Is Telecom Cost Savings Strategic?
The telecom expense management (TEM) industry was founded on the promise of cost savings. In the late 80’s, cost savings were readily available through two primary channels of effort: (1) recovering identified invoice-to-contract compliance overcharges and (2) carrier contract negotiations with or without switching carriers. These savings are certainly still available, but what happens to the ‘strategic’ savings value proposition when the environment is optimally managed and savings gains decline? Identifying all facets of financial waste, recovering overcharges, reducing price points and optimizing service-to-cost performance is a best practice and should absolutely be an aspect of every telecom management practice, but is telecom cost savings really a strategic business objective if it can’t be sustained?
Cost containment and ongoing expense management practices simply make good business sense. Establishing formal business practices to control cost is essential, but sustained cost reduction (savings) in and of itself is not a strategic initiative. In fact, cost saving represents short-term thinking that sets a precedent in the minds of business leaders not intimately aware of the strategic business value available from a comprehensive telecom management practice that leverages the goods and services of the telecom estate as business innovation and results acceleration enablers.
Managing the telecom estate to optimal technical, financial and operational standards is one goal of telecom management practices; this effort establishes telecom management as a Center of Excellence (CoE) within the business. Aside from the CoE efficiency benefits, telecom management practice leaders should target delivering business value that fuels bottom line business results – revenue, profit, market share and the like. While cost reduction can contribute to business these results, leveraging the assets of the telecom estate to proactively drive business results through connectivity and communications is a much more compelling and sustainable telecom management strategy than generating marginal and limited cost savings opportunities.
Timothy C. Colwell is a telecom management industry thought leader exploring the impact of technology as a business accelerator and social capital enabler.