How to Reduce Telecom Costs for SMBs? Here are 10 Tips

Telecommunications is an important part of any business and a company will typically use a wide variety of telecommunications-related services which include but are not limited to: local and long-distance phone services, toll-free numbers, mobile and wireless services, email, voicemail and conference services. This would also mean acquiring and paying for resources like T1/PRI, integrated T1, high speed internet, Ethernet, MPLS, SIP trunking and so on.

Using these many network and telecom services invariably adds up to a substantial expense for the business. In fact, according to research conducted by the Aberdeen Group a few years back, average small to medium businesses spent about $26 million a year while an average Fortune 500 company spent about $116 million a year on telecommunications alone. What was even more revealing was that out of those costs, nearly 7% to 12% were in error. If you do the math, you will find that for a small or medium business enterprise, this translates into costs of $2 to $3 million that can easily be saved every year.

Further, according to the IDC Research Group, telecommunications costs are not only the second largest indirect expense but also the third or fourth largest expense overall for a business.

Considering all this, it should seem obvious that reducing telecom costs will be a priority for most businesses. However, managing telecommunications costs is not an easy task either for a Fortune 500 company or a small business. With hundreds or thousands of invoices for various services being received, it is hard work to go carefully through all expenses listed. Further, this is just one part of the problem. To truly manage telecommunications costs, a business has to have a regular and comprehensive strategy to monitor and change, if need be, various plans, services and resources.

With this in mind, here are 10 tips aimed at helping businesses develop a strategy to reduce their telecom costs.

1) Use the services of a Telecom Master Agent

One of the best ways a business can ensure that it is receiving the most robust and cost effective solution is to work with a telecom master agent that represents a variety of carriers offering services such as commercial long distance and local phone service, high speed internet access, data services or even integrated voice and data services. A master agent first understands the telecommunications needs of a business and then works with the carriers it represents to offer a host of solutions that will fit these needs as also the budget of the company.

Master Agents build strong, long-lasting relationships with both customers and carriers through their experience, objectivity and performance.

2) Audit and evaluate all services

Another step a company can take to reduce telecom costs would be to carry out a thorough audit of all services that the company is paying for. It is important that a periodic evaluation of all these services be carried out to understand if there are any services that are not being used any longer or are being under-utilized so that they can be terminated without any problem to reduce the total costs.

3) Identify and rectify billing mistakes

It is also important that outright billing mistakes be identified and rectified. Billing errors can be of different types – a line or service that has been discontinued continues to be billed, costs indicated in contracts or quotes are not being reflected, there are incorrect assessment of taxes and many more. Auditing telecom bills is time consuming and though the errors detected may not seem to amount to much per month, when accumulated over the year, they add significantly to total telecom costs.

4) Take benefit of discounts and refunds

Often, due to lack of time or adequate manpower, companies are not able to follow up on credits due to them for previous errors, or on penalties payable to them for unsatisfactory services or they are not able to take the benefit of discounts introduced by telecommunications companies. Tracking these credits and discounts to ensure that the company gets the full benefit will lead to cost savings.

5) Have an accurate inventory of all lines and circuits

A business needs to have a complete inventory of the number of lines and circuits they have, how they are being used and what they are being charged for those resources. Understanding the details of various lines, the features and functions of all lines and circuits as well as tracking usage can be complex but is necessary to ensure that the company is being charged only for the correct number and correct usage of lines and circuits.

6) Make optimum use of existing lines and circuits

Another way of saving telecom costs is to optimize circuits so that they can be used to their maximum efficiency. This can be done by consolidating multiple narrow bandwidth lines - like the separate lines used for Internet access, PC connections to the Intranet and internal applications, the switchboard, credit card readers – into a few higher bandwidth lines. On the other hand, some companies, based on the plan they have selected, may have many smaller circuits that are not being fully utilized. In such a case, the best way to optimize the circuits may be to migrate some of the high cost, higher-capacity circuits to these smaller circuits.

7) Detect anomalies in usage and costs

To easily spot problems in telecommunications usage, it is necessary to assign proper usage and costs to specific departments within a company. For example, the sales department may have higher usage and costs than say the data processing department. Whenever a discrepancy in the usage is discovered, a thorough investigation is to be carried out so that errors can be quickly detected and rectified. One example is that of employees who stopped using the pagers handed to them by the company and neither returned them nor did they request the service to be discontinued.

8) Renegotiate plans and features to save on costs

A company should always be reviewing the services it is using and try to renegotiate the plans so that it can get the maximum features for the cost of the services. A company may have grown or needs may have changed since signing up for a plan with a carrier and it may find it more suitable to go in for a different plan or a package with more cost savings.

9)Renegotiate contracts to get better deals

When it is time for renewing a contract, businesses should make their contracts competitive instead of just automatically renewing their present contract. They can request various carriers to provide details of specific plans or packages the company is interested in and ask them to quote a price for those services. This way a comparison across carriers can be made to see who is offering more services for the same price or who can offer the same package for a better price. In fact, as the carriers become aware of the competition for the contract, prices do tend to improve. They also offer better terms on early termination charges and service-level agreements. Even if the present carrier has provided satisfactory services, it makes more sense to renegotiate the contract so that the company can get a better deal on plans and rates.

10) Employ new technologies IP-PBX to reduce costs

A business has to be continually aware of the emerging skills and technologies in telecommunications and study how these can be leveraged to reduce their telecommunications costs.

For example, using VoIP over an IP-PBX system can lead to substantial savings. Using VoIP, calling from one computer to another is absolutely free. And even though calling a phone – mobile or landline - from a computer involves a certain fee, this is significantly less than the international call charges that the company would have to bear were they made over the traditional phone networks.

Businesses can also consider using specialized software to analyze not only telecom bills but also rates and plans as well as to compare various vendor offerings. Another alternative is for businesses to outsource to experts who specialize in telecommunications analysis and cost management, thereby achieving better results at lower costs.

If you need free help implementing these strategies to reduce your company's telecom expense, contact the TelecomSupportdesk.com and mention this hub.