The Customer
The bank in question is one of the largest corporate consumers of telecom services in South Africa. Torch TEM was appointed following a tender to investigate telecom costs and associated cost structures and to deliver cost savings where possible. The customer’s original estimation of savings was between R500,000 and R1 million.
The Challenge
One of the largest banking groups in South Africa with retail, commercial and investment companies spanning some 1,200 physical locations was unable to accurately state its total spend on telecom due to disparate payment methods and reporting practices across the businesses. The bank had, however, centralised the functional control of the telecom estate at head office with a team of 25 full time staff responsible for this function. Cost management and accurate allocation was taken as a given and no individual’s responsibility. The telecom estate included a wide range and age of technology, service providers and business models. Procurement was historically decentralised, but the bank had started to centralise all telecom procurement under Group Supply Chain Management at head office.
Approach
The initial objective was to determine the current cost of the telecom estate. This involved the consolidation and review of over 5,500 telecom accounts which had to be associated with internal structures. The gross amount was found to be more than 200% of what the bank considered to be their annual expenditure.
The telecom estate was then modelled in detail to identify relevant cost reduction projects. A programme of initiatives was tabled and then executed.
Each project was managed through to the measurement of actual success against forecasted values. Only true costs were considered in terms of success measurement. So while efficiency gains and the like were achieved, only income statement based costs and benefits were considered and measured.
Business Outcomes
The programme yielded an annual saving of R80 million which has been sustained for the last four years. All this without addressing user behaviour! A number of root causes were also identified and brought to the bank’s attention.