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Winning at Whack-a-Mole: a Two-Pronged Approach to Managing Telecom Costs

by Dave Muller

Pricing for telecom services is notoriously byzantine, convoluted and complex. As a result, customer organizations face the constant challenge of ensuring that invoices and charges are correct, and that they’re getting what they are paying for.

Technology Expense Management (TEM) capabilities can help address the task of overseeing billing and invoicing.   As a specific service that uses technology tools to aggregate invoice processing and review charges against usage, TEM provides value to an enterprise by reporting on monthly telecom expenses and identifying exceptions and invalid charges.  TEM is becoming increasingly important in today’s environment, as enterprises shift from terrestrial data networks to cloud- and IP-based services that include SIP, Ethernet and broadband access.  These transitions create additional changes in contracting and billing, driving even more confusion and opportunities for inaccurate carrier invoicing.

But ensuring that bills are accurate is only part of the challenge. The complexity of telecom pricing also makes it extremely difficult to gauge the competitiveness of an existing contract; indeed, carriers actively seek to obfuscate terms to gain an advantage at the negotiation table.  Keeping up with market changes, meanwhile, is increasingly important in today’s fast-paced market.  Intense competition among carriers, coupled with ongoing technology innovation, is driving down prices dramatically, so that a contract signed today immediately starts to lag behind the market.

On its own, therefore, a TEM capability – while providing accurate billing and expense reporting – does not ensure that pricing remains competitive. In words, under a TEM program alone, invoices six months post-contract may be accurate, but prices will be higher than top performers are paying.

To keep pace with market changes, periodic review and renegotiation of contract pricing against competitive standards is an imperative complement to ongoing audits of billing, invoicing and usage. Moreover, if working with a third party, the contract review and renegotiation function should be kept separate from on-going TEM services. The reason for this is that bundling the two presents a conflict of interest, as TEM providers typically charge for their services as a percentage of expense they review. As such, if contract pricing goes down, so does the TEM provider’s revenue.

Bottom line: telecom cost management is a constantly moving target. If you don’t stay on top of overseeing expenses and invoices, and if you’re not constantly evaluating contracts, you face a serious risk of falling behind.

About the author

Dave applies his 25 years of industry expertise to help enterprises optimize their network and IT services and drive significant operational expense savings in the process. Through establishing and maintaining deep, trusted-advisor relationships with clients, Dave and his team design, source, and implement custom, industry-leading network technology solutions.