Telecom Expense Management

The Truth about Online SIP Savings Calculators

2011-06-17T07:33:44-07:00

By Wayne Webers, Veramark Sourcing and Contract Negotiations Manager

Many organizations with a focus on telecom expense management are investigating Session Initiated Protocol (SIP) trunking as an alternative telecom delivery system. In addition to getting rid of all those thick bundles of multicolored wires, most telecom experts agree that SIP trunking offers significant potential advantages: improved utilization of existing bandwidth; ease of expansion; improved system availability, and lower operating costs.

The big question everybody seems to be asking is
“How much can I really save with SIP trunking?” Service providers want you to think that you will always realize substantial savings with SIP, and many provide online savings calculators to support their claim. But...

If it sounds too good to be true…
The truth about these online SIP savings calculators is that they can be somewhat biased. Many are built on the assumption that your telecom system is over-trunked by 40 to 50% and that you haven’t done a good job of “grooming” your network. They also generally assume that you are planning a centralized network instead of a distributed network, since a centralized network will deliver the greatest savings on concurrent talk paths.

These calculators offer limited opportunities to input data that would help clarify your organization’s SIP savings potential. For example, they may offer a company size selection of small, medium, or large without providing any further definition. Some allow you to input your current rates, others don’t. Some calculators include only three variables: number of employees, number of locations, and percentage of long distance calls that are intra-company. We have performed tests on these calculators – we found that they are strongly biased toward the number of locations and may not accurately forecast your savings.

A more thorough analysis is needed
To accurately forecast your potential SIP trunking savings, we’re convinced that a more complete analysis is needed beyond what you can get from these free calculators. When analyzing the impact and cost benefit of a SIP implementation, we look at 17 important variables. All of these can impact the overall cost of a SIP solution:

- Existing Capacity (Kbps)
- Busy Hour Minutes
- B/W Fat Factor
- CODEC Used
- Voice Usage Rate – Local
- Voice Usage Rate – LD Intrastate
- Voice Usage Rate – LD Interstate
- Existing Data Access Cost per DS1
- Local Usg Mix %
- Interstate Usg Mix %
- Local Measured Rate
- Busy Hour to Monthly Factor
- Busy Day % of Month
- On-net %
- Minute Allowance per Concurrent Trunk
- Overage Rate per Min.
- Charge per Concurrent Trunk

SIP trunking CAN many organizations a substantial amount of money, but beware of the exaggerated projections delivered by these free online calculators. You don’t want to be the guy who assures your CFO that SIP will deliver 50% savings when the real number turns out to be 20%. Not that 20% savings is bad – actually, it’s substantial and most CFOs would jump at it…unless someone promises them 50% first!

LEARN MORE – Watch our on-demand Webcast “Consider SIP Trunking IF…”

DISCLAIMER: Veramark Technologies, Inc. does not guarantee the authenticity, accuracy, appropriateness, or security of any hyperlinks contained within this posting.

Who Needs Telecom Expense Management?

2011-05-25T07:14:30-07:00

By Rob Tyler, Senior Marketing Technical Writer

Let’s say you have a business – a healthy, thriving business – with large sales and support call centers and hundreds of mobile workers using wireless in the field. Why should you invest good money in a service/software solution for telecom expense management (TEM)? You never have before, and you’re doing fine!

After all, your call centers have all the capacity they need. Sure, you bumped the ceiling a few times last year at peak hours, but the carrier suggested you add a few trunks and that solved the problem.

And when you expanded your wireless services and some of your field reps needed unlimited data, it was easy to add. Your wireless provider was extremely responsive to your needs when it came time to expand your services.

And yes, with all the complicated and lengthy invoices coming in, the bills and late fees were a nuisance for a while, but all you had to do was hire a few new people to process those invoices and everything is hunky dory. They even catch a billing error once in a while. Can you beat that?

Well, actually…you can! You don’t need TEM to run a successful business. You only need it if you want to be MORE successful. Because all the time and money you spend trying to solve new telecom expense management problems using old methods add up and cut into your profits. Your business can still thrive – when business is good – but your bottom line could be better.

Here are three examples of how TEM can help your bottom line:

Eliminate trunks by being smarter about using capacity
Negotiate the best wireless rates, terms and conditions for the services you actually need
Process invoices electronically, and manage by exception to reduce labor demands and billing errors

Telecom is not what it used to be. The technology, the services, the providers, and even the way you use data over telecom systems has changed dramatically. Telecom is one of the top five expenses for most businesses now – up from number 10 just a decade ago. When a business cost rises that much…that quickly…it warrants a new solution.

Telecom expense management is not a luxury. It’s simply part of a purely pragmatic business strategy to eliminate wasted spending and improve the bottom line. It’s an easy way to put some distance between your business and your old school competitors who think they don’t need TEM. They’ll figure it out…eventually.

LEARN MORE – Download our white paper “The Low Risk Approach to Telecom Expense Management.”

DISCLAIMER: Veramark Technologies, Inc. does not guarantee the authenticity, accuracy, appropriateness, or security of any hyperlinks contained within this posting.

How to Create a Business Case for Telecom Expense Management

2011-05-16T08:01:27-07:00

By Robert Halik, Veramark Senior Telecom Analyst

Your stakeholders will need to be convinced that bringing on a telecom expense management (TEM) services provider will materially reduce your expenses and increase operational control in a low-risk fashion. To make your pitch successful, you must make your point quickly and your message must resonate in a powerful way. Here are two key talking points:

Contingency Audits Provide High Upside with No Exposure
You can start out slowly by engaging a TEM provider in an audit project with contingency/success fee-based pricing. Fees are negotiable, but if you engage a provider to audit your organization's invoicing with no upfront costs and a 25% success fee, you are essentially getting free audit work at no risk. If your TEM services provider finds $200k in billing errors, then you cut a check for $50k after your audit savings are realized. If your provider does not find any billing errors, it costs your company nothing.

This is actually a good deal for your company and TEM providers. Why? Because service providers will most often find errors that justify their effort. This is especially true when considering their contingency audit opportunities in the aggregate. A TEM provider is also eager to perform excellent work on your behalf to initiate a long-term relationship, so that they can perform additional professional services for your organization.

This is typically the way enterprise companies like to dip their proverbial toe into TEM waters. It’s safe and easy. It’s a TEM no-brainer.

Other TEM Services Provide Very High Upside with Limited Exposure
Other professional services such as Network Optimization Analysis or Contract Negotiation support can turn up tremendous savings opportunities while also limiting financial risk to your organization.

Optimization work, like audit analysis, is most often priced on a contingency basis. The only difference is that the potential for savings is often greater than for audit analysis alone. Skilled TEM analysts will always be able to find ways to save money via: (1) cheaper service alternatives; (2) transfer of non-discounted pricing for certain services to contracted rates; (3) longer service terms where appropriate; or (4) the removal of unnecessary services altogether.

Contract Negotiation Services ensure that your organization procures the right services, at the right costs, under the right contractual agreements. These professional services will often deliver the biggest TEM bang for your buck, and frequently include success fee caps and savings guarantees to assure the client that results will be equitable and fair for both parties. Here’s an example of savings guarantee language:

“ACE TEM guarantees the annualized savings resulting from the negotiated contracts will be more than X times ACE TEM’s fee. If the first year savings is not at least X times ACE TEM’s fee, the fee will be reduced proportionally relative to the expected savings, with a minimum fee of $N.”

LEARN MORE – download our white paper: The Low-Risk Approach to Telecom Expense Management.

DISCLAIMER: Veramark Technologies, Inc. does not guarantee the authenticity, accuracy, appropriateness, or security of any hyperlinks contained within this posting.