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R20bn in telecoms spend wasted

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R20bn in telecoms spend wasted

South African businesses are wasting up to 20% of their telecommunications spend every year. This adds up to R20-billion – and means that for every R5 spent, R1 is being lost. These figures are according to a white paper, Wastage in South Africa’s Telecoms Sector, released by telecoms professional services firm Nebula.

Nebula estimates that the telecommunications market in South Africa is worth around R200-billion – or equivalent to the government’s spend on education. Half of this is business spend – and one-fifth of this is wasted.

There are a number of reasons for this, but key is that “because of the complexities involved, many businesses are unwilling to take a closer look at inefficiencies and wastage in their own telecoms systems, despite the potential savings,” says Daniel Nel, Nebula CEO.

The telecommunications landscape has certainly become more complex, there is a lack of oversight and management of spend by companies, and in some cases there is also simply bad selling by the operators. However, it’s a two-way street, and businesses can take ownership of their spend.

Mobile is an area of over-spend that many people are familiar with: for instance, bill shock thanks to international roaming or data use outside of your bundle. Another pressure point is unused, or dormant, infrastructure and contracts that are still being paid for. For example, SIMs that don’t get reallocated when someone leaves a company; or fixed lines that are no longer used, say after a store is closed.

And a third area of wastage is business signing up for incorrect packages or contracts: paying for things they don’t need; data bundles running out too soon; or even purchasing too much data. This could be bad selling by a service provider, or simply that a company’s requirements have changed, but they are locked into legacy subscriptions.

The good news is that many of these issues can be remedied quickly, and without major upheaval to the company. For instance, huge savings can be made without even cancelling a contract. Nebula advises that 3% to 5% wastage on telecoms spend is achievable by most companies.

Nebula offers the following advice:

* Eliminate waste – Remove or consolidate infrastructure and services that are not in use or used infrequently.

* Improve efficiency -This includes billing accuracy, consumption and configuration anomalies, routing optimisation, contract reviews and unit price optimisation.

* Operating model alignment – this includes internal and external compliance, centralisation of operations and delivery, financial management and procurement.

* Sourcing optimisation – benchmark prices and licences, review contracts for compliance, and look at supplier consolidation or replacement.

* Technology and service optimisation – standardise across equipment, support agreements, licence fees, SLAs, connectivity, etc. This also looks at how the company evaluates the introduction of new technology.

* Don’t go it alone – partner with an independent expert – not aligned to any service provider – who has the knowledge, experience and tools to assist you.

“By removing complexity and constrained telecoms thinking, and introducing simplicity and unconstrained telecoms thinking, telecommunications can become an essential vehicle for a business’s growth, rather than an expense. What’s more, think about how you could reallocate the savings and resources into innovation, better customer service and becoming more competitive,” says Nel.