Self-Financing: Power Your Own Projects Through Billing Savings

How do you implement new projects when you don’t have the budget dollars available? Creative cost savings. There’s gold in them thar bills.

According to Jim Leonhard, President of VorCOMM Communications, LLC, a company that specializes in telecommunications billing optimization, “Most organizations spend little attention to improving their global communications cost effectiveness and lack a baseline to compare and to measure improvement.” After all, with your overflowing e-mail inbox, desk inbox and SMS inbox, who has time for the detailed and painstaking work that it takes to optimize your billing? It is easy to default to status quo because your vendors generally bill you a predictable amount that combines many products and services into one invoice; often with hundreds of pages of detail. The invoice total just is what it is, right? Wrong. Leonhard continues, “Companies often look at their communications cost as a matter of fact – if it’s in my budget and the cost is in line to what I paid last month, then it must be correct.” Depending on a multitude of factors, most companies can save 10-30% off of their existing telecommunications bills. This can be done by combining accounts, discovering incorrect charges and optimizing current accounts to leverage better pricing. Even tax rates and utility charges can be incorrect, where retroactive credits can be obtained. One or two dollars saved? Nope. Depending on your budget size and spending, there are potentially millions of dollars of “free” money.

How does it happen and how can you make it happen most productively (and lucratively)? Commitment. It requires an almost exclusive focus and dedication, rather than being an “as-time-allows” activity. You will get the best return and more savings if you dedicate an internal resource or external vendor to the effort. Dive into the details and initially look for the low-hanging fruit. Over many years, your company may have multiple accounts with the same vendor for the same and/or different locations; you may have phone lines and data circuits that are no longer in use that you are still unknowingly being charged for. You may even be paying long distance rates that were negotiated years ago when the average cost was higher than it is today. Your cellular phone contracts may have reverted to a more expensive rate following a discounted period. Your telecom provider will likely give you a special discount for consolidating multiple existing service contracts into a new co-terminus contract, which will actually be easier to manage. Also, if your company has an affiliate (a parent/sister/subsidiary) company, and you both use the same vendor for a product or service, you can both leverage your relationship to get better pricing, without even having to make any changes. Similarly, if you have multiple offices, all managed independently, global billing optimization becomes a matter of information gathering and coordination. The savings potential is staggering.

Successfully executing such a strategy requires specific expertise; otherwise it can be a penny wise, pound foolish effort. Unless you are careful about the time spent and diversion of resources, you could spend more on trying to get the savings than you would actually save! Knowing your way around the bureaucracy of the telecommunications companies in addition to understanding what is realistic to be saved is all critical to the success of such an endeavor. “It can be tedious, exhaustive work,” says Leonhard, of the page-by-page billing review process, “sorting and tracking circuit numbers, phone lines, locations, and actual usage can be an especially complicated puzzle, but it is what we do every day.”

Billing optimization service companies generally operate on a contingency basis; they find savings opportunities, arrange and implement the actions needed, confirm the new billing rates, and in return, receive a portion (usually 50%) of the savings over a period of time (usually 1 to 2 years). With such a contingency arrangement, your costs can only go down. You would save 50% the first year or two and then 100% all subsequent years. Many companies fully use the savings to either return to their company’s bottom line or re-invest in IT.

Most often, the company’s portion of the savings realized is split between the overall company budget and the IT budget; it is a win-win for everyone, which is where the true payoff happens within IT. With a solid amount of savings freed up, you can now afford to pay for some of the “nice-to-have” items that you and your team have wanted to improve the performance and efficiency of your technology group.