Off the Hook
If wireless communications costs are making your ears ring, here's how to fight back.
by Robert Hertzberg/CFO Magazine
Cell phones and hand-held devices such as BlackBerrys are among the most insidious of line items — on an individual basis they seem insignificant, but when you add them all up you may find yourself choking on your morning coffee. They "come in through the permeable membranes of the organization," says Aberdeen Group analyst Andrew Borg, hitting a variety of budgets, their collective tab often going unrecognized.
Two years ago, Aaron Ware, controller at services firm Progressive Medical, decided to do something about it. Frustrated by the profusion of wireless bills arriving each week, the company hired a consultant to analyze all the mobile devices employees used at the company. Within a few months Progressive reduced the number of telecom providers on its approved list to three from seven, stopped paying for services it wasn't using, and saw some wireless-expense categories drop by as much as 50 percent.
Progressive, a 430-person company that now spends about $300,000 a year on telecom services, took some fairly basic steps. Consultants who specialize in telecom expense management (TEM) recommend five best practices:
- Centralize the payment function. At most companies, a variety of people, from procurement to IT to line managers, can sign off on cell-phone expenses. Volume discounts and other advantageous terms are often overlooked, and duplicate service is common. Aberdeen communications analyst Hyoun Park recommends appointing a telecom czar. Maybe with a slightly different title, however.
- Consolidate carriers. Doing more of your business with fewer carriers gives you greater negotiating power, Park says. This doesn't necessarily mean you should work with only one carrier — doing so wouldn't make sense even if you could. After all, the presence of a secondary carrier can be pivotal in extracting concessions from the first, and different employees may have different needs that no single carrier can satisfy.
- Institute clear, written policies. At some companies, employees buy whatever device, and plan, they want. This doesn't make for tight controls, says Lori Thomas, an executive at TnT Expense Management, a provider of TEM services to large and midsize firms. Be explicit about policies and controls, and centralize management of services to ensure compliance and optimize terms.
- Pay mobile bills directly. Companies sometimes believe their employees will be more careful about using corporate devices if they have to go through the trouble of submitting expense reports. Unfortunately, this two-step process hurts the employer, too, by adding steps and making it impossible to audit monthly statements, which often uncovers substantial errors.
- Consider outsourcing. Above a certain threshold of mobile use (500 or more mobile users is one benchmark often cited), companies may want to use a virtual accounting department. Consulting firms that specialize in TEM say they can save clients 15 percent just by eliminating services that get zero usage, building optimized plans, and making vendors comply with contract terms. TnT, MDSL, Tangoe, Veramark Technologies, and Asentinel are among the firms battling it out in a very crowded market.
This article has been excerpted from CFO magazine.
Robert Hertzberg is a freelance writer and editor based in Port Washington, New York.
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