Enterprises Forfeit 12% -17% of Telecom Services Spend Without a Proactive Approach to Cost Management

The average Fortune 500 company reports that telecommunications and related network services are a top-line item expenses accounting for 3.6% of their revenue, according to a new Aberdeen Group report.

Over the past two decades, telecom costs have followed a deflationary trend, yet many enterprises' spending continues to rise as declining rates for telecom services are offset by ineffective cost management and increases in the consumption of services. On average, enterprises proactively manage 67% of wireline expenses and only 57% of wireless expenses.

Joe Basili, Research Director, and lead author of the new "Total Telecom Cost Management Benchmark Report" states, "Enterprises forfeit 12% to 17% of what they are spending for telecom services, if they do not have a proactive approach to cost management that leverages technology or process improvements through outsourcing. Contrary to conventional thinking, 65% of our survey respondents incur late payment penalties. The ability to pay invoices on time has a significant impact on the ultimate cost of telecom services."

Aberdeen's research shows that technology can be an enabler for both internal and outsourced total telecom cost management (TTCM) programs, with labor savings of 21% for invoice-processing and reductions for sourcing, audit, and other categories. Enterprises need to manage the full lifecycle for telecom expenses and address gaps in process and technology. The report recommends that organizations:

* Aggregate all telecom expenses with an invoice-processing system in the next 12 months through business process outsourcing, hosted, or licensed software.

* Centralize telecommunications procurement (for both wireline and wireless services)

* Select metrics to track telecom expenses and labor costs associated with managing telecom expenses

* Gather TTCM benchmark data and expertise from industry peers, fact-based research and to identify best practices for processing billing, and allocating expense charge backs

* Add system, people and/or process capabilities to manage telecom.