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How to Avoid the Top 4 Telecom Expense Management Difficulties

 As a result of inefficient processes used to manage telecom expenses, over 70% of SMBs are forfeiting opportunities to reduce these expenses by an average of 25%!

The Challenge: Your company is struggling to manage telecom and Internet service costs across multiple locations with multiple carriers.


The Solution: TEM. Telecom Expense Management is one of the most effective methods a Small/Medium Business (SMB) can use to potentially cut thousands of dollars in wasted voice, data and Internet expenses incurred from over-billing, inefficient spending and outmoded processes. Effective TEM decreases telecom spend, increases available funds for IT investment, and improves bottom line efficiency. Unfortunately, many organizations haven't taken this basic cost-cutting step that can significantly impact their business. This article outlines the most common TEM difficulties to avoid.



Defining Telecom Expense Management:


"Telecom Expense Management is the practice of managing the full cycle of telecom expenses from telecom invoices, usage, and cost allocation. By getting better control over your telecom expenses, you will reduce spending on telecom services and the operational costs associated with managing them."


SMB Hard Dollar Cost Savings via TEM:


• Decrease overall telecom spend.

• Increase available funds for IT investment.

• Improve the bottom line.


SMB Soft Dollar Cost Savings via TEM:


• Improve process efficiencies.

• Increase staff efficiencies.

• Increase telecom infrastructure visibility.


Telecom Expense Management provides direct financial advantages. Spending for voice, data, and Internet has not only become more complicated to manage, it has also grown to represent 3% - 4% of revenues. With proper TEM implementation, SMBs will see immediate savings as well as generate ongoing operational benefits that continue to pay off over the long run.


The Top 4 TEM Difficulties:


Most SMBs waste thousands of dollars annually by not managing their telecom spend in a standardized, centralized and more accurate manner. With continually changing inventory, complex billing for a wide range of services, and confusing contracts, TEM is complicated and hard to manage. But, with telecom and related network services accounting for nearly 4% of company revenue in many cases, this is too big a number and too important a service for you to manage manually or worse, not manage at all. Avoid the following TEM pitfalls:


1. Inaccurate Telecom Inventory


Lack of an accurate inventory is the biggest obstacle to managing telecom expenses. Telecom inventory is a moving target with frequent Move/Add/Change/Disconnect (MACD) activity that must be reconciled with actual billing. Often, service disconnect billing is not actually removed from invoices, causing overspending. There may also be errors in timing on a bill for when a service has been disconnected, added, or changed. Or, incorrect pricing may be applied to new services. Know your inventory and automatically validate it. Telecom expense inventory needs to be stored in one place, so that you have true process efficiency, expense validation, and reporting consistency. An accurate inventory provides the starting point for validating charges such as closed locations or facilities that have reduced services due to downsizing. This may seem like a daunting exercise at the beginning, but with a strong TEM solution in place, you won't have to do it manually.


2. Disconnected Telecom Data/Functional Groups


Different functional groups often do not understand how their telecom expense activities impact others. Procurement may negotiate contracts with the lowest priced provider, but billing or service may be poor. Groups that are responsible for validating charges may find they can achieve better results if they submit disputes before accounts payable pays the bill. There may be opportunities to partner with procurement to secure better results when the audit group negotiates large claims with carriers. Unify different functional groups involved with telecom including:


• Service Order Management/Move Add Change Disconnect

• Inventory Management and Change Control

• Invoice Management

• Expense Management (validation and optimization)

• Accounts Payable Bill Payment


By leveraging the organizations' entire volume of telecom spending, better results will be secured. For example, many enterprises underestimate what they spend with telecom service providers. An SMB/Enterprise that is able to leverage the full volume of its spending with a carrier is more likely to get better outcomes when disputing billing errors and able to use this leverage to obtain better rates when negotiating contracts. When data for a TEM program is centralized, organizations find that employees use it more frequently and it is more accurate. An integrated database also will help to drive better alignment among different functions with consistent reporting. It provides "one version," which sets a standard for getting groups to work together.


3. Labor Intensive Telecom Invoice Processing


SMBs and Enterprises may not be able to eliminate all of the bills that are received in paper format, but reducing the time spent on tactical labor intensive activities of processing paper invoices can be a big time saver. Streamlining manual paper bill processes with automated electronic billing also improves accuracy of the data that is entered into the system. It reduces the time to process invoices and payment approvals. This can eliminate late payment penalties and business disruptions that result from uncontrolled service disconnects. Most carriers offer electronic billing through EDI, CD ROM, or web downloads. An effective Telecom Expense Management solution provides invoice management that integrates electronic billing to simplify the process. Billing data is entered into a centralized repository that flags missing bills and streamlines labor intensive bill processing activities. Alternatively, organizations can outsource this function to a TEM provider and refocus internal staff on higher value activities.


4. Manual Telecom Invoice Validation


Billing errors occur because telecom services include some of the most complex charges of all invoices the enterprise receives. The charges include tangible assets (lines and circuits) with decentralized inventory spread over multiple locations and intangible services. Most organizations are manually validating thousands of line items for each telecom bill they receive. Or worse, no one validates expenses and errors are slipping by unnoticed. Error rates range from high volume, low dollar value invoices to more costly bills for data and inventory items. With cuts in personnel, technology changes, and changes in billing platforms, telecom carriers do not have the resources to validate billing. This has resulted in the need for organizations to proactively validate and resolve billing errors with their vendor. A good TEM Solution automates invoice validation to identify billing errors as they occur.


The Results: During transition, an effective TEM program categorizes your company's telecom inventory and the intended usage for each line or service. Some customers identified over 50 obsolete lines, resulting in annual savings of approximately $20,000. Additionally, the TEM program found lines that did not belong to the client and achieved annual savings of nearly $4,000 by disconnecting these services. Overall, a properly implemented Telecom Expense Management Program averages a 20-30% savings for the customer.


Conclusion: Managing telecom expenses is complex and challenging. An effective TEM solution can help you avoid the most common expense management pitfalls by centralizing inventory, improving visibility, streamlining invoice processing, automating invoice validation, and controlling spending.


For more information, please contact Indiana Telephone Company. We would love to start a conversation with you about the Telecom Expense Management programs we've created and implemented for many different types of businesses. Indiana Telephone Company is the trusted partner in TEM programs and services. For over 20 years, ITC has worked to streamline customers' telecom spending, without a retainer fee or "percentage of savings" charge.

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