Tony:

Hello, I’m Tony Mangino from TC2, and this is Staying Connected—the podcast where we talk about what really matters to enterprise buyers navigating today’s technology and sourcing decisions.

I’m joined today by my colleague Frank Zagrodnik from TC2, and we’re talking about a problem that can sneak up on even the most sophisticated IT organizations: cost creep. Frank, welcome back.

Frank:

Thanks, Tony. Great to be back.

Tony:

Cost creep is the gradual rise in technology spend across telecom, network, mobility, IoT, and related services. It usually doesn’t come from one bad decision. It comes from ordinary changes that pile up: lingering services, incomplete disconnects, billing errors, stale pricing, and contract terms that aren’t actively governed.

And here’s the frustrating part: a company can have strong people, a TEM platform, procurement maturity, and governance—and still have this happen. Why?

Frank:

Because enterprise technology environments are big, complicated, and always moving. You may have thousands of circuits, devices, sites, accounts, rate plans, invoices, and pricing schedules across various business units and suppliers.

It comes from common business activities:

• Sites open and close.
• Services get upgraded.
• Users move.
• Contracts get amended.
• Suppliers change billing structures or add new charges.

The problem starts when those changes don’t tie back to inventory, contracts, invoices, and owners.  Costs start changing, and suddenly no one can explain it.

So it’s not always a discipline problem. A lot of the time, governance just can’t keep up with operational change.

Why It Matters for Enterprise IT Buyers

Tony:

That distinction matters. Cost creep doesn’t necessarily mean the customer negotiated a bad deal. More than likely, it means the value of a good deal is eroding because the lifecycle isn’t being actively managed.

Frank:

Exactly.

A service creates costs long after the contract is signed—when it’s ordered, installed, billed, changed, renewed, disconnected or replaced. If those steps aren’t connected, cost gets trapped in the various handoffs.

• Sourcing may negotiate strong rates, but the invoice may not reflect them.
• IT may replace a service, but the old service may stay active.
• And, Finance may approve an invoice because it looks familiar.

One area that really matters is the handoff from the negotiation team to operations. Operations needs to understand the specifics of the deal, especially if you negotiated and focused on rates for certain speeds, products, or service types.

Here’s a simple example. Suppose you negotiated an aggressive rate for 100-meg DIA. If the engineering team doesn’t know that, they may order 80-meg DIA because they assume lower speed means cheaper. Commercially, that may not be true.

That’s where cost creep lives: in the gaps between functions and execution.

Tony:

And those gaps matter because enterprise customers use these numbers for renewals, sourcing events, budgets, and business cases.

Frank:

Right. If you don’t trust the baseline, you’re negotiating from a weaker position. You may not know whether an increase comes from growth, supplier pricing, billing errors, usage changes, or services the business no longer needs. The supplier has its facts. The customer needs its own.

Main Discussion

Tony:

So where should enterprise customers look first?

Frank:

Start with inventory accuracy. You need to know which services are active, where they are, who owns them, which supplier provides them, and why they exist. If that information is incomplete, cost management gets difficult fast.

Second, validate the contract to your invoice. Don’t just ask whether this month’s invoice looks like last month’s. Review each invoice and ensure it aligns to the agreement, pricing schedule, service order, and actual environment.

Third, look closely at disconnect management. A site closes, a circuit is replaced, a mobile line is retired, or an IoT deployment changes—but billing keeps going. Lately, disconnects are taking months with the suppliers, often leading to disputes and credit follow-up.

Finally, review usage and service alignment. The business may be consuming services differently than it did when the agreement was signed. That can mean overbuying capacity, outdated plans, or missed chances to move to a better and more cost effective model.

Tony:

So the customer may have negotiated a strong agreement, but the expected value doesn’t fully show up because day-to-day controls are weak.

Frank:

That’s right. A good deal is not self-executing. You can’t rely on the supplier to explain where the best rates are, or to volunteer that you’re paying for services you no longer need.

Tony:

A lot of organizations focus on the big events: the RFP, renewal, or renegotiation. Those matter. But if governance between events is weak, the business case can unravel before the next renewal.

Frank:

Yes. The invoice may look stable. The budget may not trigger alarms. But underneath all those costs, you may find services that are no longer needed, pricing that trails the market, or services that no longer fit.

That’s why budget review alone isn’t enough. A budget tells you what you can spend. It doesn’t tell you whether the spend is correct, optimized, or still necessary.

What Good Looks Like

Tony:

What should enterprise customers do differently if they want to get ahead of this?

Frank:

They need a repeatable governance rhythm, not a one-time audit every few years. That means connecting inventory, contracts, invoices, usage, and owners.

Start with ownership. Every major service category needs a clear business owner and operational owner. If no one owns a service, it has a funny way of staying on the invoice.

Then validate invoices against contracts and service records. The question isn’t just, “Does this amount look reasonable?” It’s, “Is each charge valid, correctly priced, and the service is still needed?”

Next, maintain a living inventory and tighten disconnect and change-control processes. When something is replaced, retired, or moved, there should be a matching billing action and confirmation that billing actually stopped.

Finally, conduct periodic market checks. Even when an invoice is accurate, the pricing or commercial model may no longer be competitive.

Tony:

That last point matters because cost creep isn’t always a billing error.

Frank:

Exactly.

A charge can be accurate under the contract and still be commercially outdated. That’s why customers need both compliance and optimization. Compliance asks, “Are we being billed according to the agreement?” Optimization asks, “Is this still the right service, at the right location, under the right commercial structure?”

Tony:

What about TEM platforms and other expense management tools?

Frank:

Tools matter. They can organize invoices, track inventory, flag exceptions, and support workflow. But a tool doesn’t replace governance. If the inventory is wrong, the platform may simply organize outdated and inaccurate data.

The key is having multiple sets of eyes on inventory and spend: IT, finance, procurement, and business stakeholders who understand what’s being used. Tools improve visibility. Control comes from accountability and expertise.

Key Questions & Actionable Takeaways

Tony:

What warning signs should listeners look for?

Frank:

A few stand out.

• If no one can produce a reliable inventory by supplier, site, service type, and owner, that’s a warning sign.
• If invoices are approved because they’re consistent with prior months, that’s another.
• If disconnects require manual follow-up and no one confirms billing has stopped, there’s probably waste hiding in the environment.
• If contracts and pricing schedules aren’t connected to invoice review, you may be losing value.
• And if spend keeps rising but no one can clearly explain why, the governance model needs attention.

Tony:

What’s a practical first step?

Frank:

Pick one category of spend—DIA, MPLS, mobility, whatever feels high-impact—and build an accurate baseline. Then ask: what are we buying, where is it, who owns it, what is the correct price, and do we still need it in this form?

That baseline usually reveals the first wave of opportunities and creates a structure you can expand across other categories.

Closing Remarks

Tony:

As we wrap up, the key message is that cost creep is often caused by complexity, change, and fragmented ownership, not simply poor management.

A strong contract, a TEM platform, and a budget review can all help. But none is enough by itself. Customers need a governance model that connects inventory, contracts, invoices, usage, supplier behavior, and operational change.

Frank, any final thoughts?

Frank:

Yes. Cost creep becomes manageable when customers treat spend control as an ongoing discipline. The organizations that do this well don’t wait for a renewal, budget crisis, or dispute. They build the rigor, visibility, and ownership to validate costs and keep asking whether each service still makes technical and commercial sense.

The risk of waiting is that small issues become the new baseline. Once that happens, the enterprise isn’t just overspending. It’s negotiating and planning from the wrong position.

Tony:

That’s a great place to leave it.

To our listeners, if you’d like to discuss cost creep, spend governance, billing integrity, IT cost management—or any other technology strategy, sourcing, and cost reduction needs—with Frank, me, or any of our TC2 and LB3 colleagues, please give us a call or shoot us an email.

You can also stay current by subscribing to Staying Connected, checking out our websites, and following us on LinkedIn.