Your C-Level Guide to Telecom ROI

When evaluating your telecom expenses, the first thing to consider is not simply how to increase the ROI but rather how to better understand your company’s network and available inventory. Enterprises of all sizes struggle year to year, assessing the best available options for curbing telecom costs, which include inventory tracking and billing issues. Many executives are looking for better ways to manage budgets, assets and resources in order to curtail increasing telecom costs.

Telecommunications represents one of the top five line-item expenses in the budget for most enterprises, yet many financial managers have little knowledge of how to allocate spending for this growing category.

Below are some tips to keep in mind when looking to reduce costs and increase efficiency for your communications program.

Manage Your Assets

As a first step, get control of your assets. Enterprises can incur tremendous expense by simply not accounting for their telecom inventory. As an example, a company may purchase new phones without knowing that unused phones are already available in the office. Executives should consider a vendor-based asset management service that protects telecom investments by lowering costs, increasing efficiency and extending the life of systems with complete and accurate inventory information.

Explore Leasing vs. Buying

Next, consider your technology needs for the present and over the next five years, and evaluate whether it’s a smarter decision to lease or buy equipment.

Technology can be expensive to acquire and often is quickly outdated. Traditionally, CIOs have had to compare the cost of leasing with the cost of an outright purchase, or worse, financing, when contemplating a technology purchase.

Both long-term leasing and outright purchase can trap an organization into a technology that no longer meets the needs of the enterprise two or three years out. While most manufacturers today have technology migration and upgrade programs, sometimes the needs of your company might not match the direction of your current suppliers. As time goes on, this could render your organization less competitive.

Leasing has the advantage of aligning cash flows – lease payments and the advantages accrued from the use of the technology – but leasing brings its own challenges. Many leases have rigid renewal/non-renewal dates. Failure on your part to notify the leasing company regarding non-renewal may extend your lease automatically with technology you want to replace.

Fortunately, there are leasing products that are designed for fast-paced technology acquisitions. Typically, these products have a “no-penalty technology conversion” clause that lets you trade out of your existing technology and replace it with something else at any point during the lease.

Leverage Existing Equipment

Make the most of your existing telecom equipment. Frequently, when enterprises choose to upgrade or even switch to another telecom technology, they are presented with few options, all of which require wholesale replacement of their existing systems. In many cases, existing equipment can be refurbished and incorporated into your new system, adding savings to the bottom line. Companies like SOURCE can leverage your existing telecom infrastructure, while also providing a foundation for future technologies, including converged solutions.

*Aberdeen Research, "Network Meeting Agenda" http://www.aberdeen.com/research/agenda/2007_network_management_agenda.pdf