The 7% Problem: why your FY27 technology budget is last year's mistakes, compounded

Somewhere in your company right now, someone has a spreadsheet open. Last year’s Telecom and Utility actuals are in one column. A 7% bump is in the next. That’s the FY27 budget line.

I’ve called that method “unsophisticated yet fairly common” on stage, and I stand by both halves. Nobody thinks twice about it, because the number came from the general ledger and the general ledger doesn’t lie.

It doesn’t. But it also doesn’t answer the question you’re asking it.

A receipt is not a plan

Last year’s number records what was paid. It says nothing about what was needed. Those are different questions, and a roll-forward treats them as the same one.

So the receipt includes the circuit into a building you no longer occupy. The service a departed engineer was afraid to cancel. The line still billing for a station you sold years ago. The second invoice for a circuit that was disconnected on the first one.

Add 7% to that, and you’ve committed to paying for all of it again. With a raise.

What’s actually inside the line

A Telecom and Utility line looks like one number. In our experience it’s usually four:

1. What you use.
2. What you used to use.
3. What you were billed incorrectly.
4. What you cancelled, but never actually stopped paying for.

Across our engagements, first-year savings average 29%. About 70% of that comes from category two: services nobody uses and nobody noticed. That’s not a rate negotiation. That’s not vendor consolidation. That’s paying for things that stopped being needed and never stopped being billed.

If your FY27 number came from last year’s actuals, all four categories just rolled forward into it.

Why nobody checked

Walk the chain. An engineer in a market submits the bill. AP pays it, which is the job. The GL closes. The model rolls. Every link in that chain did its job correctly, and nobody’s job was to validate the service. Not AP, whose job is to pay. Not IT, who is measured on uptime, not invoices. And the carrier’s system was built to bill, not to ask.

It’s no one’s fault. These bills are written in Latin. They’re 17 pages. A forecast is only as good as its baseline, and most baselines in this category have never been read by a human being who knew what they were looking at.

I’ve watched this for 21 years, and I’ve never once walked into a company and found that the overspend was somebody’s fault. I’ve walked into plenty where it was nobody’s job. Those are very different problems, and only one of them is worth losing sleep over.

Three things a roll-forward structurally cannot see

A contract cliff. A percentage forecast cannot see an expiration date. A copper circuit was running at $500 a month. It fell off contract. The next invoice was $14,000. Yes, it’s legal. Carriers stopped investing in copper years ago, and price is the lever that moves customers off it. No “last year plus 7%” model in existence anticipates that. Which of your contracts expire during the budget year, and what happens to the rate the day after?

A cut that didn’t stick. You approved a cut last year. Your team placed the disconnect order. The carrier confirmed it. Finance booked the savings into the plan. In our experience, 11% of placed disconnect orders never actually stop the billing. Nobody follows the order to the invoice, because everyone treats the confirmation email as the finish line. It isn’t. Some of the savings in your FY26 baseline may not have happened, and FY27 is being built on top of them.

The acquisition you closed. Every deal brings contracts nobody at your company signed, for services nobody can identify, at rates nobody negotiated. We call them zombie contracts. They roll into actuals and straight into next year’s forecast. It can be worse than a cost, because it’s a liability: we have seen a utility company physically remove the electric meter from an acquired building because the bill, still in the seller’s name, never reached the new owner.

What you can do yourself

You can move the needle on a lot of this internally, and I’d never tell you otherwise. The four steps are not a secret:

1. Inventory. Pull every bill, every account, every carrier portal into one list a human can read.
2. Rationalize. Take that list to the people closest to the spend, site by site, and ask of every line: are we still using this? What’s it for?
3. Use your true buying power. Renegotiate what survives as one company across every location, not as forty small sites.
4. Do it again in twelve months. Contracts expire, rates go up, needs change.

If you do those four things in a spreadsheet you will find money. High fives.

Here’s the honest ceiling. One client ran their own internal Telecom audit and posted $787,000 in savings. I think they high-fived, and I would have too. They brought us in two years later. By year three we’d found $7.4 million. Roughly nine times what the internal pass surfaced.

Not because their people weren’t smart. Because an internal audit is something you do between everything else, and this category doesn’t give up its secrets to a part-time effort. That’s not a skill problem. It’s a focus problem. Laser beam focus. This is all we do.

The clock

Telecom savings take 6 to 8 months to land. Start in Q4 and they land inside your budget year; start in April and they mostly don’t.

Before your FY27 budget locks

Don’t hate the player, hate the game. Your engineers are keeping the signal on the air, which is where you want them. Your AP team paid the invoice, which is their job. This is a hot potato between finance and IT, sometimes even passed over to HR. No one naturally owns this. So it defers every budget season and compounds.

Meanwhile the number you’re about to lock is the only one in the whole budget that nobody in the building has actually read. That’s the 7% problem. It isn’t a math error. It’s an unread receipt with a raise.

So here’s an easy one. Send me the Telecom or Utility line you’re about to commit to for FY27, plus one of your messiest invoices. In 15 minutes I’ll tell you what your likely phantom expense numbers are, before it locks. No deck, no demo, no MSA. Either way you leave with an answer: what’s a phantom expense, what’s accurate, and what I’d do next.

Book the 15-minute Budget Line Review

Emily Lindner
Founder & CEO, TruNorth