Calculating the Benefits of TEM

Blog, TEM Telesoft

Virtually all firms need to create a business case for Telecom Expense Management (TEM) that defines the challenges, solution options, and clearly articulates the return on investment (ROI) for the proposed approach.

A good business case also needs to capture benefits, which may be both financial and non-financial. TEM program benefits typically fall into four categories: telecom services spend reductions, operational gains, improved security and indirect savings.

Here we’ll look at each category more closely to help you better frame your case and get your closer to delivering savings for your organization.

Telecom Services Spend Reductions

Savings in this category come, in part, from billing errors and optimization of services. For example, if historical records are good, enterprises can usually find between 1% and 15% of their total spend in billing errors (on provider bills) in need of resolution and refunds. In addition, we’ve seen the more accurate and detailed service order activity records are, the more substantial the refunds are from reconciliation of move, add, change and disconnect (MACD) activity not captured on invoices.

In terms of optimization of services, a “traffic study” can drive future savings by identifying a variety of services that overlap or are no longer needed. Simple paperwork changes to existing services, grooming of circuits (e.g., T-1s to higher capacity DS-3, OC3, OC12 circuits etc…) can also lower overall costs. Even asking for competitive quotes before placing orders can help organizations save money. Finally, employing an expense “chargeback” strategy will ensure increased accountability as the people & departments consuming services see the impact of their behavior on their budgets. In our experience, organizations are typically able to cut future spending with cost avoidance techniques like these and save 5-25% (based on environment status).

Operational Gains

Firms can gain access to exceptional capabilities with TEM specialists. These specialists will have in-depth telecom billing expertise and know how to find billing errors, as well as, other opportunities for cost savings. In addition, to the technology and dedicated expertise, organizations that partner with an experienced TEM provider for their program will have access to limitless best practices, standards and benchmarks to help you achieve more, faster.

In addition, labor efficiencies gained from automating manual processes or outsourcing including, but not limited to, automation of procurement, inventory management, invoice management, and validation mean your most valued resources can be reassigned to income producing projects as applicable, make smarter decisions and better influence business outcomes.

Improved Security

Of course the security savings benefits depend on the likelihood and cost of a breach to your enterprise; however,
TEM programs provide controls to monitor compliance to mobile policy. At a very basic level, this means only eligible employees with corporate devices are able to access the network, maximizing your control and minimizing your exposure.

Indirect Savings

Unifying disparate processes, improving collaboration and enabling more informed decision-making (as mentioned above) can equate to an indirect savings of between 1 and 5% of expenses based on our experience.

Other examples of significant, indirect savings organizations can achieve with TEM include:

  • Consistent application of procurement policies leads to volume discounts where orders are placed with “preferred service providers” to fully leverage savings opportunities.
  • TEM reports provide better information for improved decisions. In some cases, organizations are able to avoid MARC penalties by switching business to a provider where a penalty could be imposed for failing to meet a MARC. In other cases, organizations may find that a provider appears to offer lower prices, but delays in activating or disconnecting services may cancel out any gains from lower prices.

Measuring the Benefits

Ultimately, savings from each of these categories is dependent on how things were managed before the program was implemented, contracts in place, historical records and the enterprise network. For example, if there were few controls in place before the program was implemented, savings will run higher. If existing contracts limit how far back a claim can be filed or your records are incomplete, refunds will likely be smaller. Incomplete records and contracts can limit an enterprises’ ability to recover refunds for long-standing billing errors; however, these missed savings opportunities can often transfer to cost avoidance on future spending.

Developing a persuasive business case with accurate, compelling ROI will take some time and research. Fortunately, there are many rich target areas that can contribute to savings to help cost justify a TEM program.