Telecom expense management (TEM) is reported by Gartner to reduce costs by as much as 30%[i]. Savings that many TEM vendors seek to realise by changing suppliers. But while a new supplier may reduce call and data rates, supplier change brings with it transition costs, and may introduce new costs.
So, if moving services from one supplier isn’t always a cost reduction certainty, how else can businesses reduce costs through telecom expense management?
Cost foundation: Telecommunications inventory and spend analytics
Inventory management and analytics reduce costs by 5% – 15% of telecom expenses.[ii]
Any strategic decision making can only be made when data is accurate. Inventory management creates and maintains a telecom service and asset database. Containing information on active and unused services, fixed and mobile assets, and contract expiration dates.
Combining inventory with telecom invoices, and staff data, allows TEM analytics to identify initial cost reduction opportunities. Standard analytics reports identify excessive and out of policy spend, and unused and under-used services. Advanced TEM solutions allow service tagging. Meaning unutilised services supporting security or fire alarms aren’t wrongly disconnected.
Billing errors average 5% to 12% of telecom expenses[iii].
The maths within an invoice is rarely wrong. Billing systems are rigorously tested to make sure that bills add up. Invoice errors happen when a person setting up the contract or account in the suppliers billing system, keys in the wrong details. Typical invoice errors include contract rate differences, incorrect discounts, and invalid service fees.
TEM invoice validation runs checks on every invoice captured. The detail needed to do this is often not included in summary invoices emailed to customers. So, TEM solutions need to collect invoices from supplier portals to have enough data to check for bill errors.
Accounts payable automation reduces costs by $5 per invoice[iv].
Collection, categorisation, cost-allocation, and data input, are the tasks accounts payable teams must get right, every time, before an invoice is paid. TEM solutions automate this process to provide the AP team with an invoice file that has been had duplicate invoices removed and covers all suppliers. Making remittances simple. While allowing for future reconciliations in the event of payment dispute.
Invoice processing fees are often used as a reason to consolidate to a single service provider. But, vendor consolidation will typically mean that the lowest prices cannot be achieved with each service component. The outcome is likely to be a higher cost basket of services.
It’s not about change. It’s about cost reduction.
The core of TEM is delivering improvements on the status-quo rather than a sourcing sugar-hit (where there’s an estimated additional 5%-25%ii). Advanced TEM delivers savings with every invoice processed. Automating returns and making sure telecom billing is right.
This article was first published at Procurement & Supply
Bruce Macfarlane is the founder of Kansoly a source to pay telecom expense management and telecom cost reduction platform for business.
[iv] Aberdeen Group, Report ‘Reap the Benefits of Invoice Excellence with AP Automation‘ 2016