The average enterprise spends roughly 4% of its revenue on telecommunications. A quarter of that spending often results from a combination of under-utilized inventory, uncontrolled purchasing, and billing errors or overpayments.
According to a recent Aberdeen study, 1% of a typical business's revenue is blown on costs that could be avoided or are errors. For a huge company, that can translate to millions of dollars a year.
There's a fairly new breed of software out there called telecom expense management (TEM), designed to curb overspending and find telecom billing errors before payment is sent. The goal of TEM is to allow enterprises to regain control of their telecom spending.
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There are literally dozens of TEM vendors now, including AnchorPoint, Asentinel, Invoice Insight, Market Data Services Ltd., MBG, QuickComm, Rivermine, Secure Path and Tangoe.
QuickComm makes software that can read and normalize invoices in one database and weigh them against the infrastructure. The bill is entered into the system and is checked for errors and deviations from contractual agreements, and is even scanned to determine whether all lines and devices being billed for are still in use. After the bill is scanned, users see either a red light, meaning there are problems, or a green light, meaning they can pay the bill, QuickComm CEO Mark Evans said.
For example, Evans said, one company that has several thousand cell phones deployed throughout the company ran QuickComm software and found there were 3,500 cell phones still being billed for that belonged to employees who had since moved on. The cell phone bills for former employees were costing upwards of $1 million a year. Evans said another company, a national bank with more than 1,000 branches, ran QuickComm and found that they were still paying for data and telecom services to five branches that had been closed for months.
Since most enterprise bills can be stacks of paper two feet tall, it's unrealistic to think that someone is manually combing through them to find errors and save a few dollars, Evans said. A typical Fortune 500 company spends $116 million per year on telecom, and it processes more than 15,000 invoices. There isn't enough manpower to effectively manage telecom expenses without automating and streamlining the process.
Evans said that the QuickComm system can link to ERP systems for payment or link back to Human Resources to check against employment records.
Software like QuickComm can be used in different ways. It can be on premises or hosted. If hosted, the user can access it through a Web portal.
"The CFO has always known the phone bill has been wrong," Evans said, "but what they're doing now is understanding they can do something about it."
According to recent research, 7% to 12% of all telecom service charges are due to error. This can lead to more than $8 million per year in overcharges for large enterprises. Many bills, as many as 85%, go unchecked.
Currently, the TEM space is taking in $240 million in annual revenue, and Gartner Inc. estimates that will increase 20% over the next four years.