Telecom Expense Management

Three Frequently-asked Questions about Telecom Expense Management

What 3 questions about telecom expense management (TEM) do potential customers most frequently ask?

We polled our staff of TEM experts, and here are the winners:

1. What single aspect of TEM provides the most value?
2. What are the resource requirements of a TEM solution?
3. In what ways can TEM be mismanaged?

Get the Answers via Podcast or PDF

The answers to these frequently-asked questions may surprise you. You can listen to our TEM FAQs Podcast or download our TEM FAQs PDF.

Veramark Technologies is a leading provider of telecom expense managment and call accounting solutions.

Why Some Telecom Expense Management Initiatives Fail and Others Succeed

The value of successful telecom expense management (TEM) is so great, most people in the industry don’t bother – or don’t want – to talk about TEM failures. But like any other enterprise management system, a TEM solution poorly conceived or executed can fail. This doesn’t cast any doubt on the value of TEM done right – but rather offers instructive guidance in avoiding the consequences of TEM done wrong.

So what can derail a TEM initiative? Here are some of the usual suspects:

Broken promises – Broken promises damage relationships, and not only in the pages of romance novels. A TEM vendor may set expectations based on a best-case outcome, but many variables influence the actual savings that can be achieved by the solution. For example, the state of the client’s telecom environment and existing degree of optimization will affect the improvements that can be realized. Implementation might take longer than promised due to changing requirements, technology integration snafus, or weak executive sponsorship. Other factors – in license and SaaS deployments – include the ability of the client to meet the resource demands of managing the system.

Misalignment with business requirements – A TEM solution will fail if it is not precisely aligned with the customer’s needs and business processes. Can the software handle your GL coding and cost allocation requirements? It might – but only if the invoice data is granular enough, and the software mapping capability is adequate. Limited workflow support can also cause TEM failures. The workflow capabilities of some TEM applications may not be flexible enough to accommodate your particular needs. TEM providers who know what they’re doing will always perform an inventory/audit/discovery process in order to thoroughly understand the customer’s business and TEM needs before designing a solution.

Lack of buy-in – A TEM initiative has many stakeholders, and buy-in from all is crucial for its success. The people who will use the system on a day-to-day basis must actively participate in developing requirements, testing the solution, and ultimately, embracing the solution. At the executive level, buy-in helps marshal enterprise resources behind the TEM initiative and adoption across the organization. Executive stakeholders are also in a position to see the “big picture” – the potential for the solution to address telecom issues beyond the single pain point that may have triggered the TEM initiative in the first place. A TEM solution that doesn’t address the needs of all stakeholders is more likely to fail.

Partial TEM solution / lack of integration – TEM solutions that are designed to solve one problem might be very effective in the short term, but they fail to deliver long term value. To deliver sustained ROI, year after year, a TEM solution must address the full telecom expense lifecycle. Only a comprehensive solution – covering sourcing and contracts, usage and inventory management, invoice and dispute management, MACD workflow, integration with AP and other systems – can drive out costs on an ongoing basis. One-time audits and partial TEM solutions fail to generate the ongoing savings that a complete and integrated solution is capable of providing.

In every enterprise solution, some degree of risk is unavoidable. But if you understand why some TEM projects fail, you are in a far better position to make sure that yours will succeed.

Want to learn more about why some TEM initiatives succeed and others don’t? Click here to view a recording of our recent Webcast, which explains the “magic formula” for a TEM solution that successfully delivers visibility, control, and savings.

Veramark Technologies is a leading provider of telecom expense management and Call Accounting Solutions.

When procuring new services, your network operations and expense management team will need to scrutinize much more than the rates for services. Just ask Yogi Berra.

Contributed by: Robert Halik

Yogi Berra once said,” He hits from both sides of the plate. He's amphibious.” Telecommunications may not be as entertaining as baseball, and certainly not as much as Yogi, but it does require great skill to execute a well played game. In the game of telecom expense management, swinging with equal measure and effect from both sides of the plate can save your organization thousands, perhaps even millions of dollars.

Network operations and expense managers often tend to focus on rate reductions when looking into procuring new services but there is much more. Just like Yogi’s “amphibious” hitter, TEM firms end up being far more valuable to the companies they serve if they can swing both ways. In TEM procurement, the other direction involves swinging at your contract terms and conditions.

Your contract terms and conditions will need to be reviewed in rigorous detail. Negotiating best practice terms and conditions are as important as driving rates to or below market. In Yogi speak, “a nickel ain’t worth a dime anymore.” Nowadays, times are tough for all organizations so it’s important to reduce financial exposure indirectly (i.e. terms and conditions) as well as directly (i.e. rates).

Favorably negotiated terms and conditions can minimize shortfall penalties and provide the flexibility to secure a rate reduction in a down market. Aggressively negotiated terms and conditions will also influence the degree to which your organization can effectively manage your vendors’ performance over the life of the agreement.

Your existing key terms and conditions will need to be compared to the most favorable that presently exist for each respective vendor under serious consideration to date. It’s important to generate and provide a readout of current terms against recommended alternative language and determine a negotiation strategy that will empower your organization to successfully negotiate the most competitive terms for your new agreement.

Critical terms and conditions that should be included in any benchmark study and compared to best practices:

Commitment: The structure, language and commitment levels should be closely evaluated. Any concessions made to a vendor (e.g. monthly or yearly revenue commitments) should be reciprocated in kind. Quid pro quo is certainly the rule here; for example, longer terms should translate to a commensurate reduction in rates. Yogi once remarked, “I always thought that record would stand until it was broken.” The same holds true for telecom negotiations: push the envelope and you may be able to achieve much more than you thought possible.

Service Level Agreements (SLAs): The proposed SLA and its associated penalty language for failing to meet service levels should be scrutinized. As Yogi might also say, “It’s not a problem until it’s a problem.” Service levels are typically met by most vendors but it is important to have protections in place should the unexpected happen.

Account Team Control: How empowered will your organization be to influence the assignment of the account team and customer support personnel? Has your incumbent vendor account team been responsive enough to your needs? According to Yogi, “all pitchers are liars or crybabies.” And so goes the game of telecom; if your vendor account team personnel have not been throwing a good game, it might be time to call the bullpen and make a change.

Annual Rate Reviews: Will your organization have the authority to force price reductions as the market drops? Another Yogi nugget of wisdom proclaims, “If the world were perfect, it wouldn’t be.” It’s not possible to be perfect and, as Yogi notes, it probably wouldn’t be much fun but it is possible to approximate perfectly managing the imperfect; we can protect against the uncertainty of the future by putting protective measures in place today.

Business Downturn Clause: Will your organization possess the authority to reduce the revenue commitment due to business downturns? As is the case with the annual rate review, “ninety percent of this game is half-mental” so a little Yogi-vision goes a long way towards mitigating the potentially deleterious effects of an unknowable future.

In sum, benchmarking to achieve the most competitive terms and conditions is critical to proactive telecommunications network expense management; it’s just as important as pursuing the most favorable rates. Yogi once noted, “Anyone who is popular is bound to be disliked.” As TEM professionals, it’s better to be popular with our respective CFOs than with our service providers. Vendors may dislike tough negotiations but, like Yogi, “they will give their right arms to be ambidextrous” if it means getting your business.

Trouble Explaining the Value of Telecom Expense Management? Try "Real Life" Examples

For people unfamiliar with the concept, TEM can seem complex. You can describe it in abstract terms, but examples that show how it works can be more powerful. Here’s an approach you might want to try when explaining TEM best practices and lifecycle management to someone who is having trouble “getting it.” Like the person in your organization who needs to sign off on the TEM solution YOU know you need!

Imagine a large organization with many offices and a complex telecom network. The company has a TEM system to lower telecom costs and improve productivity. John Doe joins the company and needs a cell phone for work. As a matter of policy, the company purchases the phone and accepts liability, but John is responsible for reimbursing the company for all his personal calls.

Rather than John calling someone to assist him in picking out a phone and plan, fill out the paperwork, and submit the order, John simply goes to an online catalog and selects the phone and plan pre-approved for his position. The entire procurement process is automated, including vendor transaction and invoice processing. Every order that goes through the system is at contract pricing. The phone is delivered to the TEM vendor’s managed services team, who unpacks it and sets it up. When it shows up on John’s Desk, it’s ready to use.

John uses his phone a lot, for business and personal calls. His company processes monthly carrier invoices electronically and captures all of John’s call and cost data in the TEM system database. John can log into a Web portal to see all his charges and any inventory items (such as his phone and accessories) assigned to him. If John needs help or has problem with the phone, he can submit a help ticket and track its status through the Web portal.

Through the portal, John receives monthly reports of all his calls to numbers previously categorized as personal. If the report is accurate, he can “Accept and Certify” it with a single click of the mouse. He will then receive a reimbursement summary report. The TEM solution is integrated with the company’s payroll and AP systems, so John can select from a number of payment options, including payroll deduction, printable remittance (payable by check), or online payment through a 3rd party system (such as PayPal).

Every now and then, John’s business usage exceeds the call or data allowance of his plan. The TEM system identifies these overages during validation and issues alerts to John and his manager, who can then sit down together and discuss whether or not John needs a new plan.

The telecom expense management system collects usage and spend data for every wireless account in the company. Business intelligence tools make it possible to analyze this data in a variety of ways to spot trends, patterns, and exceptions. This is extremely powerful information for the company to bring to the table when negotiating with carriers, and helps them achieve the best possible terms, rates, and conditions on subsequent contracts.

That’s the John Doe example of wireless lifecycle management. There are countless other examples that illustrate other aspects of TEM. All you have to do is start somewhere in the expense management loop and follow the process. For folks who have trouble grasping abstract concepts, it can be an effective way to demonstrate the value of TEM.

Veramark Technologies is a leading provider of telecom expense management and Call Accounting Solutions.