Is the economy headed for recession or a soft landing? This question is at the top of many business leaders’ minds.
According to a panel of 48 forecasters surveyed Feb. 3-10 by the National Association of Business Economics (NABE), fifty-eight percent of the economists still say there’s more than a 50% chance of a downturn in the next 12 months. We are seeing many conflicting signs of what’s to come. What seems clear is there is a bumpy road ahead and CFOs are taking notice.
According to Gartner, 39% of CFOs surveyed in Q4 of 2022 plan on cutting costs. The pressure will be on CIOs to carry out aggressive cost cutting strategies with immediate impact to enable CFOs to meet their cost cutting goals. The question is how? Gartner has laid out 10 rules for rapid IT spend reduction.
While this guide is useful it paints in broad strokes and may still leave CIOs with questions on how to specifically get started and what tangible steps they can be taking today. Here are our top 7 tips on how to reduce telecom spend with actionable steps for each.
1. Understanding where you can save money now, and where you have to wait
Now: POTS aggregation, mobility plan management, re-contracting with existing providers.
Later: migration from on-prem to cloud, conversion from MPLS to SD- WAN/internet based networking.
It’s critical to understand your bigger savings will come from consolidation
opportunities created by long term transformative changes. Any short-term savings plan should have a longer-term strategic component as well to maximize your total savings.
2. Vendors are feeling the same pressure as you, this means you must give to get
Many of your vendor partners are under the same pressure as you to bring in more revenue and to cut costs so they are guarding every dollar. You are likely to find more success by offering something in return for immediate cost savings such as:
Giving a specific vendor more business, which dovetails with a POTs aggregation strategy.
Agreeing to a longer contract term, coupled with an early renewal, at a reduced rate.
This give and take frequently results in a win-win for you and your vendor partners.
3. Avoid tunnel vision
All too often CIOs focus their attention on the spend associated with their largest single invoice or vendor. The reality is that this spend is likely already well managed.
This doesn’t mean you shouldn’t ask for some relief on your largest invoices, but you typically will have more success by shifting your focus to items you haven’t been managed as tightly.
4. Focus on non-disruptive change
Non-disruptive change creates faster time to savings. Examples of non-disruptive change:
Contract changes with more favorable payment terms or rates
Aggregation of services that can be moved without new installations (telephone lines are a great example of this)
Optimization of existing cell phone plans. Don’t forget to implement ongoing management as this prevents surprise bills that erode your projected savings
5. Don’t fall for the siren song of a new vendor
Often moving to a new vendor requires installations and billing overlap between your old and new vendor that can make it more expensive in the short term.
When a new vendor promises you savings, work to understand when you can expect to see those savings.
Ask for a plan that describes savings not only over the life of the contract, but for each of the next 4 quarters.
While moving to a new vendor may result in the most savings when measured over a multi-year period, if your focus is on short term savings be aware moving to a new vendor may end up costing you more during the timeframe where you are looking to capture your most aggressive savings.
6. Don’t forget the soft costs
While hard savings are easier to understand and measure you can find substantial savings by making changes that impact your soft costs.
Ask yourself, how many people need to touch an invoice and the time spent in each step before it is approved and payment is issued to a vendor?
Identify vendors that offer you tools that result in easier to understand bills resulting in less touches and time spent internally. Look for additional opportunities to consolidate and reduce invoices.
7. Get granular
It’s easy to lose sight of spend trends if you are looking at aggregated spending. Here are some places to start your hunt for savings:
Toll Free isn’t free to your company. This is one place where looking at an aggregated view can be more beneficial than looking at spend by business unit or line of business.
Wireless is both volatile and unpredictable which makes it the perfect place for runaway costs to hide. The problem grows exponentially by the number of devices you own. Look for zero usage lines, examine job roles for need, and don’t forget to review your rate structure.
Phone lines when purchased from big telecom are continuing to go up in price. Even if you have minimized the number in use they are more expensive than they have ever been. See tip #2 above for one way to try to claw back some of these increases.
Look for out of contract spend, especially data networks. You can often get the same for less money, more for the same amount of money, or way more for slightly more money
Is it time to move your corporate telephony to the cloud? You’d be surprised what providers willing to do to win your business.
Use AI to lower contact center engagement costs. Can we reduce handle time through better agent tools? What can we automate easily and what can we make self-service? It might be a time to take another look at what is locked behind a paywall with your current provider. You may find a much stronger ROI case with the maturation of those tools coupled with increased employee costs.
Still need help? Want to talk to one of our experts that can help you formulate a strategy? Contact us here to get started.