Telecom Expense Management

Transcription

1 White Paper The 7 Most Common Mistakes CFOs and CIOs make in Telecom Expense Management After years of turmoil and a prolonged economic recovery, the climate of cost consciousness in Corporate America remains strong. CFOs are still engaged in the rigors of business process improvement and resulting gains in efficiency and reduction in spend. Meanwhile, CIOs want to demonstrate their prudent stewardship of IT and Telecom resources. Executives everywhere are looking at areas where they can eliminate inefficient processes to free up dollars to fund growth and be more competitive. For these reasons, now is the ideal time to evaluate opportunities for reducing telecom spend, typically one of IT s top expenses and an area ripe with savings opportunities. Improved Process. Real Results.

2 Introduction Telecom expense management (TEM) projects, when implemented correctly, can generate impressive cost reduction benefits as well as dramatic process and efficiency improvements. Substantial, measurable hard-dollar savings as well as freed-up essential resources could easily fund more mission critical programs like innovative development or needed network security enhancements. But first, you should think through your goals for deploying TEM so you can challenge your teams to consider what can be achieved through enhanced processes. The following are the top seven criteria that are often overlooked when implementing a telecom expense management program. Mistake 1: Failing to Manage Telecom with a Lifecycle Approach Organizations are evolving from departmental silos responsible for discrete functions and transactions, to collaborative teams working together on continuously improving processes from beginning to end. Businesses that connect all of the steps in the communications lifecycle from sourcing to payment understand that the efficiencies they achieve will deliver exponential value through the repetition of the lifecycle. Just a few years ago, IT managed the data networks, telecom focused on wireline voice services, mobility was for the privileged few, HR managed employee policy, purchasing handled contracts, and AP paid the bills and everyone operated primarily within their own silos. Today, with the convergence of voice and data, and the consumerization of IT, managing telecom should be viewed from a holistic communications lifecycle management perspective. No longer can fixed and mobile communications be addressed separately. Workforces are becoming mobilized and changing how we communicate with each other and our customers. Now IT, Cost Accounting, Sourcing and HR must work collaboratively, supported with a best-in-class, communications lifecycle management (CLM) platform that enables visibility, workflow and collaboration. Driving this trend is a realization by enterprises that managing telecom is an essential but non-core function and, as such, is best suited to be managed as an outsourced service provided by a trusted vendor. For example, best-in-class CLM enables cross-functional areas to manage employee-owned and corporate-owned mobile devices in one central place. A company s HR information systems (HRIS) can be integrated with its CLM platform so that it sends timely, accurate information about which employees are actively employed, what types of corporate-issued devices they are allowed, and/or what amount of reimbursement they might be eligible for if using their own device. Services and devices can be procured through an online catalog. Additionally, the platform s system logic for processing and auditing invoices would be based on telecom carriers contract terms and conditions. Connecting all the steps in the telecom lifecycle - from sourcing through payment - delivers exponential value. 2

3 Mistake 2: Under-estimating your Organization s Potential to Achieve Savings Executives often under-estimate the amount they could save through a consolidated, consistently managed approach to both fixed and mobile communications with CLM. If you don t fully appreciate all of the elements that contribute to how savings are achieved, you won t be able to reasonably evaluate the savings potential. For example, one IT director we talked with said he didn t think his organization could benefit because he already had a very lean telecom group. He was incorrectly assuming most of the savings would be derived through headcount reduction. Another manager said most of their telecom needs were supplied by a select group of carriers, and they negotiated deep discounts for the high volume. He was assuming (1) That most of the savings would be derived from consolidating services and through contract negotiation, and (2) That the new contracted rates were accurately reflected in his current invoices - although he had no automated audit process in place. Another manager thought he didn t need a CLM provider because his organization had its own internally developed, automated processes whereby invoices were scanned and imaged. He assumed the savings were to be derived mainly by lowering invoice processing costs but had not looked at gains from conversion to EDI format, or regular audit, or faster dispute resolution with higher returns. In reality, companies that leverage best-in-class end to end CLM services achieve savings at many stages of the lifecycle - through better sourcing, deeper audits, more consistent procurement, more consistently applied payments, and improved dispute resolution. The primary means is through an automated process that (1) creates an inventory of detailed billing and contract information, (2) audits each detailed charge against current contracts and service orders, thereby identifying errors and overcharges, (3) delivers actionable business intelligence identifying underutilized services and other data that reveals optimization opportunities, (4) equips the vendor s staff to manage billing disputes and recover fees, and (5) applies payments in an accurate and timely manner. Unless your current process is built around an intelligent platform that fits this description, you re probably under-estimating your ability to find savings. If you don t fully appreciate how savings are achieved, you won t be able to reasonably evaluate the savings potential. Mistake 3: Under-estimating the Value of a Centralized View of Telecom Assets and Spend If your focus doesn t include a centralized inventory of assets, services, billing and spend across both fixed and mobile communications, you ll miss the big picture. Fixed and mobile can t be managed separately any more. As the technologies evolve, IT and telecom are part of the same IT infrastructure. A consolidated inventory is needed to effectively manage not only voice but the exploding reliance on data in day-to-day communications. In the ever-changing communications environment, you need to be on top of your utilization so you can plan for today and the future. Rich usage data, with an up-to-date, centralized inventory, provides the business intelligence needed for mission-critical planning and decision making. 3

4 You can t manage what you can t see. What kind of data is available, how current is it, and how easy is it to access? If you are developing a comprehensive CLM RFP, be sure to focus on the amount of visibility you will gain once the solution has been implemented. You should also consider what abilities you ll have to customize dashboards and reporting views. You will want to understand what reports are available and if scheduled delivery is an option. You should ask how the provider s other clients use this data to drive further cost reduction. CLM is really a business process improvement project and, as such, the data assets are the key to continued success. Mistake 4: Managing Wireless and Fixed Communications Separately The most forward-thinking organizations today have outsourced telecom expense management for fixed and mobile. However, today s complete solution is most typically a pairing of two disparate systems one for fixed communications (local and long-distance voice and data) and a second one for wireless mobile communications. The plurality occurs because traditional TEM solutions initially focused on enterprise voice and data services. A separate set of vendors emerged later to address enterprise needs for automating operations as well as managing the growing expense of mobility. While some traditional TEM providers have partnered with mobility lifecycle management providers to offer what is positioned as a complete package, enterprises are still stuck with two separate platforms. You may ask yourself: as long as you ve chosen two reliable service providers, why are two systems a problem? With separate platforms, you won t have one reliable global view of your telecom expense data. Instead, you will likely have to navigate two portals for reporting and then need to aggregate and normalize data to generate comprehensive reports. You also end up with twice the work in supplier management which eats up valuable time in your week. What s the solution? Look for an established service provider with an end-toend communications lifecycle management solution integrated across both fixed and wireless expenses Disparate Systems: Wireline Client Wireless Integrated TEM System: Integrated Wireline and Wireless Client Mistake 5: Blurring the Distinctions Between a Full-Service Solution and Discrete Tools A CFO in one Fortune 1000 organization decided to mandate change, and issued a directive to his controller to work with the CIO to implement a TEM tool. Later, disappointed with the results, the CFO learned why the newly implemented solution didn t achieve the targets he had set for expense reduction. Instead of engaging a firm to take accountability for the business results, the team ended up buying hosted software and taking sole ownership of the goal to reduce expenses. This CFO didn t fully appreciate the distinction between a full-service BPO and a provider that offered little more than SaaS tools. When the project didn t achieve desired business goals, the software company s response was we delivered the software. What the CFO was looking for was a business partner that would share accountability for business results. 4

5 The trend in telecom expense management today is to partner with a managed services provider that understands delivering consistent business results. Organizations should look for a provider that offers a complete managed service solution. The provider should have demonstrated competencies in rapid implementation, audit analysis, dispute resolution, automated general ledger accounting, optimization, and payment for both fixed and wireless. Many of today s TEM vendors originated as licensed software companies or software as a service (SaaS) providers. Over time, these vendors have been forced to extend their software-centric offerings to meet market demand for a complete solution by adding invoice processing services along with ad hoc processional services such as audit or data entry. Organizations should understand that SaaS-delivered software is a world apart from a managed service solution. Clients who select SaaS often find that their vendor focuses more on the software and less on the process and the financials; the buying organization retains most of the responsibility for day-to-day process management as well as achieving measurable business outcomes, such as cost savings. Since most SaaS-centric TEM firms are not staffed or experienced in back-office processing and payment servicing, they cannot provide the complete scope that a true, end to end managed service model can deliver. For the above reasons, analysts have been reporting that trending toward managed services will continue. Smart enterprises are adopting CLM and are moving away from other models as they strive to push administrative processes out of their own hands and seek increased expertise. Vendors who offer end-toend processes, with sufficient experience to provide process control, will emerge as the hands-down leaders within the industry Mistake 6: Underestimating the Positive Impact of Superior Client Service Many organizations, unfortunately, that have outsourced TEM have chosen providers that while they may have solid technology and processes are severely lacking in the customer service department. Realize that the technology is a very strong component of the solution, but service is another. When selecting a CLM provider, ask detailed questions about how your account will be staffed. Who, for example, will manage pending credits and refunds? Who has the responsibility to take action on your behalf with carriers if the carrier misapplies payments and your account is shown to be in default and charged late fees? The best approach to solid customer service starts with having a named account team that will act as your telecom group down the hall. The key to improving customer service levels is the account team. It should be staffed by people who know your team by name, understand your infrastructure, accounting rules, etc, and know implicitly that they are accountable to you. Monthly meetings to review status of current initiatives, savings, optimization opportunities and more will support a continually successful program. Organizations should understand that SaaS-delivered software is a world apart from a managed service solution. 5

6 Considering the importance of customer service, one should investigate the ratings of industry-approved associations. Organizations such as AOTMP and others publish information on CLM providers based on their independent surveys of client organizations. Reviewing such research should be an imperative in making vendor selections. Mistake 7: Omitting the Payment Process Two goals of your CLM project are to (1) reduce overall costs and (2) free up your internal resources for higher value tasks. Late fees might be a significant component of your costs today. Payment reconciliation and dispute management issues can be a significant time drain. If you manage the process internally, your staff may spend considerable time communicating with your accounts payable team to research payment history. If this information isn t readily accessible, it s difficult to manage disputes to reconcile misapplied payments. All the time that your internal staff spends resolving billing issues is time that could otherwise be devoted to higher-value tasks. With this perspective, strategicallythinking organizations prefer to outsource the payment process as a component of overall telecom expense management. This minimizes workload for both the IT and Accounts Payable organizations. And, it allows the controller to hold the managed services provider accountable for managing on-time payments and minimizing late fees. Summary: Start by Asking the Tough Questions Wonder how much you might save through enhanced CLM? Start asking some tough questions. How automated is your current process? Are you receiving more paper invoices than electronic? Do you have enough data to conduct rigorous, automated audits at the charge level of detail? Does your CLM provider have established competencies in managing high-volume back-office business processing? How much visibility into fixed and wireless expenses do you have? If you can t see these expenses, how well can you manage them? Is your managed services provider focused on enhancing the gee whiz features of the tool, or in accepting accountability with you for driving cost reduction results? Will your service team meet with you regularly to review the status of your program? As you evaluate your current process and investigate potential solutions, these questions will give you a framework to conduct a much more critical and thorough evaluation. And in today s economy, there s no time like the present to find savings. PTEM Improved Process. Real Results Cass Information Systems, Inc.