Businesses can cut costs and share the benefits throughout their organisations in a recession.
Financial efficiency is an imperative for organisations, especially during a recession and basic running costs often represent the best opportunity for savings. In this report, we summarise some best practice in sharing cost savings i.e. how cutting costs in one area of a business can free up funds for core activities and R&D.
As this month’s cover story illustrates, (pages 24-27) managers can significantly cut costs by thinking twice about a company’s telecoms bill.
Indeed, telecoms and networks, according to Gartner, are some of the worst managed functions in an organisation. Incorrect billing and limited cost breakdowns from providers are major problems.
Lee Kelso, the co-founder of US telecoms management company BBK, recommends that organisations ask their phone company for ‘customer service records’ for each count, listing every number for which they are billed. Managers may be surprised to learn how much they are paying for unused lines. Voice-mail, call forwarding and inside wire maintenance are all “potentially unnecessary services” which can add extra costs.
When considering any agreement for voice or data services, he advises that it rarely makes sense to sign agreements longer than 24 months. Buyers should also look out for commitments, discount schemes included, which lock a company into specific spending levels. They should also press for flexible contracts that allow upgrades to new technologies (e.g. voice over internet protocol) without any penalties.
All offers which carry an exclusivity clause in exchange for low rates or high discounts deserve particularly close scrutiny.
“Make sure every invoice gets a thorough review by someone familiar with your telecom landscape and [who] knows how to challenge billing errors and unauthorised charges,” he says.
“Also, insist that all telecom services be ordered through a structured process [which] is recorded in a master database. All changes must be communicated to accounts payable. Maintaining an accurate inventory is [an] important step to keep from paying for services you no longer use.” BBK’s advice draws on its experience with customers across 20 states in the USA.
Writing in December 2009, Gartner analyst Geoff Johnson explained that asking for an organisation’s total annual telecoms spend was an easy way to test whether it was firmly in control of its bills. “If this question cannot be answered intuitively or promptly, then a low focus on telecom cost control may be indicated,” he remarked.
Control of use and resolution of billing errors were the two main benefits experienced by organisations using telecoms expense management (TEM) systems. Johnson recommended that firms educate all staff involved in networked IT applications (not just accounts payable) on the scope and capabilities of TEM.
Enterprises, whether small or large, should also test or adopt TEM “incrementally until its business case benefits are quantified and sufficiently proved.” However, where it does prove successful, companies should then move on to maximise the technology i.e. going beyond billing analysis and cost control to using TEM databases and management summaries to optimise their assets and plan new services.
The recession feeds into the ‘triple crunch’ of credit, energy and climate crises. Rising energy costs for businesses make energy efficiency more important than ever. While telecoms savings are best for smaller office-based services, energy efficiency offers the best savings opportunities for large public service organisations and manufacturers.
Businesses across the board need to rise to the challenges of these tough times. The good news is that companies can learn from each other and extensive advice is available on making the most of savings.