TELERGY LLC

Client revenue is being threatened by the COVID-19 outbreak and, unfortunately, this may continue for the foreseeable future. So what can you do now to free up cash flow and working capital? Not surprising, we are hearing from our clients that they are turning to cost reduction strategies during this economic downturn. We agree that now is the time for firms to take a hard, close look at their cost structure to identify excess and unnecessary spend (i.e., waste), especially in their larger cost areas.

 

Two of these larger cost areas to focus on are Technology and Telecommunications because of the magnitude of this spend and the high likelihood of netting significant savings. The sophistication of these services, the difficulty in tracking this inventory and the complexity of the billing lends itself to inadvertent wasted spend. Our experience is that the quickest savings opportunities are with: (i) services not under contract; (ii) telecommunications services in general (where savings can be recognized as early as 60 days); and (iii) technology contracts that are auto-renewing or expiring in the near future.

 

With this in mind, we recommend that the company take the following steps to put itself in the best position to accomplish savings:

• Determine if any of the firm’s technology or teIecom services are not under contract. These services are the lowest hanging fruit for cost reduction and, therefore, should be attacked first. Typically, the firm will get much better rates from its carriers and vendors if it agrees to enter into a contract for a certain term.

• Identify the company’s larger telecommunications contracts, regardless of expiration date, as these rates may be subject to negotiation during the existing contract term. As a condition to giving better terms, the carrier may require that the firm extends its contract which may be a worthwhile trade-off for the firm.

• Determine which of the company’s technology contracts (e.g., software, hardware, SaaS, managed services, support and maintenance) and telecommunications contracts (e.g., voice, internet, data, wireless, and audio/web conferencing) are set to auto-renew or expire within the next 90 days. All of these contracts are ripe for renegotiation. Note of caution: some of the firm’s technology and telecommunications contracts may have multiple expiration dates in that different services (e.g., software modules) auto-renew or expire at different times. In this situation, the firm as part of its negotiations should request that all services be put on the same contract term so that all services run co-terminously.

 

So now’s the time to set your plan of attack on reducing the firm’s costs. In our next communication, we will discuss how to effectively negotiate with your vendors and carriers to obtain the best rates and contract terms. In the meantime, please stay healthy and productive!

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Telergy LLC is a cost management consulting company helping middle-market companies, including professional service firms, reduce and control their Technology, Telecom and Energy costs. To contact Telergy, please send an email to Mark Friedman, Chief Optimization Officer, at mfriedman@telergyllc.com or call 312-736-8900x100.