The Hidden Potential in Your Services Spend

The Hidden Potential in Your Services SpendThe Hidden Potential in Your Services Spend

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Visibility is the Key1. Current and relevant “Information” is often a constraint

when trying to reduce vendor spending without sacrificing service

2. A lack of visibility, defined as poor, missing, or vague information, often keeps this constraint in place

a) No one is aware of a better solutionb) We are unwilling to risk service disruptions to try something new.c) We are unwilling or unable to tackle a complicated issue that few

in the organization have expertise in


Why is Nothing Done Gaining visibility is time intensive. To track complex services

purchased you can have dozens of data points for every service, and even 60 person offices can have 100 to 200 services in a complex category.

Once you have visibility, fixing issues can also be time intensive, some category vendors are notorious for not fixing billing issues and not applying new contracts. All issues must be tracked over several months until resolution.

Typically anyone high level enough to realize this is a problem and how to solve it is too busy to be distracted. Their present approach catches many problems and is all they have time for.


Some signs of low visibility1. Does your company have processes and the

time to actively manage ALL vendor costs? 2. Billing Errors - Are your people frustrated with confusing

bills, overcharges, and time wasted dealing with vendors?3. Unused Goods and Services - Do they not know

EXACTLY what you’re paying for and if you need all of it? Is detail vague?

4. Above Market Pricing - Do you know if you’re getting the best rates available? Is it hard to find out?

5. Is further time spent just not worth the hassle? Does it seem like a black hole?

6. Can the contradiction between “waste of time” and “waste of money” be solved?


Telecom as a sample category Every business uses it, and lots of it. Every business is too busy running a

business to aggressively manage telecom costs

Telecom can cost $1,000 per year per employee, it is a top expense.

The longer nothing is done the more expensive it becomes.

Visibility is so low, and expenses are so high, that 50% cuts in costs are routine with the right process.


Visibility and Telecom Telecom companies do not provide their clients the free information

needed to make informed buying decisions. Most organizations cannot answer the most basic questions –

What are we paying for? Do our inventories match up with our invoices? Are we paying too much? Can we negotiate better contracts? Can we move to less expensive carriers? Where are all of our telecom services? Are we paying for unused lines and services? Are there newer more cost effective technologies? Are we over capacity?

Most companies simply do not have the in-house expertise to provide the information and make an informed buying decision.


The Process to Cut Telecom Costs

Vendor bills and records are used to create a detailed consistent inventory of every single service (phone number or line) and the cost of the service.

The inventory creates visibility in to details. It allows one to see all costs in one place, and compare across bills. Bills and accounting alone don’t do this.

Then each of the services is analyzed and three questions are asked of each service.

What is the business need, is it unused or underused? Is the charge the one contractually agreed to? Is the service over priced in today’s market?

Then unused services are discovered and terminated and underutilized services are consolidated.

Vendor’s billing errors are discovered and fixed. Better rates can be negotiated and implemented.


Gaining Visibility with Telecom Expenses

Without the inventory you don’t have visibility. Without visibility in to what you’re buying, the business need, and what it costs, you can’t manage it.

The nature of the inventory reflects the nature of the goods and services being purchased.

Inventories for telecom help determine if there’s a disconnect between the contractual and current market price of the key services the business needs and the actual bill.

Without visibility companies MUST have a disconnect between the optimal price of the services that I.T. wants and the total $ amount accounts payable is actually paying.

Year after year we find most companies pay 100% more than they need to due to visibility issues.


Two Solutions Delegation Outsourcing Basically these are two sides of the same coin. The primary constraint is Decision Makers’ Time.

Decision makers should prioritize decision making. If cutting a cost no longer takes up a lot of a

decision makers time, it can move rapidly up the priority list.


Delegation Get an IT person (who understands why telecom is purchased) and someone in

accounts payable to create an inventory in their spare time. Make sure they account for every service being purchased and why it is needed and if it is being billed correctly.

Have them fix any billing errors. Have them submit to the decision maker any unused or underutilized services. The

decision maker approves, the lower level staff executes. The staff should figure out how to easily determine if a quote is worth pursuing, then

be open to new quotes or give targets / demands to potential vendors. If a deal is found the decision maker will be given a clear presentation as to why it is a deal.

The staff will determine what the cost of needed services should be based on the existing contract or any new ones. This will be used to document if a bill should be flagged for review. Everyone will know what each month’s bill should look like when -

Old billing errors are fixed. There are no unused services New pricing is implemented.

Each month’s bill will be easily checked to make sure it is the expected amount.


Outsourcing Have a motivated outside expert in the field suggest

actions for cost cutting. Make sure they can give you full visibility in to what you

are purchasing and should be purchasing. Without this they won’t be very effective. Similarly, if you have visibility, you can give the expert the visibility to make good suggestions, saving their expensive time.

Approve the suggestions you like. Have them implement the suggestions you approve. Make sure they provide documentation.


Results for Sample Client A:

Reviewed $45,000 Monthly Spend for NY Company with 550 Nationwide Employees

Implemented ~$25,000 a Month in Savings ~$300,000 annual savings ~55% Monthly Spend Reduction Found and terminated many unused lines and

services, and obtained lower rates and vendor credits


Results for Sample Client B:

Reviewed $15,000 Monthly Spend for Nationwide company

Found ~$9,600 a Month in Savings ~$115,000 annual savings ~63% Monthly Spend Reduction Renegotiated contract and eliminated very

expensive unused lines and services


It’s not just Telecom

Insurance (including health) Freight Tax IT Recurring Maintenance Charges Print and Financial Print Credit Card / Payment Processing



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The Hidden Potential in Your Services Spend

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