1. Is your business costing you?
find extra profit
A guide to reducing operating costs
Issue 7: Communications
2. Introduction
Communications technologies continue to develop at a rapid
pace, enabling the availability of an ever-increasing amount
of functionality in communication devices and networks.
Once more of a service or personnel- It includes tips and advice on the following areas:
controlled expenditure, communications
are now an integral and strategic business • Fixed Lines – how to best manage your line
function which improve business rental and call costs
productivity – the loss or disruption of • Mobiles – now a significant expense for most
which can often have an immediate and businesses. Do you know your true costs?
severe impact on many businesses. • Data – how to best manage your requirements
and minimise expense
Despite its importance, it is very easy to • Technology – Should you purchase or
lose sight of the true cost of your lease/rent equipment? Could IP Telephony
communications amid the bewildering array and Unified Communications reduce cost
of contracts, pricing, changing technology and improve efficiency?
and unforeseen costs. • Management and Control – contracts and
policies are often an overlooked area which
This guide – the seventh in our series can contribute to minimising expense
looking at different areas of cost reduction
– aims to provide a range of practical advice
and examples from our expert consultants to
help ensure your business is managing its
communications costs effectively and efficiently.
02 Introduction
3. Fixed Line Costs
Despite the exponential growth in email and mobile
usage, the fixed line (landline) is still a fundamental
business communication tool. A reasonable monthly
expenditure on fixed line communications is therefore
inevitable for all businesses.
TIPS TO CONTROL COSTS:
1. Cancel unused lines and ensure that your
inbound and outbound line capacities
match your business needs.
2. Understand your call profile and the real
call tariffs and how they apply against the
range of different call types.
3. Check your bills carefully for one-off costs,
services that are no longer required or
billing errors.
4. Avoid calls to Directory Enquiries.
These calls will cost at least 50p a minute
and the same information is available at no
cost from the web. If you do call Directory
Enquiries, never accept the operator’s offer
to connect you –you will be charged at
least 10 times more per minute than your
normal call rate.
Fixed Line Costs 03
4. Mobile Costs
The mobile phone is a vital business tool for most
companies. But contracts, terms and tariffs can be complex,
and it is common to find monthly mobile costs exceeding
monthly fixed line costs.
TIPS TO CONTROL COSTS:
1. International roaming (voice, data and texts) 2. Understand termination or other admin
costs will normally be outside the bundle and charges which may be applied and how the
will frequently be charged at much higher contract may affect the way you manage
rates. When abroad: your mobile portfolio.
• Turn off data roaming and connect to a
local WiFi point which is free in many cafes 3. Account for all mobile devices (including
and hotels. those used by past employees) and put in
• Use text messages instead of calling. place a process to ensure all leavers return
When roaming you are charged to receive their handsets.
calls as well as to make them but texts
are always free to receive and rarely cost 4.Decide whether employees are entitled
more than 25p to send (even in the most to take the mobile phone number when
remote locations). they leave.
• Consider buying a special additional bolt-on
bundle appropriate to your needs. 5. Consider the costs (including time) of
supporting smartphones.
04 Mobile Costs
5. Data
Your internet connection is often critical to your business.
But it is a limited resource with increasing demands that
needs managing efficiently.
Technologies which deliver broadband 2. Understand what you are using your
services are continually evolving and connection for:
new services are being made available. • How should bandwidth be used in
If your network and internet connections your business?
are critical to your business, remember • Is bandwidth being wasted?
that the cheapest may not always provide • Is non-work related internet usage
you with the level of service you require. controlled?
• Is important traffic prioritised?
TIPS TO CONTROL COSTS:
1. Understand what you are paying for: 3. Monitor usage and take action before
• Is a router and installation included? problems occur:
• What support is available at the time of • Analyse and manage usage. Some
installation and in the future and what firewalls and routers allow you to give
will it cost? priority or prevent certain types of traffic.
• What are the predicted or actual • With employee web misuse, streaming
upload/download speeds? media and spam having the potential
to occupy as much as 25% of internet
bandwidth, ensure you understand
the extent to which bandwidth is
being hijacked.
Data 05
6. Technology
The continued rise in the use of internet-related technologies
and the progressive deployment of next generation networks
and devices has created opportunities to reduce costs and
introduce business process improvements.
IP Telephony and Unified Communications 4.Assess the state of your network. Ensure
IP telephony and Unified Communications you have sufficient capacity and that its
(convergence of voice, data and video on a performance is acceptable.
single network) can be deployed to provide cost
reduction and/or business benefits. 5. Document your requirements to minimise
issues and ensure the end result meets your
TIPS TO CONTROL COSTS: business needs.
1. Identify if your current equipment is
compatible or if further investment is needed. 6. Ensure the additional security and business
continuity risks are addressed.
2. Consolidate equipment and connections, link
locations, share bandwidth across all services 7. Ensure the benefits are identified and
and ensure the network is properly managed. measurable.
3. Understand how the system will be used, Collaboration using today’s technology
how many sites will be supported and what can result in a number of additional
functions will be used. benefits, including:
• Reduced travel costs
• Reduced environmental impact
• Improved -work/life balance and
productivity for employees
06 Technology
7. Purchase versus leasing
Leasing equipment can allow your organisation to
implement new technology without the need for
capital expenditure.
Total Cost of Ownership (TCO) is an TIPS TO CONTROL COSTS:
important factor in making the purchase 1. Capture all (capital) costs for routers,
versus leasing decision, taking into account switches, phones and software, network
risks and benefits associated with these upgrades and system management tools.
solutions. To ensure TCO is used effectively,
it is essential that you compare the 2. Ensure operational start-up costs – such
advantages of both purchasing and leasing. as training costs and implementation costs
– are identified up front.
3. Identify system management, support,
software upgrade costs and any costs
associated with moves, additions
and changes.
4.Consider inter-site connectivity and factor
in ongoing savings from free or reduced
call charges.
Purchase versus leasing 07
8. Management
and Control
Contracts
Communications contracts and terms can vary widely –
both within and across differing communication products
– in terms of their expectations, execution, documentation
and communication.
Contracts, terms and pricing are also 3. Understand your commitments and
becoming increasingly complex. consider whether they are appropriate
Understanding them is therefore a key to your commercial and strategic needs.
component of effective communications Ensure you understand minimum periods
management, ensuring they are delivering and/or minimum spend commitments,
maximum business benefit. charges on termination, rolling contracts,
notice periods and early ‘termination’
It is also essential that you are aware of what charges.
your contract commits you to and, given the
continual change in communications 4.If equipment is obtained through a finance
technology, whether it provides the required agreement, or is provided ‘free’ or at less
flexibility for your business. than retail price, understand whether you
do – or will – own it (if not, seek clarification
TIPS TO CONTROL COSTS: about whether and when the equipment
1. Locate and understand your contracts/terms will have to be returned).
and ensure you have a hard (written) copy.
5. Ensure your service levels are appropriate
2. Be aware that terms may be communicated for the product and your business by
in different ways, including in writing, considering whether you have chosen the
billing messages/insertions and/or updates right service level option for each product,
to websites. during what times are you able to report
faults, how long it will take to fix, whether
there is a warranty and how soon a
replacement will be made available.
08 Management and Control Contracts
9. Policies
Policies and internal procedures are key to managing
costs. It is imperative that employees know and
understand what is required of them in order to avoid
any unforeseen problems or costs.
Policies may be contained in formal manuals, 3. Ensure your choice of mobile phones is based
staff handbooks, contracts of employment on the needs of your organisation. Consider
or via internal communications. whether a phone is being provided for
business use only or includes personal use
TIPS TO CONTROL COSTS: and whether employees need a specific
1. Ensure employees know whether they are phone for business use. Assess whether your
entitled to commit to new – or renew choice is influenced by compatibility with
existing – contracts (particularly those made company IT policy/requirements.
over the phone).
4.Implement a policy which forbids
2. Implement a clear policy regarding the employees lending company devices to
personal use of company (and employees’ friends and relatives.
own) mobiles, fixed lines, company
broadband, web browsing and social 5. Assess whether mobile devices need
networking. Ensure employees understand additional security features such as user
the cost implications, both financial and authentication, firewalls, virus detection,
lost work time. spam controls, memory and contents erasure,
encryption, intrusion detection, secure access
to company network and backup.
6. Prevent employees’ own mobiles being
connected to company computers and
networks.
Policies 09
11. Expense Reduction
Analysts
Expense Reduction Analysts is a global leader in cost,
purchase and supplier management consultancy and
focuses on reducing non-core operating costs for private,
not-for-profit and public sector organisations.
Handling an annual supplier spend of Other topics covered in our series of
hundreds of millions of pounds on behalf of cost reduction guides include:
clients in all sectors, the consultants at Issue 1: Property and Premises
Expense Reduction Analysts use their Issue 2: Banking and Finance
significant purchasing influence to achieve Issue 3: Back Office Supplies
optimum value from suppliers, often Issue 4: Professional Services
successfully retaining incumbents and using Issue 5: Logistics
expert analysis and market intelligence to Issue 6: IT
combat ‘contract fatigue’.
For more information contact
Expense Reduction Analysts has 170
consultants across the UK. It also has a global Expense Reduction Analysts
influence in more than 35 countries on: 02380 829 737
specialising in more than 100 non-core
business expenditure categories.
or visit our website at:
www.expense-reduction.co.uk
Expense Reduction Analysts 11
12. find extra profit
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Analysts
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