Marginal Gains: The Secret Telecom Cost Saving Strategy

23 September 2021 | Posted by Don Kiernan

A $10 saving on a line rental contract might not seem like much, but when your annual telecoms bills are in the tens of millions, tiny changes add up to huge savings.

There’s a time and a place for transformative change, but in a world of monthly billing cycles, 1% improvements are more achievable and compound into huge effects.

The concept of marginal gains isn’t new – we see it in everything from baseball to car manufacturing – but in its modern form it was championed by Sir David Brailsford, director of British Cycling.

He explained the concept of marginal gains back in 2012: “The whole principle came from the idea that if you broke down everything you could think of that goes into riding a bike and then improved it by 1%, you will get a significant increase when you put them all together.”

The idea of marginal gains has impacted the business world as a tactic for improving processes. And it’s this philosophy that’s the secret weapon in telecoms expense management. All you need to do is find those tiny areas of improvement and replicate them across your billing environment.

How to Find Savings in Your Telecoms Bill

Understand Your Bills

CFOs don’t have the time to look at every single line rental contract, SaaS subscription, and cell phone renewal.

Volume notwithstanding, providers seem to go out of their way to obfuscate charges to keep billing complex. But understanding your bills allows you to know where to consolidate, renegotiate, and optimize your payments.

Telecom bills can be broken down into different categories which reveal the extent of what a company pays for:

  • Monthly recurring charges (MRC)
  • Non-recurring charges (NRC)

Both of these elements can be interrogated and optimized to reduce monthly costs.

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Undertake a Telecom Expense Audit

Organizing your billing records, contracts, tariffs and inventories by location gives you complete visibility over your telecoms estate. This makes it easier to spot opportunities for savings.

For example, after undertaking a telecoms audit for a global biopharma company, we identified almost $2.5 million’s worth of cost reductions that would not have otherwise been identified.

As a global TEM provider, we had the advantage of being able to perform in-country audits of their overseas assets to get clear image of the client’s global ecosystem. Hundreds of individual MACD events and small tweaks turned into a 165% return on investment.

Optimize Your Processes

Processes come with hidden costs. For example, if your company reimburses telecom expenses, for every five expense forms your organization processes, you could be paying over $300 just to process them. This is because almost 20% of all expense forms submitted contain errors that almost double the cost of the form to fix.

Direct to carrier payments eliminate the middleman by automatically crediting an employee’s carrier account with the agreed reimbursement every month when a bill is due.

It’s a simple change that enabled one Fortune 500 insurance provider to save $1.6 million every year after switching to our Direct2Carrier Payments™ service instead of relying on expense reports.

And there's many more opportunities to optimize processes across your telecom estate, including:

  • Procurement
  • Inventory Management
  • Security Management
  • Sourcing & Logistics

In every process, there are small changes that can maximize savings while also improving the lives of your staff.

How TEM Providers Spot Marginal Gains

In our experience, global enterprises routinely struggle to rein in their telecom service spend. Visibility and client knowledge are poor, which makes finding opportunities for savings easy for a TEM provider.

But after the low-hanging fruit has been taken care of, only experienced providers know how to extract ongoing savings.

This is achieved with continuous auditing and a vendor/client relationship that’s a true partnership. In our case, we draw on the experience that comes with processing 60 million invoices a year across 185 countries.

Our experts make sure your service providers never overcharge and you only pay for resources that you use. We routinely drill down to find $5 and even $1.50 billing discrepancies because even small savings on every bill add up to millions of dollars.

Expert TEM providers also look beyond your bills to find savings. By optimizing procurement, logistics and security, TEM providers offer an ongoing series of marginal gains that quickly add up to huge annual savings.

The Opportunity for Marginal Gains is Growing

Traditionally, TEM stands for telecom expense management. But as more and more organizations move to rely on XaaS (Everything as a Service) models, TEM will soon mean technology expense management.

This concept targets all services within an organization – not just telecoms – and does the same job as traditional TEM, but across everything.

It includes cloud infrastructure billing, WebEx/Zoom/Teams subscriptions, BI application subscriptions and anything else that’s consumed for an annual fee.

All of these services have opportunities for small optimizations and better management that we see in telecoms every day, which means there’s never been a better time to engage a TEM provider.

Great TEM providers know that small gains mean huge savings. It’s a numbers game and for us, every cent counts.

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