What are the Top Three Reasons Behind Telecom Overspend?

October 10, 2022

Telecom overspend is a quick way of saying… “you’re paying too much on your telecom invoices.” Let us dive into some of the reasons we see it happening time and time again.

Telecom Overspend Reason Number 1

Trusting under-qualified people or people with their own best interests in mind, is a huge reason we see inflated carrier invoicing.

First, let us examine trust with your existing team. We have seen countless companies that rely on their own under-qualified and overworked admins, IT staff, or accounts payable personnel to identify overcharges on carrier invoicing. While these employees are hardworking, they are not telecom experts and are not trained to examine carrier invoicing to the level that it needs to be evaluated. Even if they were analyzing carrier invoices as a daily task, your staff simply does not have the tools, or time, to tackle this huge undertaking on an ongoing basis.

The second trust area is that companies trust their carrier to automatically bring them the best value. Over the years, we have heard our fair share of carrier rep horror stories where the reps are either nonexistent or switch so often that they cannot even begin to learn the details of your account. Even more dangerous, is the attentive “trustworthy” carrier rep that has kept the “invoice creep-up” year over year. Then there are inter/intra-lata carrier taxes that you must review carefully especially if you are non-exempt!  Recently, we uncovered $85K in overspend per month on an account that has an assigned rep for over four years.  That’s over four million dollars in overspend in four years. They made Presidents Club on that one ~ for sure!

Prelude Solutions focuses on getting your telecom spend optimized while bringing efficiency to your internal staff to allow them to focus on what they do best.

Telecom Overspend Reason Number 2

Fear that you will insult your employee’s intelligence or negatively impact the relationship that you have with your current carrier rep by calling attention to overspend.

We often see IT Directors fearful that they will offend the person they have hired to handle their day-to-day carrier interactions. In cases where Prelude has been brought in to assist, we end up complimenting the current staff and providing the extra tools that make these employees shine.

There is typically fear from the carrier that a telecom consultant will try to turn the customer against them. We strive to do the exact opposite! We fully understand that we need the carrier’s buy-in to make this a long and healthy relationship. Beating up a carrier for cost savings is the worst approach a consultant can take; but rather negotiation along with a built-in plan for partner success so all parties win, is the Prelude approach.

Telecom Overspend Reason Number 3

Remaining complacent with the status quo is the sweet spot for carrier overcharge. Carrier invoicing is complex by design, which often leads to a “just pay it” attitude. No one goes to college to learn how to read telecom bills and customer service records. This is an experience based skill.

Prelude approaches our customer’s telecom needs and their carrier relationships with fresh eyes to identify overspend, build business processes while providing a better end user experience. Implementing carrier quarterly business reviews and contract reviews should not just be for carriers to pitch while obtaining new business. They need to be a thoughtful two-way conversation about what has been working and what needs to be enhanced moving forward. It may be pricing, plan changes, or upgrading to newer technology; but carrier options should never be considered simply because the carrier has a promotion going on at this time.

We worked with a client that had a “10% rule.” If the invoice was within 10% of the previous month, they would simply pay the bill. Of course, this meant that it was possible to see a 9% increase every month, without any red flags. When Prelude optimized their wire line spend, $850K annual overspend was found. Invoice optimizing and analyzing is a daunting, difficult and tedious task ~ but companies cannot afford to allow it to go unchecked. What would you do with 850K back in your budget?

In closing, being fiscally responsible with telecom spend means closely examining these three factors: Trust, Fear, and Complacency. Changing your view on these three factors is the first step towards properly managing your telecom invoices and eliminating telecom overspend.

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