FEW BUSINESS elements have changed in the last few decades as dramatically as telecommunications. Each year brings striking technological advancements in equipment, software, and services. Legislation has opened the field to aggressive competition.

Powerful, reliable phone systems are absolutely essential to banks. With so many choices comes confusion and frustration. To increase productivity while saving money, here are ten ways to control your telecommunications costs.

* Understand your telecommunications needs. It's easy to get carried away by the latest gadgets and gizmos for your phone system. Too many features can actually inhibit productivity by confusing and distracting employees. Survey employees about their needs, such as call forwarding and conference calling. Avoid providing a "laundry list" of features since it's only human nature for them to want it all. As Bruce Leonard, president of Georgia Bankers Bank in Atlanta, requested, "Give me a dial tone. touch-tone, and a hold key. That's all I need, want, and will ever use."

* Learn to handle simple moves within the office. As banks expand, employees are often shifted to different offices. A typical move from one off ice to another can cost about $100. Some banks spend thousands of dollars a year for moves, additions, and changes without purchasing any new telephones.

What you can do to keep costs down is train at least one employee to make minor program changes to the phone system. You may also be able to negotiate for free program changes from your vendor. Install jacks at every possible place you could use a telephone -- even if there is no telephone there today. When running voice and data cables, consider using in-house personnel, such as an electrician.

* Don't spend thousands of dollars to get into the phone business. When a bank makes a major investment in hardware and software, such as a private branch exchange, it takes on the responsibility and maintenance obligations to provide phone service to its users.

To avoid getting into the phone business, consider these two options: central office-based switching (Centrex) and outsourcing. Centrex offers many of the features banks desire, such as regional or city-wide wide four-digit dialing, and unique phone numbers for most extensions. This system can be cost-effective even in the largest installations.

Or you might consider signing a contract with a telecommunication outsourcer. Though arrangements may vary these companies own and maintain the equipment and pay for the operating expenses while charging the bank a fixed monthly fee. Long-distance usage charges are extra.

* Standardize branch equipment. One $2.3 billion bank in North Carolina had more than 25 different types of equipment throughout its 100-plus branches. The age of the systems ranged from nearly new to 20 years old. Since each system works differently, money is wasted on maintenance and training. The solution is simple. Select a system that has the features needed for retail branches and shop the vendors to find the most competitive price. Develop a long-range plan to standardize these key systems under one bulk purchasing agreement that can be activated all at once or over a period of time. Consider donating old equipment to local charities or sell it to a used-telephone-equipment broker.

* Don't have more lines than you need. Banks often have as much as 15% more lines than needed.

Sometimes this occurs when an operation is scaled down but the same number of phone lines is kept.

Other times, a department installs a fax machine or modem for a short-term project and never removes the line when the job is completed.

To avoid these problems, keep an accurate record of all lines and their uses.

Conduct a periodic traffic study to tell if the number of lines is sufficient or if more or less are required.

Then, make the necessary adjustments.

* Maintain a comprehensive telecommunication data base. Make an inventory of each element of your telephone system with its capacity and vendor. List the number and types of phones, the software features, and the types and costs of circuits and lines. Know where the spare jacks are. A telecommunication data base allows you to capitalize on what you have. It also prevents unnecessary purchases of additional equipment while signaling when to update the current system.

* Periodically check phone bills before paying them. Computerized phone bills are complicated to decipher. That's why many banks employ independent consultants to perform this time-consuming task. It's estimated that about 90% of phone bills are inaccurate. You may be paying for lines or circuits to a branch that closed five years ago. Alarm circuits at discontinued locations are also often overlooked.

Key Centurion Bancshares, Charleston, W. Va., had 22 direct inward dial circuits installed by the phone company in 1984 for a new phone system that could support only 20 lines. A 1992 billing audit discovered the two extra lines and the bank subsequently recovered $8,000 in overpayments.

Regularly auditing your phone bill saves money two ways. It reveals overcharges and it uncovers avoidable waste, such as unnecessary use of directory assistance.

* Don't always commit to fixed-cost networks for four-digit dialing. Four-digit dialing via a fixed-cost network is not always the most cost-effective way to communicate throughout a region or through the entire bank system. A fixed-cost network employs off-premises extensions (an extension of the main office phone system in a branch office), foreign exchange lines, and/or tie lines at a fixed rate per month.

Here's an example. A large regional bank located in the Southeast installed one line to a remote branch. The cost was $500 per month. A traffic study revealed an average of 55 calls a month at three minutes per call. That's about three dollars per minute! Obviously, the fixed-cost network was not at all cost-effective for this bank.

Technology introduced in the mid-1980s allows four-digit dialing at no cost or on a usage sensitive basis.

When that Southeastern regional bank replaced that phone line with a 12-cents-per-minute, long-distance rate, the bank realized a savings of $480 per month.

* Encourage clear communications when implementing advanced technology. Key departments don't always work together when introducing advanced technology. Voice mail systems and interactive voice response systems are only as effective as the planning and training that accompany them.

Voice response systems can save thousands a month in personnel expenses by allowing a computer to answer informational calls.

Voice mail systems can improve productivity. To keep voice mail fresh and to encourage callers to use it, update outgoing messages with that day's date, your status (in the office or out of town), and an alternative to leaving a message, such as "press O for an operator". Also, show employees how to use intraoffice voice mail as an electronic memo.

Poor implementation can waste the money invested in these systems and, in some cases, can cause you to lose customers. Rely on the expertise of a project team that understands how to maximize this technology.

* Prevent toll fraud. Telephone fraud costs American businesses at least $2 billion a year. Computer hackers can tap into a bank's phone system and then sell the code so others can make long-distance calls at the bank's expense. These costs are unrecoverable since the victims are held responsible for the charges. Some carriers now offer a type of fraud insurance protection. One way to help prevent toll fraud is to install an on-line phone monitor. You can check for warning signs, such as calls to unusual locations, and track down those responsible.

Mr. Williford is vice president of E.K. Williford and Associates Inc., a Marietta, Ga.-based telecommunications management consulting firm.

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