Three Ways to Cut Your Comms Costs
Whether you are a small corporate or a large enterprise or government, every few years you will have the task of going to market to negotiate a new contract for your telecommunication services.
Many organisations see this as an opportune time to negotiate a better rate with their current carrier by evaluating and benchmarking offers and rates from a selection of carriers. Due to the competitive landscape of the telecommunication industry, successfully negotiating a better rate than your current one is inevitable. However, the daunting task of carrier negotiations is quite lengthy, complex and almost impossible to compare apples with apples.
Organisations are easily convinced that the evaluation and negotiation with carriers may be better off outsourced. This involves the engagement of brokers, a benchmarking or strategic sourcing specialist to engage with carriers, run and evaluate tenders, and negotiate on their clients behalf. These types of services, like any external consultative engagement, are often quite expensive.
But how effective are they?
Is there anything else that should be done or considered?
The answer is yes. In addition to negotiating a better rate, there are other exercises which are equally important in reducing your overall telecommunication spend, which are quite often ignored.
This short article will explain the 3 necessary steps that every organisation, whether large or small, needs to do to maximise savings across their telecommunications spend. When followed carefully they can represent up to a 30% plus saving of your bottom line. The only step that involves the carrier is step 1. Steps 2 and 3 are controlled by your organisation.
Understanding your call profiles and usage analytics before you negotiate with carriers.
Every organisation uses their telecommunications services differently, and usage profiles varies significantly from organisation to organisation. Carriers will typically provide you a rate offer that may consist of a complex pricing matrix across all the various call types. i.e. voice rate, sms, mms, voicemail, data rates, etc., just to name a few. In fact, according to recent market offerings and analysis performed by Smartbill across 50 enterprises there was on average over 120 different call types, each with their own rate, across just mobile and fixed voice. Some of the rates are negotiated and some are standard (SFOA) pricing. To further confuse, add the additional complexities of shared plans, excess usage and included call options. It’s no wonder enterprises place carrier negotiations in the too-hard basket and decide to engage an external party to negotiate on their behalf.
The good news is there is a logical and cheaper way to approach this. Rather than outsourcing the whole process, just seek assistance in understanding your current usage. This will involve a simple call traffic profile extraction from historical billing. This process involves a line by line, duration by duration, extraction of all call types and their % contribution to the total bill. Once this call traffic is extracted, it will form the basis of analysing all the different carrier offers by simple projection of the new offer against your current unique call profile. This approach not only potentially reduces the cost of the exercise by up to 80% but also gives the reins of the negotiation back to you! Typical savings are between 5-15% of total annual spend.
Elimination of wastage and cost leakage through visibility, analysis and bill validation.
Most enterprises we talk to today seem to struggle to have a good handle on their telecommunications inventory and spend. Who has what service? In which cost centre do they belong? Are they being utilised? Are we exceeding our plans/ caps? Are we being billed correctly? These are questions that enterprises ask us every day. Due to the hereditary number of moves, adds and changes of telecommunications services in large organisations (especially Mobile MAC’s), the inventory management and cost allocation quickly becomes a mess. In addition, the implementation of new contract pricing, usually complex, results in an increased likelihood of billing errors. Implementing a telecommunications expense management system with integrated inventory, asset and cost centre management easily pays for itself when compared to the $$ wasted on excess charges, redundant services and billing errors. Neglecting inventory management and validation could result in cost blowouts in excess of 30%.
User behaviour – user policies and services optimisation
Telecommunications is vital for the running of any business no matter how big or small. Step 3 is all about how your staff use the telecommunications services, whether mobile, voice or data. Expensive international roaming or using the company’s telecommunications services for personal or inappropriate services needs to be managed and controlled. Such usage typically includes subscription based enhanced sms, directory services, and staff exploiting their mobile voice or data services through personal calls. A good start is to implement a mobile use policy for all staff who have a company-issued mobile service. However, an appropriated reporting tool is required to ensure staff stick to the policy. Best practice is to give individuals visibility and analysis of their spend and work through a number of best practice exception reporting tools from a good TEM system. The pressures of increased social media and multimedia has caused usage trends in mobility to constantly increase over the last 2-3 years. Based on research SmartBill has performed, it was identified that the average monthly mobile data requirement for most users in enterprises is between 500-600Mb for business use. So why are organisations haphazardly giving their users 3-5Gb per month? Some as high as 8Gb!
Services optimisation is another area where significant savings can be realised. Ensuring that plan adjustments happen every month or at least every quarter can result in surprisingly high savings, whether it’s upgrading or downgrading plans or simply understanding the most cost effective way of making a particular call type . Usage based consumption reporting from a good TEM reporting system is a good start.
SmartBill can assist in any or all of the above steps. Call us today for a free assessment of the savings potential for your organisation.