Info-Tech Research Group Practical IT Research that Drives Measurable Results Reduce Telecom Expenses

Info-Tech Research Group Introduction Telecommunication expenses represent one of the largest IT operational budget categories for most enterprises – IT leaders are constantly pressed to optimize expenditure in this area. Due to a lack of expertise and guidance, IT units commonly overlook some basic telecom expense management practices. Pursuing even a subset of these key activities will deliver tangible cost savings for enterprises. This solution set will help organizations understand where to focus their telecom cost reduction efforts and how to develop a practice for ongoing telecom expense management. Assess Savings Opportunities Optimize Key Expenses Report Progress and Results

Info-Tech Research Group Executive Summary Telecommunications represents 14% of the IT operational budget on average, yet almost half of organizations have a very informal approach to Telecom Expense Management (TEM). A closer investigation of voice, data and wireless usage may reveal that the organization is incurring major hidden costs due to over-provisioned connectivity, carrier billing errors, and monthly overages. Organizations that have been lax in this area can expect to reduce ongoing expenses by as much as 10% - without a negative impact to service levels. In resource-constrained or complex environments, engaging a third-party TEM firm or provider under a contingency-based agreement is a viable approach. Gaining the buy-in required to formally establish TEM as a standard IT practice will deliver significant returns to the organization over the long term.

Info-Tech Research Group REPORT Standardize Reporting Investigate Automation Formalize the Practice Explore Next Steps ASSESS Recognize Cost Reduction Opportunities Evaluate In-House vs. Outsourced OPTIMIZE Perform a Telecom Inventory Review Monthly Invoices Centralize Contract Management

Info-Tech Research Group Companies overlook telecom costs because of resource limitations, uncoordinated planning, and contractual issues There won’t be enough pressure from the business to make changes to existing service if telephony & data service levels are being met 1. Basic Service Levels are Being Met IT departments usually do not have enough time, resources and trained personnel to commit to detailed analysis of ongoing telecom expenses 2. Resource Constraints in IT Many telecommunications services are provided through long-term contracts As such, organizations have less flexibility when it comes to cost cutting measures 3. Long-Term Telecom Service Contracts During high growth periods or acquisitions, not much focus is placed on future IT plans As such, companies end up being serviced by multiple vendors and/or receive overlapping services 4. Minimal Provision & Planning AssessOptimizeReport Source: Info-Tech Research Group N = 352

Info-Tech Research Group N = 106 Because current service levels are satisfactory, some companies overlook the opportunity to reduce telecom costs Companies that have centralized TEM, monitor telecom costs regardless of service level quality They are able to optimize telecom costs due to centralized TEM and formalized TEM practices 1. Basic Service Levels Already Being Met Outsourcing telecom expense management is a viable approach in resource-constrained IT environments 2. Resource Constraints in IT 44% of companies expressed that they didn’t have the resources to hire or train TEM experts For those companies, outsourcing TEM on an ongoing basis is a sound option An Info-Tech study showed that companies of all sizes hire third-parties to oversee TEM 100% of companies that outsourced TEM were successful in at least 4 of the areas listed below: Centrally managing and overseeing telecom expenses will ease the process of identifying opportunities for synergy and cost savings, consolidating service providers and renegotiating contracts. Info-Tech Insight: AssessOptimizeReport Source: Info-Tech Research Group

Info-Tech Research Group 3. Long-Term Telecom Service Contracts Renegotiating telecom contracts is less effective if contracts are not centrally managed 93% of companies that centrally managed their contracts were successful with renegotiations o This is a 50% greater success rate than companies that did not centralize Centrally manage telecom contracts to leverage buying power & include TEM in the planning process to avoid unneeded services 4. Minimal Provision & Planning Making functional units formally accountable for TEM is important in order to optimize telecom expenses A formalized TEM process will allow organization to: o Implement new telecom technology with greater effectiveness o Successfully negotiate service contracts o Identify assets and technology that can be shared across multiple business units “ We use multiple service providers, and from a competitive standpoint the motivation for doing that is to keep vendors on their toes. But it can increase the complexity of billing and make it more difficult to deal with them. -VP Information Services, Technology ” AssessOptimizeReport Source: Info-Tech Research Group N = 100

Info-Tech Research Group REPORT Standardize Reporting Investigate Automation Formalize the Practice Explore Next Steps ASSESS Recognize Cost Reduction Opportunities Evaluate In-House vs. Outsourced OPTIMIZE Perform a Telecom Inventory Review Monthly Invoices Centralize Contract Management

Info-Tech Research Group The decision to outsource TEM is a question of how effectively desired level of benefit can be achieved internally Larger Organizations Do not have expertise to accurately identify potential saving TEM is performed on a contingency basis Cannot allocate resources to TEM Need more focus on core business TEM is not a formalized process Telecom needs for core businesses have high variability Outsourcing requires significant change to existing business model A formalized TEM process already exists Telecommunication is complex, have multiple sites across geography, deal with mixed connectivity and service providers Company implements ongoing changes in service features and required services Has undergone multiple M&A in the past Will Benefit If Not Ideal If Smaller Organizations Extent of savings realizable after fees are insignificant Outsourcing disturbs operation Telecom expense is not complex and relatively manageable Expertise Easy Win Greater Gain More Control Focused Business Assured SLA Vendor Risk Improved Admin. Outsourced TEM Internally Managed TEM Better Reporting AssessOptimizeReport

Info-Tech Research Group TEM outsourcing refers to engaging third parties to manage telecom expenses on an on-going basis, or to consulting a firm in order to establish TEM practice within the organization TEM services include: o Dispute Recovery o Inventory Management o Contract Optimization Some outsourcers provide on-going outsourcing and TEM consulting engagements The TEM outsourcing industry has experienced wide-adoption in recent years, although it is still a ‘niche’ market AssessOptimizeReport A. Ongoing Outsourced TEM B. TEM Consulting Engagement BA Overlap Telecom Expense Management continues to be a key area for cost optimization The industry is very fragmented and crowded, driving pricing to go down while client satisfaction is being improved Organizations of all sizes can benefit from using TEM applications or outsourcing TEM to capable third parties o Invoice Management & Audit o Wireless TEM o Etc.

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