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The Top 4 Challenges Businesses are Facing in Managing Telecom Expenses

Businesses have become centred around virtual communication, as technology rapidly advances and global business trends evolve (Tangoe, 2018). Telecoms technologies connect employees to data and the applications necessary  to complete their work efficiently, while ensuring that employees and team members stay connected throughout (Tangoe, 2018). As employees become increasingly reliant on Telecoms technologies, business operations rely heavily on the availability of these connections (Tangoe, 2018). Research by Gartner estimates that an average company’s Telecoms expenditure is responsible for up to 15% of their overall IT spend and this figure is growing (Tangoe, 2018). 

As a result of the reliance on these connections, it has become increasingly important for companies to manage their Telecoms expenses effectively (Tangoe, 2018). We discuss the four main challenges that companies face when managing their Telecoms expenses.

Predicting Future Expenditure

The purpose of predicting future spending is to maintain clarity of your expenditure, identify trends, and use technology to take action on new opportunities (Riegelhaupt, 2018). The ultimate goal is to remain ahead of technology advancements and to develop a Telecoms strategy that is proactive instead of reactive (Macronet, 2020). However, this is a challenging task that most companies struggle to attain. 

In order to effectively predict future expenditure, you require accurate historical data (Tangoe, 2018). For example, if devices of employees who have left your company are still logged as active and you continue to pay their bills, you may plan for these devices’ expenses when these contracts should be cancelled (Tangoe, 2018). Predicting future spending, per department for example, may also be compromised if costs are not accurately allocated, as the historical data will not reflect the true distribution of costs across your company’s departments (Tangoe, 2018).

Another common challenge that companies face is gaining access to reporting that will assist in these predictions (Tangoe, 2018). Often when managing your Telecoms expenses in-house, it is time-consuming to integrate data from multiple systems and spreadsheets (such as financial and asset management systems) into one record, before you can even begin with planning and analysis (Tangoe, 2018).

Accurate Management of your Telecoms Inventory

According to research by AOTMP, companies that utilise in-house Telecoms expense management services (TEMs) spend the majority of their time ensuring inventory accuracy, however, a true level of accuracy is still difficult to achieve (Tangoe, 2018). Managing your Telecoms inventory is both time-consuming and labour-intensive, and this process is often undermined by changes in activity not being correctly documented, such as IMACDs (the Install, Move, Add, Change, or Disconnection of services) (Tangoe, 2018).

Tangoe (2018) explains that baseline inventories are difficult to develop, as there are differences in vendor billing and inventory data. Inaccuracies in billing from suppliers are often common, resulting in bills presenting unknown entries, outliers, or lines of the invoice that don’t match the clients’ current locations (Tangoe, 2018).

Allocating Costs to the Correct Cost Centre

Accurate cost allocation is needed in order to truly reflect the assets or services that a business owns (Tangoe, 2018). These allocations directly impact the information business leaders use to make decisions. Therefore, inaccurate cost allocations may lead to strategic business decisions that are made based on unreliable data (Tangoe, 2018).

Cost allocation often presents a significant challenge to businesses, as many rely on manual processes that are time-consuming and susceptible to human error (Tangoe, 2018). As the data is sourced from multiple spreadsheets and systems, it is a time-intensive process and offers a high risk of errors to put this information together in a single view (Tangoe, 2018).

In the absence of a reliable and repeatable cost allocation process, there is often an inequitable allocation across the departments of a business (Tangoe, 2018). Tangoe (2018) explains that “equitable chargeback” is essential to ensuring accountability, cost control, and illustrating the value behind financial reporting. In addition to this, CFOs need to have visibility over the cost distribution across the company in order to justify new technology investments, whereas CIOs can motivate a sense of shared accountability throughout a business’s departments by illustrating the relationship between actual consumption and IT costs (Tangoe, 2018).

Processing of Invoices

During each month-end, companies need to rush to ensure that bills are paid, invoices are loaded and everything is handed over to the AP (Accounts Payable) department (Tangoe, 2018). There is often insufficient time left in order to ensure the accuracy of these invoices, as multiple bills for each account arrive in formats that are non-standardised, such as paper, and these invoices cannot be processed electronically (Tangoe, 2018). Due to this rush to close, finance teams often do not have the time to manually review the charges printed on paper bills (Tangoe, 2018).  

The comparison between the previous and current month’s bills is not sufficient to ensure invoice accuracy, as the cancellation of a service does not confirm that you will no longer receive the bill for that service (Tangoe, 2018). 

Invoices lack detailed information in order for you to monitor their accuracy, for example, you will rarely find links to your business’s order or cancellation activity (Tangoe, 2018). In addition, invoices may often include errors, which affect the accuracy of your reporting (Tangoe, 2018). These errors may include inaccurate rates, unjustified late fees, unknown add-on fees from third parties, or missing discounts for renewed or new services (DenMark Business Solutions, 2019).

Tangoe (2018) states that companies’ Telecoms teams often do not have the expertise or time needed in order to audit each invoice and confirm that the invoices’ line items are allocated to their applicable cost centres.

According to an estimate by Gartner, up to 14% of Telecoms bills are in error, often in favour of the vendor or supplier (Global Data Systems, n.d.). Macronet (2020) states that companies with 500 or more employees that fail to manage their mobile expenses sufficiently may be overpaying by up to 30%.

References:

DenMark Business Solutions, 2019. Telecom Problems for Businesses. [online] DenMark Business Solutions. Available at: <https://denmarkbusinesssolutions.com/2019/03/26/telecom-problems-for-businesses/>

Global Data Systems, n.d. 4 Reasons Why Telecom Management Is Hard and How to Fix It. [online] Global Data Systems. Available at: <https://www.getgds.com/resources/blog/business-it/4-reasons-why-telecom-management-is-hard-and-how-to-fix-it>

Macronet, 2020. Post COVID-19 Challenges with Telecom Expense Management. [online] Macronet. Available at: <https://www.macronetllc.com/post-covid-19-challenges-tem/> 

Riegelhaupt, C., 2018. Remote workforce challenges are increasingly being met with telecom expense management: IDC survey. [online] CIO. Available at: <https://www.cio.com/article/222064/remote-workforce-challenges-are-increasingly-being-met-with-telecom-expense-management-idc-survey.html> 

Tangoe, 2018. The 4 Biggest Challenges of Managing Technology Expenses. [ebook] Tangoe, pp.3-8. Available at: <https://www.blackfinsquare.com/wp-content/uploads/2018/10/The_Challenges_Behind_Managing_Tech_Expenses_WhitePaper.pdf>

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