Networking

Cost-saving strategies: Save on telecom costs

If you want the CEO to sit up and take notice, find a way for IT to save the company money. One way is to look outside IT for cost savings.


Description
Save on systems connectivity costs, including WAN circuits, T1-type services, and other telecom services used for remote office connectivity.

Category
Direct, Cost avoidance

Identifying
  • Prepare a physical report listing all of your data line, circuits, etc., in place for remote office connectivity. Include information that will help you evaluate the service for appropriate need later, such as location, bandwidth, and number of users at the location.
  • Conduct an inventory of all telecom expenses from your recent telecom carrier invoices. Telecom expenses can be as high as 1 to 2 percent of revenue or more depending on the makeup of your company. Office changes, growth by acquisition, and other issues can create situations where there is "low-hanging fruit" by inspecting what you're paying for.
  • Reconcile the invoice detail with the telecom connectivity inventory list created in the first step. That is, compare what you think you have with what you are getting charged for.

For large companies or even small ones with many offices, this is no small feat. So prepare yourself for an intense project or seek outside help from those who deal with telecom invoices for a living.

Quantifying
Total up the circuits/lines that are no longer in use or that can be eliminated. Measure this along with the savings potential you have by reducing the bandwidth of certain remote office services while still providing adequate response time.

Investment
Possible if you use an outside company to help.

Tips
A. Savings opportunity exists in:
  • Lines, circuits no longer used or needed
  • Ability to consolidate remote operation services
  • Ability to reduce bandwidth while maintaining acceptable processing speeds

B. High-growth companies with many offices often have dormant services in place or more capacity than needed in many locations.

C. If you aren't reconciling your data-related invoices, you're almost always overpaying.

D. There are many companies such as Profit Recovery Group (PRG) that focus on identifying and recovering costs for your company. One of the benefits is that PRG's pay is based on the results of the dollars recovered or saved. Its approach helps a company in three ways:
  • Analyzing past charges and recouping overpayments. This can be up to a year or more of overpayments and can be a tangible amount depending on your environment and company history.
  • Reviewing contracts and negotiating with vendors to establish appropriate-use contracts.
  • Evaluating your current telecom needs and recommending cost-effective solutions.

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