Spend Matters welcomes another guest post from NPI, a spend management consultancy, focused on delivering savings in the areas of IT, telecom, transportation and energy.
Long before spend management became a strategic business focus, there was "TEM" -- telecom expense management. So why do so many companies still fail to reign in telecom spending?
For starters, the complexity of pricing, tariffs, and discounts are confusing to even the most advanced procurement and IT teams. Second, telecom isn't hyped as much as other technologies shaping business today (e.g. cloud computing, virtualization, security) and, as a result, we've let complacency sneak in. Finally, telecom spending is gargantuan. It's difficult to inventory, audit, and control -- especially for today's geographically and strategically disparate enterprises.
But that's enough with excuses. If there was ever a time to make TEM a priority, it's now! We are entering a period of "hyperdigitization," where telecom isn't just voice and point-to-point data circuits with a little wireless voice and data sprinkled in. Vast MPLS "clouds" and wireless data are becoming biological to the business -- a backbone of mission critical operations in almost every industry and, indeed, an emerging industry itself. As Gartner recently noted in (September 2010):
"Hyperdigitization is the accelerating manifestation of the impact of IT. Digitization describes the parts of the economy in which the "product" or "service" is content that is entirely, or almost entirely, digital. This proportion of the economy is growing significantly faster than the "physical" aspects of the economy and as such, this force describes an essential part of the global economy ... It is estimated that by 2020, roughly one-quarter of the global gross domestic product (GDP) will be generated by the force of digital activity."
Hyperdigitization has already pushed the demand for telecom services, products and bandwidth into a hyper growth mode. Spending is increasing and many expect bandwidth costs to go up -- not down -- as we're already seeing with the elimination of unlimited wireless data plans. Pricing, terms, and conditions will become more complex than they already are. If you don't think this is a serious problem, think again. At NPI, we've found that the average enterprise already overspends 20-50% on telecom.
What are you doing to curb telecom overspending in the age of hyperdigitization?
-- Jeff Muscarella, EVP of Technology, NPI