Telecom Expense Management

Seven Reasons to Outsource Telecom Expense Management

Do you want the benefits of telecom expense management (TEM) without sinking capital into IT infrastructure, and without distracting your staff from their core responsibilities? Business process outsourcing (BPO) might be the answer. TEM BPO offers a number of advantages over licensed, on-premise solutions and hosted systems with limited managed services.

1. TEM knowledge and experience – BPO providers know TEM, and they know how to save you money. They have worked with a wide range of telecom carriers, devices, and services, integrated their software with a variety of systems, and implemented the full suite of TEM best practices. They can provide insight and solutions that are simply not available from any other source.
2. Realized savings – TEM BPO programs deliver significant cost savings when delivered by a knowledgeable provider. Savings are realized by recovering credits from past overpayments to carriers, optimizing the telecom services procured, reducing the cost of services, and improving productivity and reducing demands on internal staff by letting TEM specialists do the work.   
3. Low risk – The combination of stable costs and measureable savings means that a TEM BPO provider offers a predictable and manageable return on your investment. With a fixed monthly subscription fee, you know exactly what your solution will cost – and how much it will save – over time, so you can plan accordingly. 
4. Low resource requirements – Compared to in-house solutions, BPO allows you to add TEM capabilities without adding personnel or taxing your existing resources. Your staff stays fully engaged in what they do best. 
5. Flexibility and scalability – As your business grows and changes, your BPO solution can grow with you to provide the right level of TEM capabilities and services at all times.
6. Economies of scale – BPO providers offer economies of scale in both infrastructure and services, allowing them to host and manage your solution for less than what it would cost you in hardware, software, and resources.
7. Data security and disaster recovery – The leading TEM BPO providers will house your application and corporate data in a state-of-the-art data center that ensures business continuity and data security.

Need another reason? TEM BPO can be self-funding, generating ROI in the first year.

For all the potential benefits of TEM BPO, don’t skimp on due diligence. Finding the right outsource partner is the key to success of your TEM solution. Look for a provider with experience, enterprise-class software, full TEM services, and proven results.

Telecom Expense Management: By the Numbers

What Industry Spend Data Tells Us About the Value of TEM and IT Expense Management

This year, I’ve had the opportunity to speak at a number of IT and financial management conferences around the country, including CFO Rising (hosted by CFO magazine) in March, and the Financial Executives International 2009 Summit in May. When I address these audiences of business executives, I am keenly aware of the business challenges they face and want to offer information and advice that will help them be successful. As a CEO myself, I know that expense reduction is a top priority for executives in this economy, and feel fortunate to be able to offer Veramark Telecom Expense Management (TEM) solutions as one way to help them meet their cost management objectives.

In preparing for these presentations, I do extensive research into current economic trends in order to present TEM in the context of real world economics and the business realities that will resonate with my audience. And the metrics I’ve come across lately regarding telecom spend in various industry segments are very interesting. What they reveal about the potential value of telecom expense management is quite compelling. It’s difficult to ignore these numbers – and they suggest huge savings for organizations that can manage these costs effectively.

 

So let’s work through a high level financial analysis. The potential value of any expense management tool depends on the amount of spend that can be brought under management. To find this figure for TEM, on an industry-wide basis, I turned to published sources for IT spend (which includes telecom spend).

Leading industry analysts have reported IT spend as a percentage of revenue ranges from 2% to 8%, averaging 5% across all industries surveyed. The analyst reports include sufficient detail that allows us to estimate how much of total IT spend can be attributed to telecom. Combined spend for telecom including voice and data networks, fixed and mobile telecommunications charges and the related costs for management and administration amounts to approximately 25% of total IT spend.

How significant is this amount of spend? Let’s put it into context. A company generating $1 billion in revenue spends approximately 5% or $50 million on IT, which includes about 25% or $12.5 million in telecom costs. Industry sources and our own customer data show that TEM can reduce this amount of telecom spend by 5% - 20%, for a total telecom savings of .6 to 2.5 million dollars annually.

A top priority for many of the executives I’ve spoken to is not to simply cut costs, but to reduce operational expenses and plow some or all of those savings into capital investments – to improve their product or infrastructure and enhance their competitive advantage. So it’s important to know that approximately 70% of IT expense is operational, which means that it’s fair game for cost reduction efforts.

 

Your Savings Potential

There are more than 1500 public corporations with revenues of more than $1 billion, so the potential savings from TEM on an industry scale are huge. Because these savings are based on percentages, they scale up and down. You can use them to estimate your own potential savings. No matter what your total revenues are, telecom savings of 5% - 20% can make a positive impact on your bottom line.

As significant as these savings are, they pale in comparison with the savings that can be achieved by expense management solutions that target all of IT spend. Using the industry figures cited above, the $1 billion dollar company that saves .6 to 2.5 million dollars on telecom alone can save millions more with solutions that target all of IT spend.

 

At Veramark we believe that TEM is a stepping stone to IT Expense Management (iTEM) and some really big savings opportunities. And I’m very pleased to say that Veramark is at the forefront of planning and developing iTEM solutions. As a Veramark TEM customer, you will be among the first organizations to have an opportunity to implement iTEM as part of a comprehensive expense management solution, and to gain the cost savings and competitive advantage it provides.

 

The Bottom Line

As TEM evolves to iTEM, and more organizations – large and small – harness the power of iTEM and enhance that power with business intelligence and workflow solutions, dollars will flow from operational spend to capital investment. Your IT budget can be stretched to fund more services for less money. Companies that become best-in-class for iTEM will have a real advantage coming out of this global recession.

Contributed by Tony Mazzullo, President and CEO of Veramark Technologies, Inc. – a provider of Telecom Expense Management solutions.

 

Help Manage Telecom Costs with Interactive Visualizations

Sifting through a myriad of telecom expense management reports in search of opportunities to reduce expenses can be a tedious exercise. It often requires someone very knowledgeable about telecom expenses to interpret the reports, and to know where to dig just a little bit deeper.

Advanced visualization is a new technique which can be applied to make the analysis easier to perform and understand. Using advanced visualization, numbers can be transformed into symbols of relative size, or a color whose shade denotes a value.  Movement of symbols can also be used to highlight change over time. And because the visualization is interactive, the analyst may focus on certain aspects of the picture, and remove the others from distraction. This is all accomplished without having to run additional reports. 

Example 1 below shows a “Heatmap” analytic which allows an analyst the ability to examine expenses across a couple of categories, while blending 2 separate measurements simultaneously. The display shows 4 Inventory Types (Wireless – Cell Phone, Wireless – Blackberry [V&D], Wireless Blackberry [Voice Only], and Wireless – Air Cards). The size of the box with the corresponding label shows the relative amount of spend for each category.  Similarly, the boxes inside of each inventory type category have colored boxes labeled with vendor names. The relative size of these boxes also indicates the amount of spend; the color of the box indicates the average cost per inventory type from that vendor – green is low, red is high.

  

From this example, we can quickly discern that ATT Wireless Blackberry devices have a much higher cost per unit than the ones from Sprint. The analyst can readily change which categories to use for slicing and dicing, and what measures (metrics) provide the most meaningful information, and can substitute them interactively. I have to admit it is a challenge to show an interactive capability in a static BLOG, though.

 

In the next visualization, we use movement to highlight changes over time. The bubbles will shift location as each monthly value changes over time. The Interactive Bubble Chart helps us to examine 3 metrics in any single time slice: the number of devices per inventory type at the end of each month (Y axis); the total spend for that inventory type for that month (X axis); and, the average cost per device for each inventory type (size of the bubble).

Note also that by mousing over a bubble, you get specific values for the different metrics. This is true for the Heatmap analytic above, but it is easier to show here. Using these types of advanced visualization analytics broadens the audience as to who can analyze telecom spend within your organization. Traditional text reports remain important in the exercise, but coupled with these visual tools, you can more quickly hone in on the specific reports which need to be run. Use the visualizations to determine the likely problem areas, and use the text reports to explode the detail.

By Mike Miller, Veramark’s Director of Data Architecture and Analytics

 

Why Telecom Audits Are Not Enough

An historical audit is an important tool for defining the initial state of an organization's telecom environment and identifying opportunities for improvement. As a long-term expense management strategy, however, the audit alone is a blunt instrument that fails to maximize sustainable, long-term value.

Without continuous management and optimization after the audit, the telecom environment rapidly reverts to a sub-optimal state. Organizations relying on auditing as their primary telecom expense management tool must periodically repeat the audit - at significant effort and expense - to temporarily restore expense visibility and control and return to a state previously achieved.

Telecom expense management solutions that offer the greatest return on investment are those that leverage software to automate best practices and provide continuous value. These solutions will maintain the optimization achieved through the audit process, adapt to changing conditions, and provide continuous process improvement.

To learn more, read "Why Telecom Audits Alone Are Not Enough".

Reach for Low-hanging Fruit to Reduce Telecom Expenses – Part 2

Comprehensive telecom expense management solutions have been shown to be highly effective in reducing telecom costs, generating strong ROI and paying for themselves in less than one year of operation. Start by automating your invoice management system – you'll generate immediate hard dollar savings and productivity gains.

An automated invoice management system should include four essential components: electronic invoice processing and dispute management (covered in Part 1 of this post). Here we will cover invoice validation and contract negotiation.

Invoice Validation
To fully verify the invoice accuracy, charges must be validated against 3 criteria:
Usage– Were the services billed for actually consumed? Call accounting systems collect Call Detail Record (CDR) data off the telecom switch that can be used to validate costs. Wireless services do not provide this kind of activity log and are typically validated against charge thresholds.
Contract terms and company policies – Rates applied to delivered services, as well as taxes and other charges, should be validated against terms defined in the carrier contract. Charged activity should also be checked against company policies governing appropriate use.
Inventory and MACDs– The inventory of services in effect and the technology deployed are constantly changing. Invoices from telecom providers must be validated against what is essentially a moving target

Contract negotiation and optimization
Negotiating favorable rates and selecting service plans that match usage needs are powerful ways to reduce telecom spend. The spend and usage data collected for other invoice management efforts provides valuable insight that can be leveraged to reduce present and future telecom spend.

Data gathered from invoice processing reveals how your organization actually uses telecom services, arming you with the information you need to negotiate the most favorable carrier contracts and wireless plans. Invoice management solutions with spend analytics capabilities can help you analyze this information and project future requirements and costs. Armed with this information, you can enter negotiations knowing exactly what you need, and what you can afford to leave on the table. You will be able to make informed decisions that result in significant cost reductions – such as moving to pooled plans or limited wireless data services – without jeopardizing overall quality of service.