A guide to reducing operating costs

Issue 7: Communications

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Introduction

Introduction02

Communications technologies continue to develop at a rapidpace, enabling the availability of an ever-increasing amountof functionality in communication devices and networks.

Once more of a service or personnel-controlled expenditure, communications are now an integral and strategic businessfunction which improve businessproductivity – the loss or disruption of which can often have an immediate andsevere impact on many businesses.

Despite its importance, it is very easy to lose sight of the true cost of yourcommunications amid the bewildering array of contracts, pricing, changing technology and unforeseen costs.

This guide – the seventh in our series looking at different areas of cost reduction – aims to provide a range of practical advice and examples from our expert consultants tohelp ensure your business is managing itscommunications costs effectively and efficiently.

It includes tips and advice on the following areas:

• Fixed Lines – how to best manage your linerental and call costs

• Mobiles – now a significant expense for mostbusinesses. Do you know your true costs?

• Data – how to best manage your requirementsand minimise expense

• Technology – Should you purchase orlease/rent equipment? Could IP Telephony and Unified Communications reduce cost and improve efficiency?

• Management and Control – contracts andpolicies are often an overlooked area whichcan contribute to minimising expense

Despite the exponential growth in email and mobileusage, the fixed line (landline) is still a fundamentalbusiness communication tool. A reasonable monthlyexpenditure on fixed line communications is thereforeinevitable for all businesses.

Fixed Line Costs

TIPS TO CONTROL COSTS:1. Cancel unused lines and ensure that your

inbound and outbound line capacitiesmatch your business needs.

2. Understand your call profile and the realcall tariffs and how they apply against therange of different call types.

3. Check your bills carefully for one-off costs,services that are no longer required orbilling errors.

4. Avoid calls to Directory Enquiries. These calls will cost at least 50p a minuteand the same information is available at nocost from the web. If you do call DirectoryEnquiries, never accept the operator’s offerto connect you –you will be charged at least 10 times more per minute than yournormal call rate.

Fixed Line Costs 03

Mobile Costs

Mobile Costs04

The mobile phone is a vital business tool for mostcompanies. But contracts, terms and tariffs can be complex,and it is common to find monthly mobile costs exceedingmonthly fixed line costs.

TIPS TO CONTROL COSTS:1. International roaming (voice, data and texts)

costs will normally be outside the bundle andwill frequently be charged at much higherrates. When abroad:• Turn off data roaming and connect to a

local WiFi point which is free in many cafesand hotels.

• Use text messages instead of calling. When roaming you are charged to receivecalls as well as to make them but texts are always free to receive and rarely costmore than 25p to send (even in the mostremote locations).

• Consider buying a special additional bolt-onbundle appropriate to your needs.

2. Understand termination or other admincharges which may be applied and how thecontract may affect the way you manage your mobile portfolio.

3. Account for all mobile devices (including those used by past employees) and put inplace a process to ensure all leavers returntheir handsets.

4.Decide whether employees are entitled to take the mobile phone number when they leave.

5. Consider the costs (including time) ofsupporting smartphones.

Your internet connection is often critical to your business.But it is a limited resource with increasing demands thatneeds managing efficiently.

Data

Technologies which deliver broadbandservices are continually evolving and new services are being made available. If your network and internet connectionsare critical to your business, remember that the cheapest may not always provideyou with the level of service you require.

TIPS TO CONTROL COSTS:1. Understand what you are paying for:

• Is a router and installation included?• What support is available at the time of

installation and in the future and what will it cost?

• What are the predicted or actualupload/download speeds?

2. Understand what you are using yourconnection for:• How should bandwidth be used in

your business?• Is bandwidth being wasted?• Is non-work related internet usage

controlled?• Is important traffic prioritised?

3. Monitor usage and take action beforeproblems occur:• Analyse and manage usage. Some

firewalls and routers allow you to givepriority or prevent certain types of traffic.

• With employee web misuse, streamingmedia and spam having the potential to occupy as much as 25% of internetbandwidth, ensure you understand the extent to which bandwidth is being hijacked.

Data 05

Technology

Technology06

The continued rise in the use of internet-related technologiesand the progressive deployment of next generation networksand devices has created opportunities to reduce costs andintroduce business process improvements.

IP Telephony and Unified CommunicationsIP telephony and Unified Communications(convergence of voice, data and video on asingle network) can be deployed to provide costreduction and/or business benefits.

TIPS TO CONTROL COSTS:1. Identify if your current equipment is

compatible or if further investment is needed.

2. Consolidate equipment and connections, linklocations, share bandwidth across all servicesand ensure the network is properly managed.

3. Understand how the system will be used, how many sites will be supported and whatfunctions will be used.

4.Assess the state of your network. Ensure you have sufficient capacity and that itsperformance is acceptable.

5. Document your requirements to minimiseissues and ensure the end result meets yourbusiness needs.

6. Ensure the additional security and businesscontinuity risks are addressed.

7. Ensure the benefits are identified andmeasurable.

Collaboration using today’s technology can result in a number of additional benefits, including: • Reduced travel costs• Reduced environmental impact• Improved -work/life balance and

productivity for employees

Leasing equipment can allow your organisation toimplement new technology without the need forcapital expenditure.

Purchase versus leasing

Total Cost of Ownership (TCO) is animportant factor in making the purchaseversus leasing decision, taking into accountrisks and benefits associated with thesesolutions. To ensure TCO is used effectively,it is essential that you compare theadvantages of both purchasing and leasing.

TIPS TO CONTROL COSTS:1. Capture all (capital) costs for routers,

switches, phones and software, networkupgrades and system management tools.

2. Ensure operational start-up costs – such as training costs and implementation costs – are identified up front.

3. Identify system management, support,software upgrade costs and any costsassociated with moves, additions and changes.

4.Consider inter-site connectivity and factor in ongoing savings from free or reduced call charges.

Purchase versus leasing 07

Management and Control

Contracts

Management and Control Contracts08

Communications contracts and terms can vary widely –both within and across differing communication products – in terms of their expectations, execution, documentationand communication.

Contracts, terms and pricing are alsobecoming increasingly complex.Understanding them is therefore a keycomponent of effective communicationsmanagement, ensuring they are deliveringmaximum business benefit.

It is also essential that you are aware of whatyour contract commits you to and, given thecontinual change in communicationstechnology, whether it provides the requiredflexibility for your business.

TIPS TO CONTROL COSTS:1. Locate and understand your contracts/terms

and ensure you have a hard (written) copy.

2. Be aware that terms may be communicatedin different ways, including in writing, billing messages/insertions and/or updates to websites.

3. Understand your commitments andconsider whether they are appropriate to your commercial and strategic needs.Ensure you understand minimum periodsand/or minimum spend commitments,charges on termination, rolling contracts,notice periods and early ‘termination’charges.

4. If equipment is obtained through a financeagreement, or is provided ‘free’ or at lessthan retail price, understand whether you do – or will – own it (if not, seek clarificationabout whether and when the equipment will have to be returned).

5. Ensure your service levels are appropriatefor the product and your business byconsidering whether you have chosen theright service level option for each product,during what times are you able to reportfaults, how long it will take to fix, whetherthere is a warranty and how soon areplacement will be made available.

Policies and internal procedures are key to managingcosts. It is imperative that employees know andunderstand what is required of them in order to avoidany unforeseen problems or costs.

Policies

Policies may be contained in formal manuals,staff handbooks, contracts of employment or via internal communications.

TIPS TO CONTROL COSTS:1. Ensure employees know whether they are

entitled to commit to new – or renew existing – contracts (particularly those madeover the phone).

2. Implement a clear policy regarding thepersonal use of company (and employees’own) mobiles, fixed lines, companybroadband, web browsing and socialnetworking. Ensure employees understandthe cost implications, both financial and lost work time.

3. Ensure your choice of mobile phones is basedon the needs of your organisation. Considerwhether a phone is being provided forbusiness use only or includes personal useand whether employees need a specificphone for business use. Assess whether yourchoice is influenced by compatibility withcompany IT policy/requirements.

4. Implement a policy which forbids employees lending company devices tofriends and relatives.

5. Assess whether mobile devices needadditional security features such as userauthentication, firewalls, virus detection,spam controls, memory and contents erasure,encryption, intrusion detection, secure accessto company network and backup.

6. Prevent employees’ own mobiles beingconnected to company computers andnetworks.

Policies 09

Expense Reduction Analysts10

Expense ReductionAnalysts

Expense Reduction Analysts 11

Expense Reduction Analysts is a global leader in cost,purchase and supplier management consultancy andfocuses on reducing non-core operating costs for private,not-for-profit and public sector organisations.

Handling an annual supplier spend ofhundreds of millions of pounds on behalf ofclients in all sectors, the consultants at Expense Reduction Analysts use theirsignificant purchasing influence to achieveoptimum value from suppliers, oftensuccessfully retaining incumbents and usingexpert analysis and market intelligence tocombat ‘contract fatigue’.

Expense Reduction Analysts has 170consultants across the UK. It also has a globalinfluence in more than 35 countriesspecialising in more than 100 non-corebusiness expenditure categories.

Other topics covered in our series of cost reduction guides include:Issue 1: Property and PremisesIssue 2: Banking and FinanceIssue 3: Back Office SuppliesIssue 4: Professional ServicesIssue 5: LogisticsIssue 6: IT

For more information contactExpense Reduction Analysts on: 02380 829 737

or visit our website at:www.expense-reduction.co.uk

Expense ReductionAnalysts

find extra profit

www.expense-reduction.co.uk

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