Untangling Telecoms

The modern enterprise increasingly employs a range of communications solutions –traditional voice, data, wireless, IM and VoIP, to name but a few – across numerous locations. So what challenges do companies face in terms of managing their network and telecoms infrastructures?
CY. This is a great question as most enterprise organizations we speak with are not only faced with the challenges of managing their infrastructures as they exist today, but also how they will manage infrastructures in a converged environment or as some refer to a next generation network (NGN).

A next generation network is regarded as a network that can provide independent access to applications and contents and is able to support multiple services in its core and access networks. It is expected to integrate services offered by traditional networks and other IP networks into a single platform.

There are numerous standards that exist today such as the open systems interconnection standards (OSI) and the simple network management protocol (SNMP). These two general approaches have adopted different standards and implementation methods. They are also designed for different architectures.

When organizations evolve towards NGN, the scenario gets more complex. For example, traditional management tools are designed to determine whether the points along a network path were available. This approach does not mesh for example with VoIP applications, which are dynamic. The points constantly change. Tools are required to measure how effectively a network is routing information holistically. Without such tools, enterprises may see wide fluctuations in performance are possible.

So since the control and management architecture is likely to be radically different from the current approach, the pressure in terms of operation, administration, and maintenance of networks and services will be significant.

FL. The challenges lie, I believe, in three key areas: mobile device proliferation and dispersal, mixed environments and convergence, and fiscal pressures.

The first, mobile and wireless, relates directly to a fundamental change in how companies do business: increasing decentralization and mobility of the workforce and greater demand for “headquarters quality” connectivity and data availability. With mobile and wireless devices becoming inexpensive and increasingly capable this demand (really a requirement) becomes easier to satisfy, but systems to manage the growing inventory of mobile devices, the use of those assets, and even more important, the costs of those devices is, to put it dramatically, a “silent epidemic” for most companies.

The second challenge lies in the accelerating move toward new technologies like MPLS and VoIP. Competing pressures, from internal funding challenges, IT project overload and increasing pressure from the vendors and carriers to move to the new technologies on the one hand, and the promise of new features/functionality on the other, most companies are moving incrementally, and sometimes reluctantly, toward these new technologies. When you couple that with the legitimate finance perspective of “we paid a lot for the old stuff and it still works fine”, the result is frequently a mixed environment that is difficult to manage. Since detailed reporting, tracking and charge back have always been a priority in the voice world, there is pressure on the organization to maintain the granularity that is necessary for compliance, security, cost allocation, policy enforcement, etc. even as the underlying infrastructure being reported on is changing and growing in diversity and complexity.

The third point I’d like to make is something I touched upon a moment ago: margin pressures are high, overall communications costs are increasing with greater proliferation of bandwidth, mobile devices and data-delivery services, and the systems that are typically in place to manage that spend is wholly inadequate to the task. What worked when there were just a handful of local and long distance services to acquire and bills to review and pay simply can’t support the myriad of charges from a range of service providers providing wireless data, mobile voice, video and voice conferencing, subscription data sources, etc. Add to that the increased number and complexity of contracts to support these services and technologies, and manual or consulting-based services just can’t keep up. The sad fact is, most companies—even the ones who think they’ve got a handle on their systems and spend—are bleeding money through lack of control and visibility. In some cases, so much so that they could fund their new initiative fully from the savings generated from implementing better sourcing, tracking, reporting and invoice processing systems.

BM. The telecommunications market has grown from traditional voice services to include complex data networks and wireless services. In parallel, the management and control of the related expenses are growing increasingly complex. Telecommunications expenses average 3.6% of a company’s revenue, and the Fortune 500 spends $58 billion on telecom alone. Telecommunications now represents a top line expense in the budget for enterprises and a strategic area to be managed, controlled and to exact savings.

The enterprise’s Telecom Expense Management challenges can be summarized as follows:

• Controlling Costs: Telecommunications and network services have become a significant, top line operating expense requiring specific focus for most enterprises.
• GL Coding and Cost Allocation: Accounting for telecom costs, determining departmental charge-backs are typically time consuming, labour-intensive and costly tasks for most enterprises.
• Change Management: The enterprise’s telecommunications networks are continually changing with the addition and removal of services and assets. Wireless and data services are expanding rapidly. Additionally, telecom carrier changes (e.g. mergers and acquisitions) are driving frequent changes to invoice formats and billing methodologies.
• Process Validation: Most enterprises rely on labour-intensive, manual processes to manage the receipt of the large volumes of paper invoices they receive, process, validate, audit and approve. Inefficient processing can lead to late payment penalties and uncontrolled service disconnects.
• Data Visibility and Benchmarking: Networks are decentralized and organizations have limited visibility and access to the data needed to understand and optimize telecom expenses. Having real-time access to data enables the enterprise to prepare for future procurements, validate invoices, and make sound business decisions.

For enterprises that do not have an effective TEM process (i.e. people, process and technology coordinated in a best-practices approach) the costs are likely to be significant. Large billing errors can be caused by ineffective visibility to the telecom inventory, process inefficiencies, missing changes to billing, and other fundamental TEM disciplines.

AH. Despite advances in technology and increasing “pain” around managing complex telecom spending, it is still commonplace to find companies and organizations that do not utilize telecom expense and inventory management (TEIM) processes or systems. Simply stated, even traditional communications services for phone services are not effectively tracked or monitored. The dynamic growth of wireless devices and rapid enterprise adoption only compounds matters. Gartner estimates that 50 percent of enterprises will exploit at least five new wireless network technologies by 2007. And Aberdeen states that mobile penetration among US professionals is topping 75 percent. One of the specific challenges with managing corporate-wide wireless plans is that any favorable “cost per minute” contractual rates are typically negated by unnecessary special features and the lack of corporate level management that provides cost savings such as pooled minute programs. Due to the various types of carrier EDI feeds, automating the invoice processes down to the USOC (Uniform Service Order Code) level is difficult and must be proactively managed after initial setup.

Effective TEIM processes are based on establishing a disciplined approach for managing the volatility of the assets’ MACDs (moves, adds, changes and deletes), programmatically reconciling those assets for discrepancies with carrier bills at the USOC level and automated business processes to streamline workflow with ERP-coordinated events. It is important that USOC level detail is available so that contractual or unregulated rates are properly reconciled. Additionally, integration with ERP and human resource systems is necessary to reduce manual labor requirements and eliminate data entry errors in order to focus the organization’s efforts on strategic initiatives as opposed the tactical processing of invoices.

Why is managing these costs such a key focus for businesses right now? And why is it important to develop a telecommunications strategy based around the business strategy?
AH. Communications costs still rank as one of the top five indirect costs in a large percentage of businesses, and represent one of the greatest opportunities for creating new efficiencies and savings. Enhancing bottom line profitability and reducing large telecommunications spend is a necessary business focus.

By understanding exactly how telecommunications costs are allocated, business managers can better understand usage and carrier contractual structures. For example, business managers need to understand contractual detail to negotiate the best rates available in the market and then be able to monitor those provisions relative to asset movement and invoicing. This level of review also helps support contractual discounts or minimums to ensure that discounts are applied and the infrastructure is optimized. Business managers also need better insight into wireless costs, especially as wireless usage CPM (cost per minute) increases, and contract rates are consistently negated and often go unnoticed. TEIM systems can also assist in complying with Sarbanes-Oxley regulations requiring expense controls and proper allocation of costs by general ledger code. Bottom line: Gaining visibility into communication costs at the management level and establishing a better understanding of how reining in those costs and creating more efficient processes will impact business goals will greatly assist in controlling costs across the enterprise.

BM. A typical Fortune 500 company will spend over $25 million this year on its telecom expenses and will receive over 15,000 invoices from its telecom carriers. These invoices will be sent to numerous locations in the U.S. and abroad. Many of these invoices are paper-based and require a great deal of manual labour to receive, process and pay. The company battles each month just to get the bills paid on time. Over 80% of the invoices are paid without validating them against a contract or inventory. Allocations and usage accountability is simply not done. Companies know that there are errors in some of the bills, but most bills are paid if they simply meet threshold criteria that may or may not be current and appropriate. The accounting for these invoices is inconsistent at best. Furthermore, new telecom service ordering is not centralized and the typical company does not have a reconcilable view into its telecom expenses that it requires to optimize and minimize its costs. The end result is that businesses have neither good visibility nor control of the telecom expenses.

Faced with these types of challenges, many companies have embraced Telecom Expense Management (TEM) outsourced solutions as a viable practice to solve the telecom challenges for their firms.

With a growing line item expense for telecommunications, more and more firms are seeking the benefits of effective TEM programs, including:
• Control of expenses and billing errors
• Reduced processing costs
• Data visibility via reporting
• Application of corporate business and accounting rules.

Telecom Expense Management is helping management answer important questions about the expense side of their networks:
• Am I buying the right services?
• Am I paying only for the services and assets I use and need?
• Am I paying the right amount?
• Am I getting the data I need to drive effective decision-making?
• Am I maximizing the return on my telecom spend?

FL. Margin pressures have never been higher for most companies, previous cost improvement efforts have yielded as much as they are going to, internal –and external—demands for quality of service is growing. At the same time, while unit costs of many communications services are dropping, overall spending is increasing—there’s just much more of it going on these days. A mobile work force, decentralized assets and inadequate management systems limit the view into this “top 5” spend, and what you can’t measure you can’t manage, let alone cost-optimize. Ironically, many companies believe they are doing a good-to-excellent job of managing their communications expenses, but rarely do they have a handle on their total communications spend and the areas they can better control and reduce.

To the second part of your question: it’s important to first understand what you are trying to do with your communications infrastructure. Are you trying to keep your employees connected at all times? Do you have a highly mobile workforce? Is customer access a priority? How do you interact with your customers and employees? Once these questions are answered you can put together an effective strategy that meets your requirements and implement a telecom expense management solution to manage it.

CY. No company can truly be successful in executing its defined business strategy unless its telecommunications plan is directly based upon the enterprise’s short and long term business strategy. To ensure the telecommunications strategy is sound and will support the enterprise’s defined business strategy, the C-level executive responsible for telecommunications must participate in and be an integral part of the overall business strategy development process.

One of the biggest mistakes an enterprise can make is not developing its business strategy with the significant participation of the telecommunications executive and then telling that executive on the back end of the process to find a way to support the business strategy that was approved. That scenario can lead to all types of issues from cost overruns in telecom related expenses to the telecommunications infrastructure’s inability to properly support the business strategy. Involving the telecommunications executive in the business strategy development process will ensure that key telecommunication related items are considered and planned for up front.

Managing telecommunications costs should always be a key focus for any business because without constant vigilance, telecom related expenses can get out of hand and create a competitive disadvantage for the enterprise. All telecom service providers have a poor track record of invoicing enterprises accurately. Market pricing for installed telecom services continues to decline and new IP based network services that are driving cost efficiencies.

Therefore, an enterprise needs a systematic approach to managing its telecom expenses on a monthly basis. This will help enterprises identify any billing errors quickly and keep the them in a position to take advantage of any window of opportunity to renegotiate its telecom contracts or implement a competitive bidding process for its telecom service needs.

How can deploying a telecom expense and inventory management (TEIM) solution help companies find new ways to stretch scarce network and telecom dollars? What benefits does such an approach offer?
AH. Deploying a TEIM solution can not only produce savings related to rectifying billing errors, inventory discrepancies or contractual variances, but it can also lead to better-optimized communication structures or networks. For example, consolidating multiple primary rate interfaces to a larger OC3 can produce significant savings. On the flip side, underutilized bandwidth can be appropriately sized or disconnected.

A properly implemented TEIM solution will provide the necessary reporting detail and analysis to understand carrier contractual structures. This leverages the enterprise for the best possible contractual negotiations. Once the contracts are negotiated, TEIM solutions assist in real-time cash flow management by identifying billing errors during the accounts payable process. The ability to “short pay” or to not pay an invoice allows the enterprise the ability to dispute the invoice while retaining the cash as the invoice is corrected. It is estimated that carrier invoices contain 8 to 12 percent billing errors.

Once the system is properly implemented, cost avoidance through proper management is key. If systems are not maintained properly billing errors will be missed, which negatively impacts the bottom line.

In addition to helping stretch scarce network and telecom dollars, maximizing TEIM systems and outsourcing elements of the process allows better utilization of IT and accounting teams, allowing them to focus on other priorities.

FL. Most companies, even those who have put time and effort into managing their communications expenses just don’t do a good job at it on their own, even if they think they do: it’s just too complex a task these days. Typically communications expenses are dealt with in one of two ways: using consultants and auditors to identify savings opportunities and/or to negotiate better rates and terms in services contracts, or the use of an automated system or service bureau to process invoices and identify errors in those invoices. Either approach worked fine when the world was a simpler place, but in today’s complex environment is “good enough” really good enough? I don’t think so. IT dollars are hard to come by and project lists are growing far faster than budgets. We see ROI requirements on project funding getting shorter and shorter, so lots of projects are getting pushed out—important ones.

By moving beyond consultants and invoice processing to a comprehensive system that automates – and potentially outsources - all the business processes involved in the management of a company’s communications, tremendous results can be found. Our experience has been that double digit reductions in spend can be obtained through a more comprehensive approach. The cash—and we are talking about hard dollar savings as well as soft dollars—can be reallocated to important but unfunded efforts or used to boost earnings.

The benefits are real and measurable: first is visibility and control over a company’s entire environment, from the assets and ownership, to usage and spend.

Second is process improvement, taking activities that required large staffs or demanded too much of small groups and streamlining those efforts, or increasingly, offloading the hassle entirely through completely outsourcing the management.

Third is cost reduction. Depending on the breadth of the solution, contracted rates and terms can be dramatically reduced, invoice errors identified and credits requested, and misuse identified and shut down. Through outsourcing further cost reductions can be obtained through staff reduction or redeployment of internal resources to more valuable activities.

BM. TEIM provides enterprises with the data and analysis required to control telecom expenses and drive sound business decisions. The primary drivers of value in TEIM include gaining control of telecommunications expenses; maximizing efficiencies via lowering the cost to process bills; paying only what you owe; meeting internal controls for Sarbanes-Oxley compliance; and reduction of the telecommunications budget through audit and optimization.

The benefits of a proactive approach to managing telecommunication expenses are significant. Selection of a vendor who offers business processing outsource (BPO) of TEIM, requires careful understanding of the enterprise’s current network expense environment, its goals, as well as an evaluation of the leading vendors. Utilizing a proven vendor saves the time and cost of building a proprietary solution, leverages deep TEIM expertise and optimises resources for core competencies.

BPO of TEIM services produces a solid return. It collects vital data and provides timely reporting about expenses to drive strategic decisions that enable the enterprise to optimize its investment in telecommunications and better focus on its own core offerings.

What criteria should companies use when choosing a TEIM vendor? What are the essential services/solutions they should look out for? And are there any pitfalls they should avoid?
CY. The main criteria that companies should consider when choosing a vendor are:

Telecommunications Billing Experience – Most TEM providers boast profiles of employees with years of industry experience however, there are significant differences in the levels and types of experience among the industry. The successful delivery of TEM services requires an in depth knowledge of billing to include terms, USOCs, carriers billing systems nuances, and pitfalls across all the major carriers. This knowledge can only come from tenured employees with decades of experience actually working in the telecommunications carrier world. When considering a prospective TEM vendor one should ask for the employee profiles that will actually be supporting the services provided.

Choose your references – TEM companies are notorious for flaunting logos of customers in their marketing materials. In reality, the TEM vendor only provided limited services to that customer. Perform your due diligence and take the time to talk to a minimum of three references. This should provide you with broad reaching and honest feedback.

Electronic is the name of the game – TEM vendors have concluded that the cleanest, most efficient and cost effective way of delivering service is by embracing electronic telecom billing media. Processing, auditing, and allocating are all functions that benefit from electronic billing. Also, paper and EDI formats are the only legal tendered types of invoices. Therefore, if a TEM vendor recommends using vendor CDs as a means of payment, then you should be concerned.

The essential services/solutions clients should look for when choosing a TEM vendor are:

Vendor Management – Success in the TEM space starts and ends with proper vendor management and established solid senior level relationships within the telecommunications providers. Without successful vendor management, the TEM provider will be hard pressed to deliver results that are superior to your own.

A detailed level of audit – Living and breathing with telecom vendor invoices and contracts should translate to volumes of questions and billing disputes. Additionally, the TEM provider should have senior level relationships within the carriers and be able to obtain resolutions to all issues identified much more quickly than you would on your own.

Charge back – Identify a TEM provider’s charge back methodologies. If they have a “one size fits all’ process, then this should raise concern. Every company has different needs when it comes to allocation of costs. The TEM provider should be flexible enough to work within your needs.

Visibility – The TEM provider should be able to provide visibility into your telecom spend at multiple views. For example, there is a inventory detail view, allocation view, vendor view, A/P view and all views should not be limited and flexible to ad hoc. With the inventory view, an operations manager may want to take a look at inventory at certain sites. A procurement manager may want to view inventory by a certain vendor. The TEM provider’s system should be able to deliver multiple views.

Documentation – Most clients want to see the process working. They want to know when an invoice was received, audited, allocated, batched, paid, and who touched the invoice in each step. Documentation and accountability are the name of the game.

Sarbanes Oxley – Kick the tires on the certification of a potential TEM vendor. Call their accounting firm and truly understand if the vendor meets your company’s requirements.

Pitfalls to watch out for:

The lowest price – You get what you pay for is a reality in the TEM space. Since implementation is never as easy as it sounds, make sure that you do not have to re-implement in 6 months. Question the pricing, and perform the necessary due diligence when considering purchasing TEM services from the provider with the lowest quote.

Savings guarantees – This tactic is still used today. Your expectation should be that the TEM vendor is going to dispute any and all charges that are incorrect. Therefore, you do not want to focus your time on a guarantee of the annual cost for the services. The focus should be on timely invoice processing, dispute log management, and additional value from the increased visibility to your telecom services.

Visit the TEM vendor – See it working first hand. Ask questions to unsuspecting employees. Better than that, go and visit a few references if possible. This will provide insight to how much work the client is still doing that should have been outsourced to the TEM provider (look for the invoices that are still coming to the client)

FL. A very good question, and a timely one. I believe this is a very confusing market for companies looking at TEM solutions. First of all, the term TEM grew out of a world of bill auditing, contract negotiation and invoice processing rather than by looking at spend management in its entirety as has been done in the supply chain world, for example. As a result when one
mentions TEM (or TEIM or TTCM for that matter) it means different things to different people. The result has been, so far at least, that the term “TEM Solution” is being used by consultants who review contracts and little else, auditors who sample invoices and identify opportunities for savings, software vendors who provide invoice processing applications, outsourcers who replace your internal manual processing with an outsourced version of the same, and pretty much everything else in between. Lots of different piecemeal or partial solutions and little comprehensive view of the business processes needed to effectively manage and optimize costs for all types of telecom.

I think it is critical for a company to consider how a potential vendor is going to approach their problems and how broad a set of issues can they solve for them. For example, bringing in a consultant or auditor to look at your contracts and invoices and recommending a course of action does nothing to improve your internal processes. Their domain expertise is undeniable, but it creates a one-time effort that keeps the burden on the customer to figure out how to execute against those recommendations. And worse, it may create a sense of complacency that prevents a company from making any real process improvements – which prevent it from obtaining any real savings and control.

At the same time, offloading your manual processes to an outsourcer that is primarily people-based just shifts the effort somewhere else, it doesn’t improve the accuracy, speed the turnaround time, increase savings or offer any better visibility into the spend than the internal efforts provided.

The same consideration applies in the other direction: to borrow from an old IT term, – garbage in, garbage out. The best software available isn’t very useful if there is not sufficient domain expertise to drive it and understand the nuances inherent in the complexities of the communications world. So you need a vendor that can manage the full scope of your business processes and who brings a proven track record of technology innovation combined with hands-on domain knowledge.

The most important pieces of advice I can offer are (1) to make sure that you understand the entirely of the problem you are looking to solve, and consider the full set of telecom business processes in your search, (2) map the breadth of your business processes to the breadth of the solution offered by the TEIM vendors under consideration. You want to select the vendor that can solve all your issues, even if not all at first, so you don’t become the integrator trying to make several partial solutions work together; and (3) Talk to the experts – who do they recommend?

AH. The first step is to select a comprehensive TEIM solution that integrates all elements of external and internal processes around the communications process. Essential services include external data expertise; service request for MACD and problem tickets, integrated with invoice processing and reconciliation; cost allocation functionality with external API ports; tariff and rate comparison modules; call accounting with VOIP support; proven ERP integration background; business process reengineering consulting and inventory management expertise – all integrated around a strong workflow engine. This level of support should be available in a license, software as a service (SaaS) or business process-outsourcing model. Companies should consider a vendor with a good track record that is financially viable and has the potential to be a valuable, long-term partner.

Common pitfalls include buying into “over sold” capabilities. It is commonplace to find TEIM vendors that over promise and under deliver. There is preponderance of solutions providers that compete on price alone. This may be a red flag as companies need to seriously weigh the cost of doing business, with long term return on that investment. Typically, vendors with the lowest prices tend to cut corners and service suffers. This is not a win-win situation and the relationship often ends with negative consequences. The appropriate TEIM provider will provide a highly automated solution to deliver maximum value.

BM. We recommend the following five-stage approach to select a TEM vendor:

1. Assess your company’s TEM needs and objectives (“Needs Analysis”)
2. Identify two or three potential service providers
3. Collect and evaluate information on services provided
4. Invite finalist vendors for site visits
5. Select a TEM partner

After ranking the prospective suppliers, a company should visit each of the finalists. These visits will provide an opportunity to see the processes behind the vendor’s response, view a live demonstration of the software and meet the people who will be implementing the program.

The first step described above – the Needs Analysis – should be undertaken before entering into the vendor selection process. This helps companies develop a clear understanding of their current TEM environment and also a general idea of the desired scope of work. The companies should obtain internal consensus on these common, high-level needs and objectives before moving to the next step. The Needs Analysis should include the firm’s overall TEM Objectives and Goals as well as an Overview of Current Telecom Expense Management Environment. Following are the minimum services that should comprise the full TEIM solution:

• Order & Inventory
• Invoice Management and Processing
• Accounting Needs
• International
• Wireless
• Call Accounting
• Approval and payment
• Historical Audit Services

The specific types of questions to ask the prospective providers include:

• Company overview (including references and financial stability)
• Service offerings and solution capabilities
• Data visibility and reporting capabilities
• Staff experience, processes, and technology
• Implementation and ongoing service
• Price and contract terms

Rating Vendors

Below are suggested values for evaluating the TEM finalists that are consistent with industry recognized standards and best practices:

1. Industry expertise, relevant experience and financial stability (25%)
2. Service offerings and solution capabilities (25%)
3. Implementation and ongoing service (15%)
4. Data visibility and reporting capabilities (15%)
5. Technology (10%)
6. Price and contract terms (10%)

Beware of the “Savings Guarantee”

Enterprises should expect to achieve significant savings through a TEM BPO. However, beware of the “savings guarantee.” Firms that sell their service in this manner are akin to accounting firms selling services based on guaranteed tax refunds. It is virtually impossible to know ahead of time the rate of errors that will culminate in credits. Over time, errors should be all but eliminated as the TEM provider identifies and corrects carrier billing problems on a real time basis. Inevitably, as the errors decline, TEM programs that are cost-justified solely on a contingency basis will continue to focus on disputes and detract from the other larger savings and efficiency areas. Furthermore, guarantees are only as strong as the proposing firm’s balance sheet, which is a reflection of their overall financial stability. The leading firms in the TEM space do not offer guarantees.

What will be the key drivers behind the uptake of telecom expense management solutions over the next 12-18 months? What trends are you getting excited about, and which developments will have the greatest impact on the market?
AH. We believe that some of the key drivers behind the adoption of TEIM solutions are the growing importance of wireless and VOIP use in corporate environments, the associated challenges with managing those assets, and tying investments to bottom line results.

Wireless
The proliferation of wireless technologies in corporate environments has created a significant challenge for companies that are now faced with having to manage multiple telecommunications vendor contracts and invoices. With cell phones, BlackBerries and wireless access for laptops creating an increasingly mobile business environment, managing the costs of those tools can become a time-consuming and frustrating process, one that will only get more complicated as investment in wireless technology grows.

The answer for many organizations, especially those with multiple offices and large workforces, is to centralize the management of their telecommunications spend – to track spending and to ensure they have negotiated the best packages possible. Centralizing cost management is important when you consider that in a company with multiple offices and divisions, there are likely dozens of methods for tracking and accounting for spending. Employees in some offices may include wireless expenditures in their expense reports, while some divisions may lump costs into a single line item that is never analyzed for trends or discrepancies. Additionally, at a company with 500 employees, there could be nearly as many different wireless contracts, many of which aren’t being optimized based on usage.

VoIP
Voice over IP (VoIP) is increasingly viewed as a viable business solution that has the ability solve certain pain-points within the cost structure of an organization. For example, VoIP may be a good solution for a branch office looking to cut costs of traditional long-distance phone service. Additionally, customer contact centers are increasingly looking toward IP telephony to unify computer and voice functions for service representatives.

While many enterprises acknowledge the benefits of integrating new technologies into their existing telecommunications infrastructure, many lack the bandwidth to stay abreast of new solutions entering the market, or the expertise to analyze return-on-investment. In these cases especially, it makes sense to utilize the services of a TEIM service provider that has the tools and the in-depth industry knowledge to map out new technology strategies, and track their impact on a company’s bottom line.

Verizon’s Integrated Telecom Expense Management Service
A sign of increasing demand for TEIM services among large global companies, Verizon Business recently introduced the Verizon Business Integrated Telecom Expense Management Service, a new service that tracks and manages the communications costs of large-business customers and identifies potential cost savings. The new service will utilize Symphony's Expense Management System (EMS) to manage assets and invoices for wireline services for its customers.
CY. With the recent merger activity in the telecom industry along with the necessary integration of networks and billing systems for the merging carriers, we expect to see some network performance issues and further degradation of the already poor billing systems of the major carriers. We feel that billing accuracy and timeliness will suffer over the next 18 months, making it much more important for enterprises to place appropriate scrutiny on their telecom invoices. We expect to see enterprises (more now than ever) seek assistance and expertise in managing their telecom vendors.
While the mergers point to integration issues, the continued consolidation of the telecommunications industry is also forcing a few key market changes. The potential bundling of multiple services is one such change that will take place. With the mega-carriers (AT&T and Verizon) now having local, long-distance, and wireless services to offer, we expect to see an aggressive effort to propose a bundle of services to the large enterprise market. In doing so, AT&T and Verizon hope to capitalize on established relationships with one product and further penetrate with others, driving up their revenue base in each customer.
What does this mean to the enterprise? There are possible financial benefits and operational efficiencies for the enterprise when a bundle of services are procured from one primary provider/ However, the bundled offer will also make it that much more difficult to determine price value on individual products, let alone billing accuracy.
In addition, legal and regulatory requirements will make it difficult for the carrier and the enterprise to have one Master Service’s contract that can govern all the bundled services. The bundled offer will potentially drive an entirely new area of expertise in managing and optimizing telecom vendors, their services and their billing. To this point, we have yet to see an actual launch of a truly bundled offering from any of the carriers However, both AT&T and Verizon have publicly stated their intent to do so in the near future.
The second market change we are anticipating is an eventual pricing and/or contract strategy change by AT&T and Verizon. While we continue to see competitive offerings in the enterprise market today, we are also seeing some indicators that the large carriers are taking tougher positions on pricing and some contract provisions. It appears the carriers are attempting to push more risk to the customer in their contracts. We have seen recently that we are having to work a bit harder to secure market-leading contracts AND to ensure those provisions remain intact for the full term of their contract.
BM. There are a number of trends that have been driving growth of TEM and will continue to support a growing market.

First, more enterprises are comprehending that TEM is more than just paying their bills and possibly conducting audits. Our clients, and the marketplace in general, are demanding a complete end-to-end solution. From procurement to payment (that incorporates best-of-breed technology), to people and processes that are outside the existing capabilities of our clients. TEM solutions cannot only uncover the problem; they repair the process so that it doesn’t happen again.

We are seeing more and more demand for business processes outsourcing as clients look to leverage our expertise, singular focus, experienced staff, and flexible and secure tools while they focus on supporting their clients.

Our clients are looking for the ability to dynamically allocate their telecom expenses. That is, they want us to account for the cost of their services based upon each department’s or individual user’s actual usage of telecom services.

Finally, the market has come to realize that the evolving nature of telecom services and telecom service billing requires a flexible solution that is able to quickly adapt to and manage change while providing visibility to the data that helps make sound and quick business decisions.

FL. There are several issues coming together that we at Avotus believe will move stimulate more companies to adopt comprehensive TEM solutions over the next 12-18 months: first, increased recognition of the true—and rapidly growing-- overall cost of communications. As more companies look to improve earnings despite rising fuel and capital costs and to find ways to internally fund programs, high spend areas like communications will come under increased scrutiny, and that will lead to a desire to improve the processes and systems that manage that spend.

Next, the accelerating uptake of new technologies like VoIP and MPLS, for example, will lead companies to balance their desire to move forward against a questionable and hard to prove ROI. Over time, there is no question of companies moving to these technologies—but finding the funding and making the business case for nearer-term implementation will require internal financial support. So too will there be a strong demand for consistent management and reporting of activities across what will most likely be a very mixed environment during that transition. TEIM can effectively address these issues.

We are also closely watching the many changes taking place in the carrier world. With all the acquisitions/mergers, non-traditional entrants into the communications world, and a spotty record of customer service, we see business consumers seeking ways to shift the balance of power away from service providers’ “business as usual” model to one that encourages the service providers to get more aggressive about pricing, service levels, and terms. In essence, there is a fundamental shift in power from carrier to consumer, and the recent spate of mergers is the industry’s attempt to slow that shift.

Also on our radar is the shifting dynamic within an enterprise. I see a real maturation of thought among the various internal stakeholders, such as finance, procurement, IT, etc. with regard to cross-department activities. In the same way that ERP and CRM solved problems and improved productivity by addressing complete business processes, I see a growing recognition that point solutions are no longer the answer to containing telecom costs and improving communications management. We see a clear desire to get control of this entire set of issues under a unified technology-based solution.

What do you consider a comprehensive TEIM solution?
FL. I believe that to be most valuable to an organization a TEM solution needs to be technology-driven and it needs to manage the entire lifecycle of a company’s communications environment. That means, in practical terms, that it must include components to manage: sourcing and procurement, ordering and purchasing, inventory, invoice processing, dispute reconciliation, system and device usage, security, traffic, and policy compliance. To leave any of these components out leaves a gap in your process through which money and accuracy will disappear.

For most companies, this means an outsourced solution that marries deep domain expertise with a solid software solution. For the largest organizations with deep internal staff, a software license solution can deliver. This combination delivers not only end savings in out-of-pocket expenses but also significant process improvements in the various steps fof the cycle, such as reducing the time to develop and RFP and get bids for services from months to less than 30 days or reducing the time to recover billings errors from months to within the same billing cycle.

Most enterprises see substantial value in outsourcing their non-core business processes, or at least in acquiring the best technology to automate and run them. We view our mission as being the best provider telecom expense management solutions in the world, which allows our customers to focus their efforts on being the best financial services company, the best pharmaceutical firm, the best manufacturer, etc.

AH. A comprehensive TEIM solution should therefore include a strategic balance of people, process and technology. This includes access to telecommunication and business process outsourcing subject matter experts through a third party service provider that become a true extension of a company’s IT and accounting teams. The subject matter experts can quickly add value in terms of providing inventory control capabilities, invoice and billing review and contract negotiation support. Additionally, effective TEIM software should integrate all elements of external and internal processes around communications management, with heavy emphasis on streamlining and automating processes and maximizing workflow efficiency.

BM. A comprehensive TEM solution supports the client’s needs from “procurement to payment” for clients in the enterprise, carrier and government markets.

The elements that form the basis of a full end-to-end TEM solution are:

• Provisioning and Inventory Management: Having an accurate inventory of assets (e.g. circuits, equipment, etc.) and services (e.g. long distance, local, Internet, wireless) is a critical component of the TEM process, providing a real-time base against which invoices can be compared and upon which cost optimization and procurement decisions can be supported.
• Invoice Management: This is the core function of TEM and includes receipt of paper and electronic bills. The process should be built on an efficient and proven process and technology that allows the enterprise to convert all bills to a standardized electronic format as the basis for managing the invoices.
• Call Accounting: Call Accounting services track the usage of telecom equipment and services by individuals and departments within the enterprise. Tracking call detail activity down to the end point of the individual phone extension provides the enterprise with a tool to manage usage at the level of the responsible employee, including: control of abuse, misuse and fraud, analysis of employee productivity and true usage-based cost allocation.
• Audit and Sourcing: Audits validate invoice charges against contracts and inventory, and identify billing errors. A strong TEM solution will audit and validate each invoice and reduce the rate of billing errors over time as issues are identified and resolved with the telecom carriers. Invoice data can further be used to benchmark an enterprise’s telecom expense picture and support purchase decision-making.
• Bill Payment: One of the fundamental goals of TEM is to identify the correct payment amounts for each carrier. A full end-to-end solution will provide the enterprise with multiple payment options, including: providing a payment feed with sufficient information to enable the enterprise to issue checks or setting up a “Bill Pay” relationship with the enterprise where a TEM provider pays the invoices on behalf of the enterprise.

Can you give an example of a successful TEIM implementation you have been involved in? What were the challenges, and how were they overcome?
BM. Our biggest challenge with majority of our implementations is data gathering from the client. In many cases the telecom expense management is not centralized. The network portion of the expense may be handled by the IT department with the remainder processed by the company's individual divisions. The challenge CPS faces is working with our contacts to obtain and centralize all the information needed to have a successful and timely implementation while maintaining a good rapport with the client.

The implementation for United Airlines was perplexing because we did not have a complete list of the billing accounts or a way to obtain their GL code structure for the purposes of charging back the expenses to the appropriate departments. We continually communicated with the client the accounts that we could confirm had been ordered and then compared them to the scope of the engagement. This enabled us to target the discrepancy. The GL code was a challenge as the defined business rules – in some cases – were not being followed by the client. A strong project management team, in addition to open lines of communication and weekly meetings allowed us to overcome these hurdles.
AH. Tickets.com is a leading business-to-business ticketing solutions provider for live events whose telecom spend ranks as the company’s number two highest cost, after labor. The company’s telecommunications infrastructure includes more than 3000 data and voice lines, 200 accounts, and a call center for inbound calls.
“We operate in a fast-paced, highly transactional business, which is supported by extensive telecommunications and IT infrastructure. While telecom spend represents one of our largest expenses, we recognized that it could also be one of our greatest opportunities for creating new efficiencies and squeezing out additional cost savings,” said Shane Miller, Senior Vice President of IT operations at Tickets.com. “Symphony’s Expense Management System easily handles our complete accounts payable cycle while providing comprehensive invoice audit capabilities to ensure our vendor contracts and invoices are in-synch. As a result, working with Symphony has helped Tickets.com reduce telecom spend by more than 15 percent.”
In order to focus its in-house networking and accounts payable teams on other priorities, Tickets.com decided to outsource day-to-day telecom expense management to Symphony Services’ Spend Management Solutions Group. Tickets.com selected Symphony help it gain control of its expense management process, improve customer satisfaction, automate business processes and centralize billing structures to reduce overall costs and create new efficiencies associated with its telecom spend.
A valuable aspect of Symphony’s outsourced spend management service, which combines an advanced web-based software platform with telecommunications and business process outsourcing subject matter experts, is the ability to easily analyze and track usage patterns, provide inventory control capabilities and offer invoice and billing review and contract negotiation support. Symphony not only detects issues with Tickets.com invoices, but also works with carriers to correct billing discrepancies and follows through to ensure proper credit. This is no small feat considering one bill can easily consist of 1000 pages or more. Symphony boils this information down into a one- or two–page report that helps Tickets.com understand its spend and works with them to identify opportunities for additional savings and efficiencies.

FL. I am proud to say that there are a large number of successful TEM implementations that Avotus has done over the last several years, but I have been personally involved with this leading manufacturer of scientific instruments since we are working with them on doing an Avotus e-Procurement solution.

This customer had no reliable baseline information about their communications spending or usage making any type of planning difficult. They needed to implement a common communications expense management process across multiple, geographically dispersed user communities. In addition, they were dealing with multiple internal and external suppliers with their own requirements as well as invoices. They needed a single repository of telecom expense data to produce business metrics to more effectively manage the performance of their processes and give their managers real time visibility into the processes for their particular area. Of course, they also needed to integrate their TEM solution with their other enterprise systems including Oracle Financials, proprietary HR applications as well as applications from other third party providers including Open Business Exchange – to name a few.

Just so you can appreciate the scope of the project, we had to build out an operationally accurate inventory of over 35,000 “elements” as we call them. This included all types of services including voice, data and a variety of mobile devices. The project involved processing over 400 invoices per month from over 30 carriers in North America. The project team that we worked with was located in 3 countries and 4 time zones.

Since the Avotus solution utilizes technology and automation and best practices, we were able to implement a TEM solution that met their objectives and included invoice processing and reporting as well as detailed and accurate inventory management. Web-based reporting enables managers at any level to access the detailed information they need about their business units.

We completed the project by having a dedicated team of Avotus and our customer’s professionals working together in this highly complex environment. Formal project management practices were required to manage half a dozen sub teams to ensure all of the milestones were met, interdependencies across teams were understood and the lines of communications were kept in real time.

As I mentioned initially, this customer recognizes that since the most effective TEM solutions start with strategic sourcing, we’re working with them on an e-procurement initiative. By doing an automated RFP and online auction process, we’re going to help them find the money in their current contracts to fund additional technology procurements. Given tight budgets and the difficulty in proving ROI’s for certain new technologies like VoIP, we’re helping our customers free up dollars by negotiating better contracts using our e-Procurement and WebAuction solution – and, at the same time, also get better terms and conditions from their suppliers. Once they’ve negotiated new contracts, this information will be brought into our Expense Management solution so they’ll be able to verify that everything that has been negotiated in the contract is actually installed and invoiced correctly

Alan Harlan, President, Spend Management Solutions, Symphony Services.
Alan brings more than 20 years of experience in the IT and outsourcing services industry, serving in executive accounting, technology and sales roles. He has a track record of running high performing sales and delivery operations for business units ranging from US$60 million to US$200 million in revenue. Alan has orchestrated multimillion dollar contracts, implemented innovative sales strategies and turned around under-performing business units..

Bob McMullan, Chief Executive Officer, Control Point Solutions, Inc. Bob brings more than 20 years of executive leadership, operational management and strategic vision to Control Point Solutions. His previous achievements include the transformation of several private companies (owned by Top 10 private equity firms) into US$500 million revenue, international, publicly traded companies, that delivered exceptional return on investment and contributed to his mergers and acquisition expertise.

Fred Lizza is President and CEO of Avotus Corporation. Fred has more than 22 years of experience in the software and high technology industry in senior executive positions. He has been CEO of three technology businesses, where he has proven his abilities to define strategic direction, position and launch new products. He has also succeeded in raising venture capital, leading public offerings, driving growth through internal development and acquisition, building and managing strategic alliances, and recruiting and developing high-performing management teams

Charlotte Yates is the CEO at Telwares Communications, LLC. Ms Yates brings over 20 years of technology and telecommunications experience to Telwares. Her personal efforts have helped create an organization that is focused on delivering value and exceeding customer expectations. She has been instrumental in acquiring and maintaining many of Telwares’ key customers, as well as instilling a set of business values that allows Telwares to enjoy a very high percentage of repeat business. Ms Yates' leadership and passion for excellence have helped drive company growth in excess of 1500 percent since 1995.