When you’re justifying the ROI of implementing Technology Expense Management (TEM), don’t just look at hard dollar paybacks, such as refunds for billing errors. Instead, consider the time and cost savings that are often overlooked:
- Employee productivity benefits from increased bandwidth
- Greater visibility into data that reveals hidden expenses, so you can make more informed business decisions
- A sound inventory that keeps costs lower
TEM ROI At a Glance: What Analysts Are Saying
More and more enterprises are investing in TEM programs right now, because of the incredible expense of telecom services. In fact, the average communications spend was forecast to be 37% of all global end-user IT spending in 2020.
Building the Business Case: TEM ROI Framework
According to ETMA, tracking ROI and building a business case for a TEM program addresses changes across four main categories where you can achieve savings.
- Telecom Savings from fixing billing errors and reducing spend
- Labor Efficiencies from reallocating resources to higher IT functions and automation, consolidation and help-desk resources
- Indirect Savings from improved policies, workflows, and decision-making
- Security Compliance from enhancements and increased adherence to mobile policies, reducing risk of, and costs associated with security breaches
|Savings Category||Potential Savings|
|Spending less on telecom services|
|Recovery of refunds for billing errors||2% - 15% of expense|
|Cost avoidance by reducing future spending||5% - 30% of expense|
|Automation, consolidation & helpdesk||FTE re-allocation to high-priority initiatives|
|Improved procurement policy, workflows and decision making||1% - 5% of expenses|
|Security enhancements, global compliance, application of mobile policy and accounting rules globally||Likelihood of a breach X cost of lawsuit or penalties|
To advance your TEM initiative, it helps to build your case across the four areas to gain a more holistic sense of how your organization will benefit. Ultimately, the cost justification process should focus on areas that add value to the organization. Cost avoidance savings is the most obvious starting point to justify a program and evaluating its ongoing performance. Though less overt, labor efficiencies, indirect savings and security considerations are also important opportunities to build the business case.
When Do I Begin Seeing Savings?
This is THE question that is always asked. With most TEM programs, returns on hard-dollar savings are seen right from the beginning of the engagement. Year one will be when most optimizations and efficiencies are discovered. Keep this in mind when you’re calculating the overall TEM ROI value, taking into account the entire length of time for the program. Gartner reports that “Cost optimization, coupled with business process transformation and growing resources in digitalization, is a key focus for many large and multinational corporations which often seek ROI within two to three years for net-new contracts on TEM deployments.”
The Cost of Delaying a Program
The other cost to factor in is the impact of not doing anything. When looking at ways to reduce telecommunications and IT expenses, there can be hard costs associated with not acting. Carrier contracts are increasingly limiting the allowable time for customers to file claims for refunds—typically six months for long-distance services and two years for local billing. Also, telecom service provider contracts are becoming increasingly stringent on the time allowed to file a claim for billing errors.
Don’t delay. After all, a successful TEM program can drive improvements across the organization in terms of improved decision making, productivity, security and innovation, as well as a significant ROI.