Perhaps you haven’t negotiated a new contract in say 20 years, or your business has grown by 2000% in the last 24 months, or we found a bunch of stuff that wasn’t on your old contract. Stuff like that. But a company that has been diligent about their services and needs? Not likely.

Consider that these statements are based on surveyed results; not actual data that can be checked with any kind of accuracy. These are self-reported numbers. Furthermore, they’re saying that this is an average, which means there are a sufficient number of cases that exceed 36%. What network provider could sustain such an attack on their already narrowing margins?

Also, contracts are not monolithic. In most cases they’re made up of multiple services with many cost elements that don’t lend themselves to a total 36% drop in overall spend. Take LD Voice: There are access costs, feature charges, multiple jurisdictions across individual states and countries, and of course switched and dedicated rates that carriers love to muddle things with on-net/off-net scenarios.

The issue here is evidence-based decision making, with emphasis on the evidence. The TEM/TLM industry should be moving more toward actual standards and methodology. Conveniently citing numbers without fact-checking what’s behind them is not good for business. Customers are rightfully suspicious of consultants because they’ve been burned so many times. Let’s stop that and restore confidence to the profession by using things like utilization modeling based on actual history so we can benchmark results fairly and accurately. Let’s separate the unusual from the usual to show where clean ups of billing issues is a discrete subset. True impacts using apples-apples comparisons is key to credibility. And finally, let’s make it a practice that a before and after study is part of the process so clients can conclusively validate what they’ve saved. If the bottom line number is closer to 17% for a new contract, with another 12% for clean ups, let’s report that and not hide it under the banner of contract savings. This should also add some longevity to engagements by educating customers on how sustain their savings.

Your comments and more important your results would be welcome to see where you’ve come out on renegotiating your telecom contract.

Many contracts have automatic renewals or specific procedures that must be followed to prevent auto renewal.  Some take it for granted that dates negotiated on their last RFP made it into the contract, this is often not so.  Always check your contracts and know the procedures, dates, and revenue commitments agreed upon.

Some jump the gun and turn the incumbent provider into an enemy before knowing the particulars of how to discontinue their agreement.  It is also important to consider the time and resources necessary to move to another provider.  Know your dates and plan in advance.  Staying one step ahead of your providers will help you to negotiate the best deals.

Ok. Here is my first issue: Numbers often obscure the greater truth. In Table 3 on page 10 there are some interesting stats, although I interpret their significance a bit differently. Despite the highlighted successes of the Best In Class categories, if you look at the overall numbers, people have been pretty lazy or ignorant or both in managing telecom costs. For example: only 46.5% of all respondents say there is a corporate strategy for long-term cost management. Really?

Only 63% of executives support reduction of enterprise telecom costs; that’s about buy in and focus. Of course telecom is such a small part of the overall budget, so why bother? Just remember this the next time you purchase a million dollar home with no concern about the decimal points on the interest rate. ‘7.5 vs 8.2%? Oh, that doesn’t seem like alot.’

How about the issue of cost cutting as potentially impacting performance? If your mindset is that you’d be trading away reliability while getting better pricing, well, you’re doing it wrong. Of course if you don’t do your homework on potential bidders then you have no one to blame but yourself.  In fact, your objective should be both lower cost and better performance through developing a productive vendor relationship and strong processes to ensure success.

The last issue can be found on page 5 in Figure 1 where companies would attempt to control consumption as a means to cut cost. If you limit your users in their use of technology, unless they are texting their votes into American Idol, you are looking at the wrong things. Here’s where Best In Class really shows it knows how to run things a bit better. The lesser advanced companies were 4 times as likely to look at this as a means to reduce cost. If you’re in this camp I suggest you rethink this. With policies in place for recommended use of company assets, you’d be only reducing productivity.

Again, what I’m taking issue with is not the report, but what’s in it and what people have reported as their behaviors. I welcome any comments on this.

Usually, TEMs are viewed as providing a very short term engagement, where they reduce costs quickly.  TLMs are expected to provide a holistic view which might begin at expense management but would also look at order fulfillment, asset management, managing SLAs, and on and on.  But is it unrealistic to expect long-term savings from short-term engagements?  No.  Any TEM/TLM should be able to provide recommendations for extended savings.  The biggest obstacle to maintaining and increasing savings is your organization.  Loss of efficiency usually takes place when there is no communications between people negotiating contracts and people ordering services, and when there are no quality management processes in place to monitor activity (MACD, Contract maturity, organizational changes).

TLM is something that you should be getting from any vendor, but it is only achievable with buy-in from your organization.  Monitoring processes from cradle-to-grave is the only way to achieve long-term savings.