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How can my company reduce telecom costs?

How can my company reduce telecom costs?

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Our experience has shown that approximately 90% of companies are overpaying by 30% or more for their telecom services. Most companies don't address this because they don't have the manpower to perform an analysis of their telecom costs. The solution is either to grit your teeth and do your own analysis, or work with an outside company that can help you or even perform it for you.

Here's what we look for when we do an analysis of telecom costs:

  • Old services that are not being used and never shut down: Surprisingly, this occurs in businesses of almost all sizes, though for different reasons:
    • Small companies: Telecom functionality is handled by the owner, who is otherwise focused.
    • Mid-sized companies: Most mid-sized companies reached that size through fairly rapid growth and have traveled a chaotic road to get there. As services are needed, they are often simply added and the increase in telecom costs is calculated as the cost of growth.
    • Large companies: Acquisitions are a huge culprit here. As companies merge, a large number of systems and services often become unnecessary. Many IT directors are faced with the overwhelming prospect of blending two or more disparate technology infrastructures without losing functionality. And an in-depth audit of telecom bills is simply not seen as an option from a time standpoint. If there is any doubt as to whether or not a company should keep a particular service, the default position is usually, "Better safe than sorry."
  • Billing errors: Although harder to find, there are frequently services that you did shut down but for which you are still being billed, or rates you were promised that aren't being delivered. The key here is documentation. The onus will be on you to prove your claim against the carrier.
  • Scams: We've all heard of "slamming" -- the unauthorized switching of a customer to a different long distance carrier. But there are a myriad of other scams available to the enterprising crook. One is the abuse of "third-party billing services" offered from your phone company. When you look at your bills, look for third-party billings. You might be shocked at what you find. Many times these charges can be easily terminated and even back-credited. Ask the carrier and the party for documentation that you agreed to this service and charge.
  • Out-of-term contracts: If you are month-to-month on your service contracts, so are your carriers. They may have raised rates and you might not know. At the very least, you are paying two- or three-year-old rates that are almost undoubtedly higher than newer rates.
  • Carrier/customer mismatch: Each service provider has its own strengths and weaknesses, and there are dozens of carriers who would be glad to compete for your business. How to choose one is another discussion for another time. But this is perhaps the most significant opportunity to reduce telecom costs.
  • Product/service mismatch: New products and services are being developed almost every day. The services you got two years ago may not be the best fit for you today. One of the most prominent examples of this, especially in the mid-market, is the dynamically allocated integrated voice and data circuits. Simply shifting your services to these can have a significant impact on the bottom line.
  • Internal usage problems: There are a million options here. One of the more popular red herrings among internal usage problems is employee abuse of systems. It's actually one of the least significant problems. Greater-impact issues include how systems are configured to utilize technology. One large call center, for example, discovered that by programming their switch to answer incoming calls in the third ring instead of the first ring, they could cut inbound usage enough to reduce telecom costs by tens of thousands of dollars every year. You can make sure that long distance calls go out on lines containing long-distance minute bundles, schedule non-imperative communications for times when usage is less expensive or look at how you are using teleconferencing minutes.

While this all may sound daunting -- indeed, that's why many companies do not analyze their telecom expenses -- performing a proper analysis and taking the appropriate steps to correct any problems it reveals can, and usually does, have a significant impact not only reducing your telecom costs, but also on boosting your bottom line productivity and profitability.

This was first published in January 2010

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