Working out telecom spend is first step to managing costs

How many organisations really know what they are spending‾ And can your organisation answer the fundamental questions regarding its telecom costs‾

Telecom services account for a significant proportion of the operating costs of any large enterprise - and for many are a top five expense.  Organisations often find it hard to establish the precise costs due to the complexity of their estate. This inability to identify the sources of cost allows duplications, errors and inefficiencies to creep in, affecting the bottom line.

Most enterprises rely on a tangle of spreadsheets, piecemeal processes and patchwork applications to manage their telecoms estate - an inefficient and costly process. The greatest challenge remains complexity: numerous carriers, hundreds of devices and circuits, and thousands of invoices. What is needed is a unified toolkit to capture and organise all the information and get control of costs.

So how do organisations work out how to recover revenue‾ Reviewing telecom services, related costs and issues goes some way to helping. Understanding and tackling the issues that influence telecoms costs - such as circuit inventory and access costs - is essential to ensure that resources are used efficiently and the business does not continue to incur unnecessary expenditure.

But how many organisations really know what they are spending‾ And can your organisation answer the following fundamental questions with any degree of accuracy‾

    - What are we being billed for‾
    - Do our invoices match our actual inventory‾
    - Are there less expensive suppliers in the market‾
    - Are we negotiating the best contracts for our business requirements‾
    - Where are all of our telecom assets‾
    - Are we paying for circuits we are not using‾
    - How can we optimise network performance‾
    - Should we migrate to more cost-effective technologies‾
    - Are we getting the best value from our telecom investment‾

In our experience, the answer from most organisations would be "˜probably not'.

There are a number of issues that lead to cost inefficiencies. For example, the lack of a single system for managing circuits across the business, a lack of transparency from suppliers, and poor cost allocation where multiple systems interface with a single circuit. This lack of control can lead to inadequate budgeting and poor financial performance monitoring.

Managing your telecom access costs effectively means tackling these issues in a positive and innovative way. Taking a strategic approach and introducing better processes, rather than fire-fighting (or worse, sweeping the issue under the carpet and hoping it will go away), operational managers can get ahead of the game and reduce this risk to the business.

Garry Metcalf, manager, Analysys Mason