AUDITS
Is TEM giving your company a false sense of optimization
Is TEM giving your company a false sense of optimization
Having completed 300+ telecom vendor billing reviews since 1994, we have seen virtually every type of telco overbilling mistake, as well as the numerous unrelated savings opportunities missed internally. Over the past several years we have noticed a substantial increase in missed savings opportunities directly related to reliance on TEM programs and the inability of these programs to recognize unused (voice and data) services and equipment.
Identifying unused services and equipment is not a function of TEM, but reliance on these programs does create a false sense of optimization, as we tend to believe all information loaded into the system is accurate, which is usually the case, in the beginning!
One of the first steps normally taken when deciding to go with a TEM provider is an inventory cleanup, followed by loading all vendor invoicing and contracted rates into the system. The program is then updated monthly based on adds, disconnects, moves, and pricing changes. Sounds fool proof, but many things can go wrong over time, and it can be very costly to your organization.
We recently removed 300K monthly in unused services/equipment for a client who has been using a TEM program for the past six years – that’s $18 million in savings over a five-year period. How much would your company need to generate in gross sales to net $18 million in profit? While not every organization can or will save $18 million over 5 years, it is very likely that up to 30% of your monthly recurring charges are related to services/equipment not in use or not required. These missed savings opportunities happen gradually over time and often continue for years unnoticed.
Here are a few of the many reasons why unused services and equipment are not identified and removed:
• Constant churn in large organizations: Increasing staff, reducing staff, opening a new location, closing an old location, consolidating staff within the same building, upgrading to new services or equipment, and staff churn within IT/IS.
• All relevant staff are not in the loop regarding the constant changes noted above, especially those responsible for updating TEM.
• Incorrect billing information including wrong service addresses
• Services with components billed on several accounts, some components are removed, while other components continue to be billed
• Same services billed by two or more vendors on separate invoices with different circuit numbers
• Certain groups or divisions paying invoices outside of the TEM system
• Lack of detail on vendor invoices, and not knowing what to ask for from the vendor
• Fear of removing services or equipment if not certain what it is being used for
• Lack of time (no time) for relevant staff to dig deep and perform a line by line review of all monthly charges.
• Not knowing the steps to take or information required to determine if services/equipment are not in use.
• Telco features and options that are added, but not required
• Believing all information entered into TEM is correct, because we took it directly from vendor billing records
• Failing to update TEM databases on a regular basis
• TEM data entry mistakes when adding or removing services
• Not completing a detailed review/purge of all services and equipment before moving to TEM or before renewing contracts with vendors
TEM is an excellent inventory management tool if used correctly, updated accurately, and maintained on a regular basis, however it should be complemented by a detailed review every 3-5 years by an experienced third-party telecom expense auditing firm.
Detailed billing reviews take time, a luxury most IT/IS staff do not have. Specific knowledge and experience is required to identify complicated billing errors and unused services/equipment. Specific vendor records (normally not available or offered to the customer) are also required.