Telephone costs are very often a business’s highest administrative expense. Despite this, many Irish businesses are unaware that a number of relatively simple actions can be taken to deliver real savings to your bottom line. Some can be achieved by finding better deals from Telecommunications Operators (Telcos), whereas others entail organising your work practices to make more efficient and effective use of your telephone services.
Directory assistance services are certainly a great convenience, particularly for busy sales people. But many users do not realise that such services are now charged at premium rates. What is even more shocking is that, if you accept the operator’s kind offer to connect you directly to the requested number, you can be charged up to ten times the cost of a normal landline call per minute for as long as you are on the connected call.
Although you may be aware of staff using Directory Enquiries, consider the case of one company which discovered, during a telecoms review, that in one month 5.7 per cent of all calls were to Directory Enquiries. A substantial proportion of the businesses calls were national and international. Notwithstanding this, the cost for Directory Enquiries represented 14 per cent of all call costs in the month! In another case where all calls were within Ireland, Directory Enquiries accounted for 10 per cent of the calls but 30 per cent of the costs!!
Here are some tips, which can remedy the situation:
- Use Directory assistance only to obtain a number—you may need to use the number again, so it is best to add it to your database rather than have the operator connect you.
- Make paper telephone directories available or better still, if you have ‘always-on’ access to the Internet, train your staff to use Web-based telephone directories. These include www.11850.ie, www.goldenpages.ie or www.eircom.ie.
- Use available discount schemes—Corporate discount schemes are based either on historic call volume or expenditure. But if you are offered a discount based on your monthly spend, make sure you know if there is a minimum spend threshold, in other words a minimum amount that must be accrued before the discount is applied.
- If your current provider is not obviously giving you a discount, ask for one. Some operators do not give you a discount automatically and you need to take the initiative and apply for them. If there is a threshold usage per month, beware, make sure your call volumes will reach this every month.
One particular business was pleased to be receiving a 27.5 per cent discount from their service provider. However, their call volumes had risen to the extent that they actually qualified for a 42 per cent discount!
Mobile phones
The advantages of mobile phones for staff are well known. Unfortunately, they are the single biggest challenge to controlling escalating telecommunications costs. Mobile telephone calls cost significantly more than fixed line calls and companies need to compare the cost and quality of mobile calls with the necessity and convenience of having mobile phones. In addition, as any mobile phone user is aware, the connections are frequently of poor call quality, the calls ‘break up’ and your call often gets dropped so necessitating another call.
In another business, 43 per cent of all call costs were to mobiles and approximately 88 per cent of the mobile cost was generated by calls to other members of staff.
Most mobile operators now have facilities on their Websites to send text messages. People in the office can use these facilities to quickly type text messages to contact colleagues, overcoming slow text entry systems on handsets. O2 currently offers 400 free messages a month to registered users.
The following are a few quick and easy tips to help you to reduce your mobile and landline-to-mobile call costs:
- If you are in the office, use a landline to make a call rather than a mobile—it is much cheaper.
- If you are using a mobile and the call is dropped, and you really need to continue, you should immediately redial, as many operators will credit the call if the same number is dialled within a specified time of being dropped. You should contact your operator for its policy on this situation.
- Avoid calling mobiles using a landline, whenever possible. If the conversation can wait, or if you only want to arrange a meeting or request some information, why not leave a message on the person’s landline voice-mail instead? Better still, send an e-mail or if they are only contactable by mobile, use a text message.
- Use mobiles to call mobiles. Mobile-to-mobile calls on the same network are considerably cheaper than fixed network to mobile calls. If you make a lot of calls to mobiles from the office you should consider setting up a ‘mobile gateway’ on your PBX. With this device, calls made from extensions to mobile numbers, are sent out so they appear to the Mobile Operator to be coming from a mobile phone on their network. The units, which are not expensive, can pay for themselves within weeks.
The above are just some of the areas where simply changing work practices can result in significant savings in telephone costs. However, much more can be discovered by a review of your telephone call characteristics and this is also key to determining the savings that can be made by changing suppliers.
Changing suppliers
With the considerably less buoyant market, companies have become focused on controlling direct costs. Yet it is amazing how few have really taken action to get best value from that simple life-line of business—the telephone.
Despite full deregulation of the Irish Telecoms Industry since December 1998, remarkably few businesses have experimented with alternative telephone suppliers. An IMS survey for the ODTR (see Table 1), found that less than half of Irish businesses (47 per cent) believed there are savings to be made by switching supplier. More surprising was the overwhelming number of businesses that had not made any change. Of the 18 per cent who had, on average 65 per cent cited cost reduction as the reason for switching.
Maybe there is a perception that because eircom is usually the only supplier that can provide a line to your premises, that there’s little that can be gained by going to the trouble of switching to another supplier. So, it is important to reiterate, that by selecting the right telephony operator and package you can make considerable savings—30 per cent and above is not uncommon. What is more, by improving internal work practices, some measures of which have been outlined above, you can squeeze even more value per euro from your telecommunications spend.
Best value
Are you getting value for money from your Telco? The obvious answer is to check your bills. This may seem a simple task, but summary bills tell you too little and wadding through reams of detailed bills is such a daunting task that most people who receive them never get the time to examine them. As a result, people accept what the bills say and take a view that if the total is not hugely different from last month’s one, pay it.
The first step in cutting your telephone costs is to find out the telephone calling characteristics of your organisation for a truly representative period. If you do not have a handle on this, you are not going to be able to make the right decisions to optimise your savings. Sorry, but this means examining at least three months of calls. It’s not just a case of finding on average where you call and when, it’s determining the trends in usage and the types of service being used.
If you don’t get detailed bills from all your telco suppliers already, order them now and have them provided electronically—it’s a lot easier for analysis purposes.
Call logging
Many people make the mistake of relying on the bills alone. They can be wrong—and quite frequently are. If you have no independent record of what calls you make, you have no grounds to challenge the bills. It’s amazing what you find. In one recent Telecoms review, Mason Communications found that agreed rates were not being correctly applied, but because of the intermixing of call types on bills this was not obvious. Only when call logs taken from the client’s private branch exchange (PBX) were compared to the bills, did this error come to light.
You should invest in some form of internal call logging. Contact your PBX supplier to find the options supported. Most PBXs and key systems are capable of outputting call records to a PC running call logging software. New systems even allow for this to be connected into your office LAN to provide continuously updated activity reporting. Although you may not have time to go through these in any detail, just the totals are enough to give indications whether or not your Telco bills are in the right ‘ball-park’.
In addition, these systems are an excellent way of allocating telephone charges to various cost centres and discovering any call anomalies you may have. Make sure your logging system logs individual calls (not calls per time interval) and archive the electronic records so you will have a good time span for analysis.
Understand your current expenditure
This depends on the call characteristics of your company’s outgoing calls and incoming free-phone calls where you pick up the bill. Having collected a few months’ records, get them analysed. The bigger your operation and the more sites you have, the more complex this task becomes but from Mason’s experience, it is precisely in these situations where the largest savings lurk behind a mass of data and confusion.
Having determined the proportions of your call types (ie grouped as local, national, to mobile, and the various bands of international), and classified each by peak, off-peak and weekend, it is now possible to understand the breakdown of your current costs and so prepare to find better alternatives.
<font color=’#004080’>Appropriate options
Once you have determined your call characteristics, you then need to acquire the details of the offerings of the various operators and the associated prices and discount schemes they offer. Next you should apply the optimum offer to each of your call groups and determine the saving you can achieve by setting up accounts with these operators. This is not expensive as most no longer charge a fee to join their service and you simply pay for what you use.
Confused? You’re not alone. That’s partly why a single operator retains the majority share of the market. Many businesses have difficulties in comparing operators’ prices and quality of service. That’s because the operators often choose tariff breaks and options that are not readily comparable.
For example, you may choose one operator if most of your local calls are of short duration (1 to 2min), or a different operator if most of your calls last more than 2min. When promoting their services, suppliers often only highlight their cent-per-minute rates. But it is important to remember that most operators either charge a call set-up fee or have a minimum call charge. This is particularly important to bear in mind if most of your calls are short.
If a significant proportion of your calls are of one type (eg national day time calls) you may find that one operator is especially competitive for that type of call. In this case, it is worth considering a service called ‘Carrier Pre-Selection’ (CPS). This allows you to request your line supplier, usually eircom, to automatically route calls to a particular carrier. You have the choice of: ‘Outgoing International’; ‘Outgoing National’; ‘Outgoing National and International’ or ‘All Calls’.
CPS is an efficient service and studies have shown there is no deterioration in the quality of service (Source: ODTR 02/41). However, it is a very ‘granular’ call rerouting system and ‘swings and roundabouts’ factors between carrier pricing structures mean that savings can be minimal unless your call characteristics are optimum to the option taken. We would certainly not recommend the ‘All Calls’ option except in very special circumstances.
The other method is ‘Least Cost Routing’ (LCR). This is a PBX facility and may not be available on older or smaller PBX systems. This allows you to programme the PBX to route calls to a particular Telco according to rules about destination (picked up from the dialled number) and time of day. The system prefixes the 13xxx carrier code accordingly.
Conclusion
A full analysis and supplier review exercise may require external experts who have the necessary tools and industry expertise, as the following pitfalls will be encountered if the analysis is conducted in-house:
- Needs a defined objective and methodology
- Consumes time and resources
- Prone to human error in analysis and tariff application
- The cost of the exercise must be compared to the desired benefit
- High call volumes will require a specialised tool for effective collation, categorisation and analysis
The process of analysing your company call characteristics, selecting the appropriate alternative carrier packages and implementing better telephone usage practices may not be an easy one, but it will be worthwhile in the end!
The author is Principal Consultant with Mason Communications, an independent telecommunications and IT consultancy. Call +353 (0)1-663 2400.
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