Success in managing wireless telecom expenses

Discover how an SMB successfully outsourced their wireless telecom expense management, curing lots of headaches along the way.

This tip originally appeared on SearchSMB.com

About a year and a half ago, StarTek Inc.'s CIO Steve Boyer decided it was high time to take control of his company's wireless telecom expenses.

A $200 million process outsourcing firm that specializes in call center management, StarTek is Denver-based but highly distributed: "So we have a strong dependency on cellular service to communicate with each other and with clients," Boyer said.

With a wide variety of service contracts and the cellular arena in constant flux, Boyer's team found it extremely difficult to keep track of who was paying how much to which wireless service provider, for how many minutes per month.

That inability was costing StarTek. "We weren't getting optimal deals" from wireless service providers, Boyer said. When, as part of an internal restructuring, the IT group inventoried every cellular phone number, it discovered a significant number of defunct cellular accounts for which the company was still paying.

Concluding that StarTek lacked the resources to manage wireless expenses on its own, Boyer went looking for a wireless telecom expense management (WTEM) provider that could monitor StarTek's wireless service contracts to "make sure they are current and competitive, and negotiate the best market terms and conditions." He chose Telwares Communications LLC, which had already helped StarTek save 20% by renegotiating wireline contracts; and 25% to 30% on an annualized basis by setting up new rate structures.

Boyer said he expects Pleasanton, Calif.-based Telwares to save StarTek between 25% and 30% annually, by negotiating more competitive rates with five or six wireless service providers.

Not a lot of companies are following StarTek's strategy -- yet. Stamford, Conn. based-Gartner Inc. expects the global telecom expense management market to grow to about $500 million by year's end. About 15% of that market is WTEM, according to Phil Redman, a research vice president at the research firm. However, Gartner expects the WTEM market to start taking off in the 2007-2008 time frame, as more companies "realize they're spending more and more, and they don't have the resources and expertise it takes" to manage and optimize wireless costs in-house, Redman said.

The challenges

Several factors make in-house WTEM a challenge, for any size firm. First, many companies leave the procurement of wireless services and devices to individual end users or sites. As a result, companies wind up contracting with a great many regional wireless providers, each on different terms.

A March 2006 survey by Boston-based Aberdeen Group Inc. found 76% of respondents had at least some wireless devices that employees had bought, typically handing the costs over to the firm in a travel and entertainment report.

"It's virtually impossible to quantify, qualify and understand all wireless costs when they're scattered among employee expense reports," the Aberdeen report notes.

Small and medium-sized businesses (SMBs) with limited IT staffs are even more likely than enterprises to push purchase and deployment responsibilities onto end users, according to Gartner's Redman.

Another key factor: Wireless expenses are in constant flux. Carriers keep updating their cost structures, introducing and terminating special deals, and adding restrictions.

A typical wireless user base is equally volatile, with employees regularly changing jobs and locations both between and within companies, each time requiring wireless accounts to be terminated, added or changed.

What this adds up to is a major management headache for IT administrators. The problem cannot be ignored, however. Security, budgetary and productivity concerns are pressuring companies to keep better track of employee wireless accounts and utilization -- not just how many minutes, but whether those minutes are being used for business or chatting with buddies.

Making the case for SMBs

Enterprises confront a much larger-scale WTEM challenge than small and midsized businesses (SMBs_. However, as the StarTek case shows, SMBs face the same issues, as users' mobile devices proliferate. "WTEM is useful typically for those with 300 or 400 wireless devices and up," said Dawn Verbrigghe, director of business operations and development at iWave Inc. in New York.

WTEM providers relieve SMBs of having to deal with wireless carriers -- a time-consuming and often frustrating task. Specific services include the following:

  • Rating service providers in terms of their responsiveness to move/add/change requests, quality of service and price competitiveness.

  • Regularly updating wireless contracts to reflect the latest changes in carrier rate structures and take advantage of time-limited special deals.

  • Monitoring a company's service usage and alerting administrators when employees are exceeding minute allotments.

  • Ensuring that bills accurately reflect actual usage, as well as current contract terms, and that rebates and cost savings a company has been promised, or qualifies for, are implemented correctly.

    This last service is key. Ten to 15 percent of all wired and wireless bills have inaccuracies, according to Gartner. However, few SMBs have the resources to continually check for mistakes, which are often small, buried in fine print, and tend to show up on a bill a month or two after they actually occurred.

    Which is why SMBs are turning to WTEM outsourcing.

    While many WTEM service providers primarily target enterprises, SMBs can find something to fit their budget and needs if they know where to look.

    Firms that cannot afford to hire a WTEM provider on an ongoing basis can choose to go with time-limited or one-shot arrangements.

    StarTek, for example, engages Telwares for a finite time "to get best possible terms and conditions" on contracts, Boyer said. "We internally administer monthly invoices, and monitor service."

    Telwares also gave StarTek one-time help defining a companywide cell phone usage policy that includes an approval process for establishing service and purchasing equipment that does not include unnecessary bells and whistles, and ensuring that wireless devices are used for "appropriate business purposes, and that we're getting appropriate equipment," Boyer said.

    Typical pricing for such services ranges from $2 to $10 per user per month, according to Redman. Some vendors charge on a contingency basis, according to how much they save a customer.

    A WTEM service provider can't do it all. SMBs need to do some initial spadework, including cleaning up their wireless device inventory and consolidating billing, if they want to get the most out of their WTEM provider, Verbrigghe said.

    But the gain is generally worth the pain, sources agree.

    Companies can expect to save between $24 and $120 per year, per user, by managing wireless telecom expenses, Redman said. IWave typically saves customers 30% to 40% the first year, on average, Verbrigghe claimed.

    StarTek's Boyer puts it like this: "The main thing is to ensure that we have good contracts in place with the flexibility to take advantage of future changes in the market, and in our own internal business needs."

    Elisabeth Horwitt is a contributing writer based in Waban, Mass.

  • This was first published in November 2006

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