Know What You've Got

How are companies getting a handle on their telecom expenses?
Know What You've Got

John Morton, president of business solutions, Enventis, Plymouth
The cost of telecommunications does not start and end with circuits. Companies should consider all the costs of business communications including voice and data circuits, phone systems, data networking gear, video and Web conferencing, equipment maintenance, and support. Typically, the cost of circuits is much lower than the costs of internal staffing to maintain these services.
Business communications have changed dramatically in the last five years. Most businesses have not fully taken advantage of voice and data convergence, and they have unnecessary complexity and cost from layering services and vendors over the years. Taking a fresh look at your communications infrastructure will uncover significant opportunities to save money and enhance productivity. Many small and midsized organizations are moving to managed services, where there isn’t a large capital expense and operational expenses are lower and easier to manage.
Understanding your telecom inventory, expenses, usage—and ultimately your telecom strategy—is important. We offer a service that discovers, tracks, monitors, and reports on IT assets. We can then run analysis on that data to understand if your company is in compliance with a variety of standards and regulatory requirements. Tracking assets over time, instead of running a fire drill at audit time or when a problem comes up, saves money.
There are new and innovative ways to buy telecom services today. Businesses should invite a few service providers in every year to get an update on technologies and learn how they can apply these to their advantage. For example, managed services and flexible IP pipes that handle all types of traffic can save companies serious money while providing enhanced functionality.
The benefits of outsourcing telecom expense management assume a certain level of network complexity, typically found with companies that have many sites, regardless of number of employees or revenues. In some ways, the need to outsource the expense management actually points to the need to reduce the network complexity first, which leads to a reduction in the network expenses as well.
There are two significant ways to reduce the complexity of your telecom infrastructure. First, reduce the number of vendors by consolidating your voice, data, and Internet traffic onto a flexible IP-based network. Second, integrate your internal voice and data systems onto a unified communications architecture.
Steve Wachter senior vice president, Integra Telecom in Minnesota, Bloomington
Telecommunications products and services offer a variety of economic benefits—from cutting travel expenses by opting for telephone or videoconferencing to reducing paper waste and toner use. And then there are the environmental benefits. Sun Microsystems reported that by telecommuting half the time, its employees saved 5,400 kilowatt hours and up to an additional $1,700 in gasoline and wear and tear costs per employee per year.
To hold down costs, companies must also manage telecom expenses and inventory. Oftentimes, companies are receiving invoices from a number of telecommunications providers and may be unaware of phone lines, voicemail boxes, and other circuits which aren’t actively used. Consolidating with a single provider can help maintain an active inventory and highlight any overlap.
Cutting-edge technology also helps businesses remain competitive in any economic environment. For instance, unified communications products integrate voicemail, fax, and e-mail into one central location. Dynamic T1 voice and data services automatically allocate bandwidth to where it’s needed most, enabling more transactions to take place in a given amount of time.
Businesses are focused more than ever on ways to reduce costs and increase efficiencies and synergies. Telecommunications can help businesses achieve these goals.
Doug Carolus, senior consultant and director, N’compass Solutions, Inc., Minneapolis
How do you manage telecom costs? You can’t manage what you don’t know.
Having a deep understanding of all current technology and associated operating expenses is an important first step. Explicitly knowing the staff resources and related labor costs needed to appropriately support the existing (and future) technologies is also critical.
To control costs, middle and senior management must manage vendor relationships. (Do you have a good partner who is offering competitive prices?) These managers also need to understand details such as service usage rates (e.g., cost per minute), comparable industry rates (benchmarks), and existing service contract terms and conditions. (Do you have early termination penalties that may limit your ability to make change?)
Finally, don’t assume that the current vendor bills and rates are correct. An audit of vendor invoices may reveal significant cost savings and credits.
These may be challenging economic times, but if you have older technology or service contracts that need to be replaced or upgraded, there is no better time than now to buy new technology and services.
It is a rare organization that really understands what they have in terms of telecom inventory and the related costs. For example, I’m currently working with an out-of-state client that spends $1.5 million annually on cellular services. They have no clear idea how many phones are in use or the plans or contracts currently in place. No one has ever managed these critical services—accounting staff has just kept paying the bills every month. A preliminary “pre-audit” estimate suggests they will save 15 to 20 percent per year just negotiating a new contract with a lower cost per minute.
To get a handle on expenses, companies must establish technology platform “owners” who have overall responsibility for the specific technology and the attendant costs. The owner has to be ultimately accountable for understanding their technology infrastructure and:
• Creating and enforcing policies and standards
• Developing strategic plans
• Managing vendor relationships and contracting
• Providing support services
• Developing and managing capital and operating budgets
Not an easy job but absolutely necessary to control and reduce expenses.
Marc Agar, president, CA Communications, Inc., Wayzata
To effectively manage telecom costs, figure out what you have; this would include finding contracts to determine length and pricing, documenting equipment at all of your sites, finding out what equipment is under warranty, if you have any special service agreements in place with vendors, and checking your bills to see if what you are paying each month measures up to what was promised on your contract.
What makes telecom bills complex is that most customers don’t have an understanding of what they have for services and products. It is difficult for them to verify they are being billed the correct amount.
I would suggest bringing in a telecom expert first to help you gather this information. Then the expert can make recommendations to either upgrade to a better, faster, and less expensive product, disconnect circuits or lines that you are no longer using, establish a system to track all of your telecom assets, and lastly to negotiate on your behalf with the carriers to get you the best terms, pricing, and service agreements. For example, we provide many of our clients with a Web portal that allows them to track all of their telecom assets; local, long distance, data and Internet circuits, phone systems, routers, servers, etcetera.
Voice and data networks are converging and wireless is ubiquitous, which makes security and data backups critical components to staying in business. Most of these things can be outsourced, but depending on the complexity of your set up, some things may be better managed in house.