Telecom Benchmark

Communications is critical for every company on earth. The company can not exist without communications. Communications enables the company to work with suppliers, customers, partners and everyone else in their ecosystm to create value. Yet few talk about communications in terms of pure dollars because the number is so buried within the internal complexities of the company.

Voice, Wireless, Network Connectivity, Server farms, Video conferencing, 3G/4G data cards, call centers, etc. All critical elements of communications to the outside world, some of these line items are managed closely, others are spread around different areas of the business. Some companies have the resources to consolidate and manage these expenses, others live in a world of unmanaged expenses. How much does this add up to?

Well let's look at this in terms of revenue versus communications spend. Say you are a $100M turn over company with a heavy online presence.When tallied up, most companies in this class spend around 10% of that amount on communications, so about $10M. I know the first reaction is, really?

Well email is not free. Niether was that SMS message. Everytime that Blackberry buzzes it costs money too. Every call costs money. Every time you check Facebook, it costs someone money as the internet is not free, despite what most people think. Every communications requires a lot of hardware, companies, people, government agencies and more to make it all work flawlessly. Something we don’t stop to think about because it is so darn good. Five 9s...that is 99.999% uptime. That means out of 525,600 minutes in the year, any little part of the network can be down for only 5 minutes.

So 10% is the average, what are the other extremes?

Surprisingly, many companies spend much more on communications. Up to 20% of revenue for a internet based companies and companies with heavy call center activity. On the opposite end, we a few clients that spend as little as 5% of revenue on telecom, even though they are heavy users of communications infrastructure. The secret?

Optimization. Heavy negotiation. Working the system. Taking known risks. Lots of hard work.