From the November/December 2012 issue of Treasury & Risk magazine

Slimming Down Phone Bills

Carlson cuts costs as its telecom expense management provider spots unused circuits and expired contracts.

Hospitality company Carlson, which owns such familiar brands as Radisson Hotels and T.G.I. Friday’s, is reaping big savings with a new telecom expense management (TEM) provider whose services go beyond the standard approach of identifying carrier overbilling. According to Gartner research, companies that outsource TEM for their fixed lines could save 16% to 32% of overall fixed-line spending in the first two years and 5% to 11% in subsequent years by avoiding costs, recapturing overpayments and reducing staff. 

“Identifying overbilling is the raison d’être for TEM,” says Phil McDonald, director of sourcing operations at Carlson, which had $5.4 billion in 2011 revenue. “Carriers are notorious [for] invoicing incorrectly.”

Minnesota-based Carlson is a private company, and McDonald is reticent about sharing telecom spending and savings data. But he says the company reduced its spending on mobile phones and accessories to 10% of its overall wireless spending, from an industry average of 30%, by having employees order from a selection of pre-approved devices via a Web portal managed by its TEM provider. 

There are more than 400 companies in the $1 billion TEM market, and competition has created powerful downward pressure on prices, according to Eric Goodness, a research vice president at Gartner. “Over the past five years, TEM prices have gone down 75%,” he says.

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