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The Case for Telecom Expense Management

With telecommunications services becoming increasingly complex to use and understand, and with multiple service and billing options, there is a strong case for enterprise, both medium to large businesses, to utilize telecom expense management services.  There are many factors at play driving the need for telecom expense management including:

  • Too many bills and/or bills are too large and complex to manage
  • Enterprise customers are constantly changing their telecommunications
  • Lack of coordination between the enterprise accounts payable department and departments utilizing telecommunications services
  • Enterprise is not adequately prepared to manage telecom expenses themselves
  • The stakes are high with large corporations telecommunications expenses representing $ MM and billing errors representing 5% to 15%

There are evolutionary stages in terms of how an enterprise will utilize telecom expense management services, which roughly followed the following progression: Internal Audit, Contingency Audit, Managed Solutions, and TEM Software

Internal Telecom Expense Management Audit

Even before an enterprise considers TEM services, they will usually first realize that they may have an issue with telecom expenses and conduct their own telecom audit.  While this is a good start, primarily because improvement starts with recognition of a problem, it is not a scalable solution, as enterprises are not equipped to manage telecom expenses.  This is due to many factors including the fact that they lack training and the tools for TEM.

Contingency Telecom Cost Auditing

The next stage in the evolution of TEM, after the enterprise realizes there is a need for telecom expense management, is to hire a TEM service provider company.  The quickest, easiest, and least resource impacting and risk free way to start with TEM is to engage in a contingency telecom expense audit.  In a contingency audit, the TEM service provider will search for billing errors, overcharges and other sources of telecom cost savings, billing for services on a contingency basis – if no savings are found, there is no charge.

In addition, the contingency fee basis typically includes upside for the TEM service provider by way of payment being a percentage of actual realized telecom cost savings, which can be up to 50%.  This can represent a lot for the enterprise customer to give up in terms of overall telecom cost savings, but a good way to get started to show the potential magnitude of savings and a good segue to the next step in TEM evolution – managed TEM solutions.

Managed Telecom Expense Management Solutions

In a managed TEM solution, the TEM service provider offers a completely outsourced solution based on an ASP model.  The enterprise customer will have the need for little or no software at their location as managed TEM solutions are often web-based, allowing access to information such as TEM reports, archived telecom invoices, etc.

Are all available through a standard web browser.  Managed TEM solutions have several advantages over contingency audits including the enterprise customer realizing a greater savings on a percentage basis of TEM service provider fees, the overall savings are greater over time, and everything is outsourced to the TEM service provider.

Telecom Expense Management Software

TEM software enables the enterprise customer to bring more telecom expense management in-house, which can provider further cost savings and control to the enterprise.  Many TEM service providers argue that there is never a reason for the enterprise to migrate away from the TEM ASP model based on total cost of ownership and to the extent that this may be true based on pure ROI analysis, the migration to TEM software becomes a control issue for the enterprise.

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