Telecom Expense Management (TEM) programs are critical to gaining control over runaway operating expenses that can drive a firm out of business. Operating costs have two components: fixed costs and variable costs. Unlike variable costs, which are subject to change based on usage, a fixed cost does not change with an increase or decrease in staff, production or productivity. Fixed costs must be paid regardless of the company’s activity or its performance.
Unless an organization can maintain high growth rates, when a firm’s fixed costs rise too fast, they become unsustainable. When business eventually slows, the firm must cut its variable costs. Managers need to look out for wasteful spending, but expenses rarely come with clear warning labels. A TEM program will proactively reduce fixed and variable operating costs.
Four Areas to Reduce Operating Costs with TEM:
- Streamline labor-intensive processes.
- Expense validation.
- Optimization of telecom services.
- Chargeback and usage management.
Streamline labor-intensive processes.
For most enterprises, TEM is a labor-intensive process. A good program will automate record keeping and identify services that remain on the bill after the service has been disconnected. It will consolidate paper bills and shift to use of electronic media to streamline invoice processing. Manual processing of bills through the enterprise is replaced with an automated workflow where managers can view and approve bills online.
The range of services and difficult ways that charges are presented on telecom invoices make it nearly impossible for customers to identify errors. If the monthly charge looks close to what was charged the prior month, most organizations pay it. Often the bill contains the same billing errors each month; there is no sharp spike in the amount due to serve as an alert that it could have an error. This is why billing errors are missed and continue for many years.
Failure to invoice properly at contracted rates is common. After a new contract is negotiated, services often continue to be billed at higher rates. Sometimes rates are raised for enterprises that clearly have a contract that protects the price for several years. Also, a contract with several discounts may be implemented improperly with components that not included or other calculation errors.
Inventory offers another area for billing errors. Carriers billing systems may bill customers for services that have been disconnected. To identify these mistakes, enterprises need to maintain records of their disconnect requests and carrier activity.
Optimization of telecom services
Optimization of enterprises’ communications infrastructure and network expenses provide savings opportunities from comparing actual usage to service plans. Unused or underutilized lines and services can be disconnected. In addition, identification of services that do not have a contract or services that have uncompetitive contracts can help drive savings.
Charge-back and usage management
Allocation chargeback and reporting promote visibility and accountability for consumption of services. When employees become aware of how their use of services impacts the bottom line, it will change their behavior and reduce unnecessary expenses.
Effective TEM programs manage the full lifecycle of telecom expenses from ordering services to receipt of bills, expense validation, optimization, charge-back, to bill payment. They provide automation for manual labor-intensive processes; people with specialized knowledge of TEM to manage the program, and reports that offer valuable actionable insights to reduce operating costs. Finally, a added benefit comes from the ability to shift funds from the operations budget to fund special projects that drive