Practical tips for cutting telecom costs

Tight times require fiscal austerity. Here's how to limit your telecom spend without sacrificing service

On the site this week you'll find a story that offers some practical ways to lower IT expenditures by both purchasing and selling used IT hardware. I thought I'd use this blog post to continue the theme of cost reduction by offering some additional ideas in reducing telecom costs.

One tactic I now use at home after I noticed that I was paying over $30 a month for information calls is Google's 411 service, Goog-411. Simply dial 1-800-GOOG-411 (1-800-466-4411). If employees are on a mobile, they can get more details about a listing by saying, "map it" or "text message." The best part is listening to the human voice that makes noises like a telephone exchange while you wait for the number.

[ For more on IT cost-cutting measures, see "16 ways IT can do less with less." ]

Of course, if you're looking to save enterprise-class cash on your telco service, you'll have to go well beyond instituting a new 411 policy.

Getting better deals from your telco

Asking employees to limit the length of calls on mobile phones is one way to save on service, but there is a better solution. I spoke with Al Subbloie, CEO of Tangoe, a software and services company that manages fixed and mobile communications, about this.

Many carriers offer "corporate liable" deals that give the company centralized billing. It's called "corporate liable" because the company is liable rather than the individual. This is ideal if you are encouraging employees to use their own smartphones for business in order to cut down on the expense of purchasing a device.

The centralized bill from the carrier puts all the individual users in one place so that you can deal with, say, 10,000 users, pushing that bill back to the individual.

A subset of corporate liable is pooling, in which you purchase a pool of minutes from which everybody draws. In this scenario, the overages of certain people pay for the underages of others. Subbloie recommends that you figure in a 10 percent variance that the pool will smooth out.

Subbloie gives the next tactic a real high-tech name: zero-use device analysis. When employees leave a company, too often nobody turns off their plan. Bills keep showing up and accounts payable keeps paying. This tactic aims to fix. A variant, on the fixed side especially, is to inventory your telecom service, taking into account offices already shut down.

One brokerage firm that shall go unnamed, saved $3 million in a single year by turning off 3,000 unused plans.

Investing to save on telecom expenses

If you want to get into more serious savings, you'll have to pay for it, of course. However, it may be worth it. On average, about 50 percent of telecom bills have an error that accounts for 3 to 5 percent of the total value of the overall telecom spend.

A TEM (telecom expense management) service will check your bills, manage your inventory, automate contracts and billing, and integrate with accounting. What was once packaged software, TEM is now more than likely to be SaaS, with a fee of about 1 to 2 percent of the telecom spend.

So for an enterprise that is spending $20 million on telecom, TEM will cost $200,000 to $300,000 as a service. If the numbers work out as Subbloie says, then you're ROI is at a minimum $300,000.

On the mobile side, TEM is usually priced on a per-device, per-month basis, with an annual fee and a three-year contract. At least that's how Tangoe does it.

Bandwidth management is another area ripe for improvement. What typically happens is a company pays for T1, and as soon as employees start complaining about performance, the company buys a second line instead of investigating whether folks are eating up bandwidth streaming video and surfing social media, rather than working.

There may be a thin line between being cheap and being frugal, but in these times, there's an even thinner line between being in business and going out of business.

Recommended
Join the discussion
Be the first to comment on this article. Our Commenting Policies