Outsourcing of Telecom Expense Management (TEM) results in over 25% savings in a 2-year period for a large consumer packaged goods company

Situation:

A multinational consumer packaged goods company knew that there was a large potential to reduce their telecommunication spend and increase billing accuracy; however, the complexity of the rate structures, and managing thousands of invoices, had prevented them from addressing the category. They had a strong relationship with an existing telecommunications network services provider and did not want to incur the costs of switching providers. The company looked for a partner to help them immediately reduce telecommunications costs and develop an ongoing expense-management program.

Solution:

Drawing on their extensive knowledge of the telecommunications industry, ICG Commerce category experts proposed that the company conduct a focused telecomm audit and recovery project to drive rapid cost reductions. To support the long-term goal of better ongoing expense management, ICG Commerce recommended that the company outsource their telecom bill payment to a specialized provider that would conduct the audit and recovery project as the initial step of the overall implementation of the telecom expense-management outsourcing relationship.

An emerging market, Telecom Expense Management solutions and capabilities are highly varied, and the market is highly fragmented. ICG Commerce conducted a broad market scan, reviewing over 60 suppliers. Using ICG Commerce category experience, industry and analyst research, and the company's requirements, the team developed an eRFI that was distributed to 41 of the 60 suppliers. The results of the eRFI identified 12 suppliers that met the criteria to be considered for the next phase of the process—an eRFP that included an extensive analysis of each supplier's capabilities in comparison to the company's specific requirements. Three suppliers were selected for the final round, and focused negotiations ensued with the highest-ranking supplier, culminating in a 3-year outsourcing contract.

Results:

The immediate result of the audit and initial cost reductions from outsourcing telecom bill-pay well exceeded $1.0MM in the first year. Ongoing savings, comprised of rate adjustments, network optimization, and operational efficiencies, are expected to reach 25% within the first 2 years of the service.