$50 million in telecom savings

Transcription

1 How we brought $50 million in telecom savings to a Fortune 500 technology firm GSG s audit and optimization services in action

2 The Client: A global technology and consulting organization with complex communications needs In this case study, our client whom we ll simply refer to as the Client is a leading global technology and consulting organization with global reach and diverse lines of business. If you ve ever used a computer in your day-to-day work, done banking without a human teller s help, paid for something with a credit card, purchased anything at a store through self-checkout, or relied on electronic records, the Client was somehow involved in that process. With operations spread across the U.S. as well as in Europe and Australia, the Client relies on global data and voice networking to connect its workers, move data about, provide its services, and get work done. As a result, it spends hundreds of millions of dollars annually on services and equipment supplied by a multinational telecom provider, whom we ll refer to as the Carrier, not just for its own communications needs, but for those of its customers as well. At a Glance Company: A U.S.-based technology and consulting corporation with diverse lines of business, which includes providing telecom services to large businesses and organizations. Industry: Technology and consulting Telecom needs: Providing data and voice communications for their own employees (numbering in the hundreds of thousands) as well as to their clients, each of whom spends millions on telecom yearly. Total telecom spending: $400 million per year on services and equipment for both themselves and their clients Goal: To ensure that they were getting the agreed-upon services from their telecom provider at the lowest possible cost. Solution: GSG s audit and optimization services. Achievement: $50 million in savings in the first three years, through the identification of billing errors and credit opportunities, organization and maintenance of complex custom contracts, decommissioning of zero-use devices and services, and ongoing optimization. 2

3 The Challenge: Complexity and costs The Client s lines of business, while all related to technology, are so diverse that they chose to outsource their network infrastructure primarily data, but also voice communications as well as network equipment to the Carrier. This arrangement allows the Client to focus on their core competency of harnessing technology in the service of business, industry, and research, and frees them from having to worry about the underlying network that ties their people and technology together. The Carrier provides data and voice networking services and equipment (which includes key components such as routers and switches) in an annually-renewed agreement with the Client that covers the entirety of their communications and networking needs. The agreement starts with a baseline set of services and equipment, paid for with a commensurate baseline fee. The client can add services and equipment for additional charges, and can apply for credits for cancelled services or equipment that s no longer needed. The Client spends hundreds of millions of dollars annually for these services. The Client also resells The Carrier s voice and data networking services and equipment to large multinational customers with tens or hundreds of thousands of employees, each of whom spends up to tens of millions of dollars on telecom costs annually. The Client negotiates service agreements with The Carrier on their behalf and acts as the billing contact. These customers benefit from The Client s management of their communications services, as well as the telecom savings that come with the special arrangements with the Carrier, even when accounting for management costs. 3

4 Even though this arrangement with the Carrier has both met their own communications needs and proven to be a profitable line of business for the Client, it introduced a considerable amount of complexity: The Client has a special agreement with the Carrier for voice and data networking services and equipment, with its own customized terms and pricing. In addition to the contract for the Client s own needs, the Client also negotiates a separate contract for each customer to whom they resell voice and data networking services and equipment, each with its own customized terms and pricing. As Client s and their customers needs evolve over time, the services and equipment provided by the Carrier as well as the corresponding charges will change. The Client negotiated an arrangement with the Carrier that the pricing in their contract as well as those of their customers would be reduced by a small percentage with each contract renewal. 4

5 With such complex, customized arrangements that were subject to change both annually and on an ongoing, as-needed basis, the Client suspected that there too many opportunities for services to be delivered below agreed-upon levels or not all all, and for them to be billed incorrectly or overcharged by the Carrier. While such errors were likely given the systems that they and the Carrier were working with, systems and the agreements they were working with, it would be difficult to prove that they were being made. 5

6 The Solution: GSG s audit and optimization services Faced with a set of managing a set of non-standard telecom contracts with special terms, dealing with the communications needs of hundreds of thousands of end users and hundreds of millions of dollars of spending, and wading through a complex billing environment with a mountain of records, the Client turned to GSG. Our mission was to help them find errors in the Carrier s billing and service delivery, and to identify savings opportunities. GSG s audit and optimization process can be divided into three major phases, each of which plays a key role: audit, optimization, and maintenance. We took the Client through each of these phases, which we ll detail in the sections that follow. 6

7 Phase 1: Audit GSG s team conducted a thorough audit of the the telecom assets, services, and costs of the Client and their customers. Using a combination of proprietary telecom analytics software and the expertise of our in-house telecom specialists, we pored over the available data sources, which included: hundreds of contracts that defined the telecom services to be rendered, any associated conditions, and costs, tens of thousands of bills and invoices, matching each charge to some kind of telecom inventory item, whether a network circuit or mobile device, whenever possible the Carrier s online portals, through which our GSGCloud system could execute queries to find more information about the services provided and the charges levied, and each customer s online ordering system, through which telecom services and equipment were procured. 7

8 As expected, a billing environment with so many factors in play yielded a number of billing errors and savings opportunities. Among them were: Services billed at standard rates instead of the negotiated ones. We found that the Carrier was charging the Client and their customers for many services at standard rates instead of the discounted custom rates specified in their agreements. Some of these charges even had tariffs applied to them, even though they were exempt from such additional fees. We believe that the Carrier s billing systems were designed with a few standard contract billing templates in mind, and not for specially-negotiated arrangements like those with the Client. These systems seem to rely on custom rates that are entered manually, which is a prime source of errors. Charges applied based on old rates. We observed that the Carrier sometimes billed the Client and its customers based on expired pricing agreements instead of using current ones, which were often lower. It appeared that the Carrier s billing systems weren t able to keep up with the Client s agreed-upon rate changes. Services whose charges should have been waived. In the Client s agreements with the Carrier, there were a number of services for which charges had been waived. 8

9 However, the Carrier s billing systems didn t account for these waivers, and applied the standard charges for these services. Yearly discounts that were not applied, or that were applied too late. One of the Client s agreements with the Carrier was that the rates in each new yearly contract must decrease a small percentage year over year. Duplicate charges. In a number of cases, we found that the Client and their customers were being billed more than once for a single chargeable service or item. Often, this was a case of different billing departments within the Carrier working with duplicate information, each one being unaware of the others activity. Charges applied to the wrong customer. In a billing environment this complex, information that uniquely identifies a charge and the matching customer gets lost, and the wrong party is billed as a result. Charges applied to decommissioned services or devices. There were a number of charges being applied to services that had cancelled and devices that were no longer in use. This was a result of the Client s not having an internal process for tracking service and device status or to see if they were due for decommissioning. Charges for network resources that had been removed. From time to time, the Carrier would remove components of the data and voice communications network, but still charge the Client and their customers for them. Due to legacy billing systems and differences between the date when these new contracts with lower rates took effect (typically on the first day of the month) and when billing took place (typically in the middle of the month), the new prices would not be applied, or be applied a month too late. 9

10 Phase 2: Optimization The audit was only the first step of the process. In the optimization phase, we took action based on the findings from the audit in order to ensure that the Client and their customers were being provided with the agreed-upon services at the agreed-upon prices. Since the agreement with the Carrier put the onus of identifying and resolving problems with telecom service on the Client, they wouldn t be able to realize any of the potential savings unless we took action. Our optimization included: Building a complete inventory of all telecom assets. We cataloged every asset used in providing the Client and their customers with telecom service, right down to the last circuit, router, and switch. We could then attempt to connect each service and matching charge from the Carrier s invoices to one of these assets, keeping in mind that a charge that couldn t be associated with a telecom asset is very likely a billing error. Having this inventory is also helpful in identifying and decommissioning unused or underused services or equipment. 10

11 Setting up a database of custom contracts. By collecting the telecom agreements for the Client and their customers in a single place (which hadn t been done before), we created a single source of truth to serve as the definitive reference for all services and pricing, against which we could check currently delivered services and billing. Implementing a calendar system that provided timely reminders and notifications of key dates. Much of the Client s losses came from simply not knowing the dates when services and rates would come into and out of effect. By creating this system, we were always kept apprised of these dates and were ready to take timely and appropriate action. Instituting safeguards to check for duplicate charges. Bills from the Carrier came from different departments that often operated in different silos without much communication among them. It fell to us to create another single source of truth, this one being the definitive reference for all billing. Actively canceling unused, underused, or expired services and decommissioning unused devices. Since identifying such services and services was not the responsibility of the Carrier, it fell to us to take it on. Any devices or services that were being paid for but no longer used were regularly identified and canceled or decommissioned on the Client s behalf. We also took measures to confirm that the cancellations and decommissionings actually took place, and that they were no longer being billed for those services and devices. 11

12 Phase 3: Maintenance With the audit and optimizations complete, we began the ongoing process of maintenance. Using the systems and single sources of truth that we implemented during the optimization phase, we began continuously monitoring the Client s and their customers telecom plans, usage patterns, and billings, making the necessary optimizations when called for. Ongoing maintenance is necessary for two key reasons: Optimization isn t a one and done process. Over time, business needs, markets, users, and usage patterns change, and technologies and services evolve. The optimizations that worked a year ago may no longer be as effective. Regular course corrections are needed to ensure that the savings and efficiencies gained from the initial audit and optimization continue. Experience is an excellent teacher. Through ongoing optimization, we gain further insights into each organization s unique telecom needs, setup, and arrangements with carriers. Over time, this allows us to fine-tune our work, often increasing the savings and efficiencies gained. 12

13 The Result: $50 million in savings over the first three years Through our audit, we were able to identify several key areas where the Client or their customers were being billed at the wrong rates, at the wrong times, for the wrong services, or with missing discounts or credits. We then applied a set of optimizations based on that audit, and by establishing a maintenance program featuring ongoing monitoring and adjustments, we were able to generate significant dollar amounts of savings on their telecom spending, especially in the second and third years: In the first year following the initial audit and optimization, we were able to save the Client $10 million. In the second and third years combined, armed with more complete information on the Client s and their customers accounts, and experience working with them, we were able to increase the savings to $20 million per year, for a grand total of $50 million in telecom savings since our initial audit. Since undergoing audit, optimization, and ongoing telecom expense management with GSG, the Client has chosen to keep using GSG s services to help them manage the $400 million they spend annually on telecom. They continue to enjoy the benefits of saving significantly on their networking and communications costs. 13

14 About GSG Founded in 2003 by telecommunications industry veterans, GSG is a global leader in communications lifecycle management and enterprise mobility management/mobility managed services. We combine proprietary business intelligence tools with the experience and know-how of dedicated telecom domain experts to help businesses solve their toughest telecom management and expense challenges. Our GSGCloud platform is a modular cloud-based solution that supports the full lifecycle needs of telecommunications management. This always-on, alwaysupdated, accessible-anywhere platform supports a suite of applications that lets you manage, streamline, and optimize your telecom operations. These applications orchestrate hundreds of tasks and the related data required to operate your telecom department, integrating actual telecom platforms and processes along with that data to help organizations make the most of their telecom equipment, services, and budget. Our open, modular platform goes beyond providing telecom management software; it also integrates with a wide array of different applications, such as MDM, workflow management, HR and financial systems. This functional, flexible approach makes it possible to build custom solutions that are tailored to fit an organization s specific needs, and unleash the full potential of their telecom system. 14

15 Contact Us Online Visit our website at gsgtelco.com or our various social media accounts using these easyto-remember URLs: Blog: bit.ly/gsgblog Facebook: bit.ly/gsgfacebook Google+: bit.ly/gsggoogleplus LinkedIn: bit.ly/gsglinkedin Pinterest: bit.ly/gsgpinterest Twitter: bit.ly/gsgtwitter YouTube: bit.ly/gsgyoutube Call or Us Call us toll free at +1 (800) or us at Acknowledgements The image on page 4, Caught Reading, was created by Jayel Ayerham and licensed under a Creative Commons Attribution 2.0 Generic license. The original can be found at aheram/ /. The image on page 5, Human Resources, was created by RickyMartin and licensed under a Creative Commons Attribution-Share Alike 3.0 Unported license. The original can be found at commons.wikimedia.org/wiki/file:human_resources.jpg. All other content in this document is 2015 GSG. 15