Uncovering Telecom Savings in Local Exchange Services

May 27th, 2010 at 08:32am Paladin Associates - Tom Thompson

Telecom is a large, untapped spend category many companies find challenging when assessing cost-saving opportunities.  Where to begin?

Telecom suppliers have a distinct advantage over vendors in many other industries — management’s reluctance to jeopardize a business’s networking infrastructure design in order to transition to an alternative supplier. 

As a result:

• Incumbent suppliers tend to be much less flexible in reacting to marketplace pricing or other business requirements.
• The Sourcing organization has multiple obstacles to overcome – the incumbent supplier and the multiple internal organizations where ownership of telecom services is often fractured between Sourcing, IT, Telecom and Facilities.

A significant part of telecom expenditures are for Local Exchange Services** (see definition) which present unique difficulties and challenges to the task of finding cost savings:

• There are at least 50 individual state tariffs applicable to the same type of services.
• Companies have little or no access to actual published rates which change periodically.
• If services are not centrally managed there is no payment history available.
• Invoicing tends to be on paper and approved for payment locally with minimal or no central review.
• Discounts are minimal.
   

However savings from 13% – 20% can be achieved if you know where to look.

In addition, the following benefits can be applicable to Local Exchange Services:

• Website portal access for account management and on-line tracking of new orders, repair requests, etc.
• Billing designed to match customer accounting requirements (GL codes, departments, regions, cost centers).
• No cutovers (overlapping services) with the LEC for analog services; simply a billing change.

 **Local Exchange Services (LEC) Definition:    A company providing local telephone service.

• The incumbent Local Exchange Company (ILEC) is the local telephony company (telco) in place prior to deregulation, after which one or more competitive LECs (CLECs) were introduced.
• LEC companies are also sometimes referred to as “telcos.”  A “local exchange” is the local “central office” of an LEC. Lines from homes and businesses terminate at a local exchange.
• Local exchanges connect to other local exchanges within a local access and transport area (LATA) or to interexchange carriers (IXCs) such as long-distance carriers AT&T, MCI, and Sprint.

Paladin Associates is a sourcing cost reduction company with a unique understanding of opportunities to reduce costs in Telecom spend categories.

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Entry Filed under: General, Technology / SaaS