Let's face it. Most of the telecom bills we receive every month are mountains of cryptic information that is not easily deciphered. In most cases, we do not have the time, expertise, or the resources to be able to accurately assess and granularly audit this billing information against our telecom services inventory, contractual terms and obligations set forth in our relationship with our many telecom service providers.
What are the consequences of this oversight? Consider these findings from a study by Aberdeen Group**, a leading TEM research company, on telecom expense management practices within large and medium sized organistions:
- 7% to 12% of telecom service charges are in error
- 85% of a typical enterprise's telecom bills are not audited internally and simply paid in full
- For bills that are validated, billing analysts most often examine only a subset of invoices associated with the largest spending.
It's clear that without any sort of formal process to manage and process bills within large to medium sized organisations, wastage and overspend will result.
What can be done? One of the first recommendations I typically make during my consulting engagements with clients who are looking to adopt TEM for the first time is to automate and streamline their current bill management practices.
What does this mean? Adopting TEM bill management best practices will look to centralise all bill processing activities for voice, data, and mobile invoices across the organisation. Centralising bill processing will mean the collection and aggregation of all service provider billing invoices with its associated data which will serve as the basis for bill audits, cost allocations, and consolidated reporting of expenditures within the enterprise. Leveraging the right technology or outsourcing partner to perform these tasks is key to a successful TEM bill management deployment.
Redeployment or reduction of staffing resources is another cost saving benefit resulting from the adoption of TEM bill management best practices. Since a large portion of the billing tasks such as bill acquisition and bill auditing are automated, staffing related to these tasks are typically redeployed to other duties within the organisation.
Ultimately, how much can you save by adopting TEM bill management best practices? I have found, based on past experience, that organisations achieve anywhere between 10%-15% in first year savings, 7%-10% in second year savings, and 3%-5% in on-going savings in subsequent years. These are hard savings that are quantifiable, but let's not forget the soft savings as well. By centralising the acquisition and storage of billing data, we eliminate the need to process information in different formats and from different tools and systems. We also streamline the billing process by compressing the time it takes to receive a bill to the point of payment through accounts payable. By shortening the billing process, we save on time and labour. Cost allocations are more granular since we capture all cost details and can associate these costs with the appropriate cost center. Finally, reporting in customisable formats and views can be achieved as a result of the single repository containing all billing data from every telecom service provider.
Adopting TEM bill management best practices is only the first step towards total telecom cost management within the organisation. Since TEM takes a holistic approach to managing telecom costs, other areas of consideration where wastage occurs is in inventory management, contract management, procurement, and improper sourcing strategies. The combined savings from each of these areas will generate significant savings in annual telecom expenditures and best of all, these savings will fall straight to the bottom line.
**Aberdeen Group, "The Total Telecom Cost Management Process Benchmark Report", Feb. 2006
Peter Hum is Principal Consultant at Eastcom Systems. Peter has been a leading pioneer in establishing the early stages of the Telecom Expense Management (TEM) market across Asia/Pacific for the past many years and has contributed his views on TEM in industry publications and at industry conferences. Peter can be reached here
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