For organizations across multiple kinds of environments, strategic TEM provides real-time visibility into the financial health of the organization's telecommunications spend while minimizing costs and maximizing savings. Effective deployment of experienced people and optimal processes, in tandem with robust automation, are vital to achieving those benefits.
Using this TEM foundation, organizations can then look more closely at network sourcing options. One major European financial services institution performed this kind of analysis as part of a network transformation initiative. The impetus was exactly the kinds of issues discussed above: whether or not it continued to make sense for the company to invest in the network asset, to extend it and manage it themselves, or whether the firm could get better and more readily upgraded capabilities at a lower price by using an external sourcing approach.
The firm performed an economic analysis, then compared existing costs with the costs associated with each of the three network sourcing models. The factors analyzed included operating expenses and capital expenses for the transformation itself, as well as the payroll and non-payroll costs. Potential cost savings were then plotted for each of the three options.
The model eventually chosen by the financial institution was an end-to-end outsourcing approach. To date, results have been impressive. At the end of one-and-a-half years, the firm had saved the equivalent of about $150 million and was looking to cut costs by approximately 35% per year.
Performing an economic analysis is a critical step in choosing the network sourcing option right for your organization. With an investment this big in an asset this important, it's vital to know what your return on that investment really is. It's possible to derive substantial financial benefits from an external sourcing approach.
At the same time, remember that the business case for external sourcing of network management goes beyond cost savings alone; it is also about improving network performance and creating a more agile network asset that can drive growth and improve business value.
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