By Scott Johnson and Tiffany Brown
As inflation reaches new heights, the organizational imperative to reduce costs is growing. With an eye towards the future, forward-thinking executives will go beyond cost-cutting initiatives to rethinking spend. One area ripe for such a strategic approach is telecom.
You may already be using a telecom expense management (TEM) software-based solution to monitor expenses and manage payments. The TEM solution provides a worthwhile component to finance and IT organizations in order to track and manage communications expenses. But, is it enough?
The TEM value proposition is centered around improved back-office workflow and processes (invoice management to GL coding) that contribute to organizational savings. Some TEMs go beyond software and offer supporting services to deliver savings.
Where TEMs consistently fall short is capturing the opportunities for material and often neglected hard savings associated with supplier overbillings, network optimization, contract compliance, true benchmarking, and inventory accuracy.
Most supporting TEM audit-based services are not core competencies and largely focus on supplier rate negotiations and other low hanging fruit offerings. Maximizing savings requires a deep level of subject matter expertise backed by scalable processes. The gap that exists between what is addressable savings and TEM capabilities is magnified by the fact that seventy percent (70%) of telecom invoices contain errors and ninety percent (90%) of those errors are in the service provider’s favor.
The TEM and the Audit Function Should Be Viewed as Profit Centers for a Business.
If you use a TEM and you are not receiving a positive ROI, i.e., hard savings delivered exceed the cost of the TEM service, every year due to the identification, correction and recovery of service provider errors and benchmarking to your peers, then you have exposure, and it could be material.
If you believe that your internal team, or an external firm, has it under control, but do not see tangible savings related to audit, regulatory, and inventory issues year over year, then you have exposure, and it could be material.
“70% of telecom invoices contain errors; 90% of those errors are in the service provider’s favor .”
Many times, the root cause of missed savings can be traced to unmanaged data and a lack of historical audit capabilities. Unaudited inventory, based on invoice data maintained as the baseline, renders variance audits useless. What’s happening beneath the surface, that is consistently missed by TEMs, external, and internal business teams relates to:
- inaccurate charges for features and functions that do not apply to the service ordered,
- inaccurate surcharges, taxes, and fees,
- regulatory rulings that impact supplier billing practices,
- changes to contract terms,
- services that were migrated/cancelled/disconnected, but never removed from billing,
- services that could be migrated/cancelled/disconnected but no one realizes it,
- stranded physical assets,
- misapplied contract rates, terms, and conditions, and
- better available rates, terms, and conditions, and the list continues.
If you are not receiving the ongoing benefits of a strategic audit, bring in a partner to do a free assessment of your telecom environment and make sure to look for the following qualities.
- Audits that go beyond low-hanging fruit. Finding billing errors is table stakes. Look for a provider that can go deeper, auditing areas that others may not examine, including physical sites, surcharges, fees, and taxes. Ask for case studies, references, and how much they have actually saved their customers and how much savings they can continually drive.
- Automated solutions to provide speed and accuracy. Data normalization and auditing tools save time compared to tedious manual audits and incorporate past data and experience for continual improvements. Speed to savings should be a factor in the decision-making process. Look for a partner that has a proven track record of speed and best in class results.
- Service level agreements that guarantee a positive return on your investment. Telecom financial assurance services should never cost you a penny out of pocket. Ensure alignment of pricing, so that both parties are motivated to achieve the best outcome. Always remember, it’s about ensuring you’re getting the most out of every dollar spent while also returning dollars to you.