The Telecom Problem
Most CIO’s and IT leaders do not look forward to negotiating their new telecom contract for long-distance communication, voice, data, and networking services. It’s already a complicated area but to have to figure out and compare pricing and which offers the best deal on VoIP and even MPLS sounds like a nightmare.
To make matters worse, the telecom/telecommunication expenses has never been so hectic with deregulation in networking services at impulsive rates. According to the Aberdeen Group, average Fortune 500 Companies spend over $100 million dollars each year on telecom services and around $26 million for mid-market businesses. Additionally, up to 18 percent of telecom invoices are erroneous and $8 million dollars a year are lost profits due to those errors.
Needle in a Haystack
The Aberdeen Group also says the average mid-market enterprise processes 3k telecom bills each year and for Fortune 500 businesses process about 15k telecom bills annually. The average costs to process each invoice ranges from $9- $15 without auditing for errors, totaling $27k to $135k a year depending on the size of the company. Gartner estimates up to 14 percent of telecom charges are in error in regards to expense management. Using these conservative numbers, think needle in a haystack! Getting vendors to reimburse you is laborious and plus, if you can’t find the billing error within a certain time frame (usually 3 months), you’ll never see that money again.
Engage in Third-Party Experts
Knowing all of this data now, wouldn’t it make sense for these CIO’s and IT managers to consider talking with a third party expert to determine how much telecom rates should be while negotiating fair deals with several network providers in conjunction with auditing invoices on a monthly basis to catch errors and request refunds in a timely manner? RadiusPoint© is an expert in the telecom, wireless and utility expense management arena with over 27 years of experience. Typically, Telecom contracts alone can contain hundreds of pages with obscure terminology and restrictions, having one platform like ExpenseLogic™ to view the contracts along with an expert to riddle the language and notify you of upcoming expirations and possibly negotiate rates is incredibly efficient. To add to this, filtering through hundreds of line-item details on invoices to ensure accuracy is just plain time-consuming. Using this one platform to view all data allows for easy tracking and accountability for all errors.
Be Cautious & Stay Aware
However, when outsourcing any service, there certain hazards to be aware of. Some TEM vendors come with the promise of certain savings and do not follow through or use a contingency-based model where you only pay for if an error is found. This may have a nice ring to it but can quickly go sour due to the simple fact that vendor errors are inevitable and usually come at a high cost. Take our recent half a million dollar refund we got our client back as an example. Imagine having to pay a percentage of this, not knowing what the next month will be. Our goal is to be completely transparent and offer a lower monthly cost option with no hidden or surprise fees ever while continuing to audit and find savings every month.
The best idea is to first ask yourself what is the specific telecom or utility problem and then craft an RFP around those deliverables. Researching and ensuring the vendor can realistically fulfill your needs is priority 1 but also ask for client references and compare pricing/service offerings. Aside from finding a good TEM partner, technology is constantly evolving so staying up to date with bandwidth, security and other business intelligence trends is imperative. Make sure to choose a vendor who can prove their capabilities and show how they are consistently remaining cutting edge in expense managemenet. No matter what, carriers are going to play a large role in all CIO’s and IT manager’s futures. Figure out the best strategy that fits your business model and maximizes infrastructure capabilities. Success will ultimately depend on one simple question: are vendors managing you, or are you managing the vendors?