsource the full program. This business process outsourcing (BPO) approach is the fastest way to ramp up a program and generate telecom cost reductions on voice, data and mobile services as well as infrastructure. By outsourcing your program, you will enhance productivity, reduce demands on your internal resources, and have more time to focus on activities core to your business. More often than not, vendors that provide BPO-only services have an army of auditors and some automated processes on the back-end to do that legwork. You may get monthly or quarterly reports. However, you often won’t have any sort of front-end to help you manage your program proactively. This option is often for the organization that wants to be totally hands off of managing the program. Typically, this organization doesn’t have any requirements for regular reporting or direct access to the communications data.

4. Hybrid Solution Combining BPO with Software Solutions – Many enterprise-size organizations opt for this approach. The combination of software and outsourced services provides the best of both worlds. You’ll have the external expertise and resources, but you’ll also have the control, transparency and added self-service functionality that comes with a good software solution. This gives organizations internal hands-on ownership over the parts of the solution they want to manage, while outsourcing the tasks that require complex programming or tedious processes.

No matter how you cut it, the primary goal of a TEM program starts with telecom cost reduction. However, with the right software solutions, BPO service, or combination of the two, you’ll quickly realize that you can do a whole lot more. You just have to decide which path is the right one for both your organization and your goals.

Want to learn more about the various types of solutions designed to help with telecom cost reduction? Check out this white paper designed to explain the difference between various solution types:  Cutting Through the Clutter: A CIO’s Guide to Telecom Management