Buyers Meeting Point procurement by Kelly Barner

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Why telecom companies don’t want CPOs to know about TEM

Mobile devices are now part of the modern business uniform. Mobile phones created a culture of always available, but mobile devices enable constant connectivity. What telecom companies don’t want CPOs to know is that bundling voice, data, and devices with them is no longer the most effective way to manage telecoms spend.

 

Mobile growth is changing telecom spend

The spread of mobile devices has caused a major shift in how telecoms are used and purchased. The 2015-2016 ACCC telecommunications market report states that prices paid for fixed lines and mobile services have both declined. One the other hand, prices paid for Internet services have generally increased. Internet service prices rose by 2.7 per cent on average. That shift matters because, according to Cisco, the supercomputers in our pockets are forecast to drive data use at a compound annual growth rate of 22 percent from 2015 to 2020.

Telecom revenue growth from data (and declining use of voice services) delivers CPOs a cost reduction opportunity with a major indirect spend item. According to The Hackett Group, 17 percent of indirect spend is on telecoms and IT.  But what used to be a black box of complicated technical speak and three letter engineering terms can now be simplified into service levels and price.

 

Unbundling the telecom basket of product and services

When shopping for a basket of any goods, the lowest cost outcome is achieved by buying each individual item at the lowest price. Traditionally, however, buying telecoms has not been like buying canned tomatoes at the grocery store. Coverage impacts service. Hardware and device procurement impact the ability to change suppliers.

But the rise of Over-The-Top applications that deliver services and Bring-Your-Own-Device strategies that reduce device ownership mean that telecom services, hardware, and connections can now be split. Plain old telephone systems, mobile, and Internet services are servicing different business functions - each with their own set of unrelated requirements. Unbundling the telecom product and service plans means that spend across the category can start to get closer to that lowest cost basket.

 

The CPO complexity challenge

The challenge for CPOs is managing service complexity. While different suppliers can now deliver parts of the telecom basket without impacting service levels, extra suppliers increases their management overhead. Each supplier comes with a different invoice format. Each supplier notifies users of excessive usage in different ways. When all a business’ telecom needs were delivered by one supplier, billing and delivery complexity were managed through relationships. When more than one supplier is used relationships need to give way to process.

To establish a telecom service management process, CPOs need to provide their businesses with a tool that sits over their suppliers. Modern telecom expense management (TEM) suites deliver on this need by providing a single portal from which services can be managed and costs monitored. They also make it possible to change suppliers without impacting service levels.

Gartner estimates that using TEM services can reduce the cost impact of telecoms connectivity services and devices by at least 30%. TEM suites deliver this cost reduction by providing online management of device and service inventory and analytics, payment automation that consolidates invoice files across suppliers, and advanced sourcing that increases competition by reducing supplier risk and providing price feedback.

 

Delivering on the CPO agenda

The move to mobile means that telecoms impact business board members and executives. This makes telecom services a strategic buy that CPOs must have a method of managing. TEM delivers on this need, elevating CPOs to trusted advisors to CIOs, the traditional managers of telecoms, as well as the rest of the C-suite.

 
 
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Saturday, 21 October 2017