The Disconnect
Captain Obvious says, "Newsflash! Nearly all corporations suffer from a lack of internal communication and processes! Effective collaboration and employee accountability are NOT the norm!"
In a perfect corporate setting, everyone works well together and they communicate effectively with each other. Unfortunately for most, if your employees are talking to each other, it's around the water cooler and usually involves last night's episode of The Flight of the Conchords.
We all know this but this lack of communication rings true especially when it comes to the IT, Finance and Procurement groups in a company (yes, even your company). Getting these groups to work cohesively is one of the most difficult of tasks when managing your company's telecom expenses. "So what", you say? So, this problem can be equating to an overpayment of up to 25% on telecom bills alone. Let's put that into perspective:
Your car payment of $400 - toss another $100 on there each month
Your mortgage payment of $3000 - a mistake costs you $750 here too
Your son's tuition bill of $20,000 - you won't miss that extra $4000, will you?
You won't mind a mark-up of $1200 on your new flat screen TV when the bill arrives.
If you ran into any of these problems, you would immediately start making calls to fix the mistake. The same goes with your company's telecom billing. So here is where I am going to help you figure it out without having to make a number of calls to customer service just to get put on hold.
Getting to the bottom of it
Your IT, Finance, and Procurement groups are focused on different areas within their respective roles. The IT group deals with the infrastructure. They ensure the phones are working, everyone has internet access and the new COO's cell phone is ordered. While the Procurement group is focused on making sure contracts are renewed. The Finance group is trying to pay the invoices on time, coding the charges and synching up with the general ledger, leaving little or no time to analyze bills. On top of all of this, these groups use at least 3 separate systems that each have their own set of dynamics. All of these components can cause a mismatch in inventory against bills anywhere from 19-24%.
How is this disconnect affecting me?
You know that your telecom management process has holes in it. Hundreds of companies are facing the same issue. So let's take a look at how this affects companies like you and how it impacts the bottom line. Some commonplace issues include:
- 10-12% of telecom invoice charges are wrong
- 85% of errors are in your carrier's favor
- +/- 20- service interruptions per year due to non-payment
- Under/over-utilized services further drain expenses
- People and places that are long-gone still have active telco services
- The competition is getting a 20% discount (and an edge) that you aren't getting.
- Well-negotiated contract rates often do not make it to the bill and you can't tell.
How are other companies handling these issues?
In 2003, CSC, a leading global information technology (IT) services company, began searching for a solution for its internal telecom operation as well as a future external TEM offering. The annual internal telecom spend at the time was approximately $60M internally in addition to managing over $500M in customer's telecom bills. Bills were being managed manually with spreadsheets and the invoices were received in a combination of electronic and hard copy formats.
CSC's TEM process was extremely labor-intensive. Besides the large amounts of man-hours taken to manually enter telecom data and the lack of communication between IT, Finance and HR departments, there were several key factors that hindered the process:
- Inaccurate allocation of costs existed
- Poor method of managing inventory was prevalent
- Cost center charge backs were difficult to manage
- Bills were not reconciled correctly due to disparate systems
When CSC decided to go with a software partner that would meet the challenge to help service its large client base, they immediately started to see results. Within the first few weeks of using a centralized solution for all of their departments, they discovered and cancelled over $1 million in active services for a location that had been closed for 2 years.
CSC now offers their clients a savings of up to 30% on their telecom cost. They reduced the time spent managing their expenditure, effectively allocated resources to proper cost centers, reconciled telecom bills, and eliminated conflict errors from carriers and incorrectly applied tariffs.
Bridging the Gap - Where do I start?
Can you imagine if you saved over a $1 million for your company? I can! So, how do I get to the point where I am carried on everyone's shoulders and hailed as employee of the month?
I know you probably get a cold call a day from TEM suppliers, so you already know that there are a number of TEM solutions from Software to Outsourcing. What you might not know is where to start. You have identified that there is a problem that needs to be fixed. The first step is completed, but now it's your job to understand the current environment and challenges before deciding on a TEM solution.
- The first step to creating any new initiative is to identify your goals and what you want accomplished. For example, some goals may include:
- we are expanding globally and want to would like to enforce a global process
- we are looking to centralize management of telco expenses
- we will keep control locally
- we want visibility and accountability of expenses
- I want my team to receive the praise and recognition they deserve..(you may want to keep that goal to yourself)
- The next step is to understand your current TEM process. After breaking down the current process, 99% of the time, you need undergo some business process changes to become more efficient and eliminate waste. Here are some questions an organization should look to ask when examining their current process:
- Where do all the bills go today?
- Who manages the contracts with the carriers?
- How do costs get allocated for invoices now?
- Are wireless devices corporate billed or expensed?
- What financial reporting do we need to execute each month/period?
- What activity causes the most pain now?
- Who are the people who look after inventory (voice/data/wireless)?
- What systems do we have now to track the services?
- How do services get ordered, cancelled, changed?
- Where are all my services?
There are a number of outlets that will help you create and maintain a successful TEM project.
- Carriers -Contrary to popular belief, they are not the enemy. They are there to help and certainly do not want to jeopardize losing a client. Speak with them about getting bills in an electronic format, which can contain service numbers, service types, and physical service locations.
- Software providers -Software applications can help enforce corporate policies and a centralized database can store and analyze all internal data worldwide. No one knows the company and processes better than an organization's own people and an application enables them to keep control. An application will create efficiencies and exponential savings across the board.
- Managed Service providers - Are you the only one managing the entire process? Then talk to a service provider who can help you manage the work and take some of the pressure off of you. The key here though is choosing a service provider that has a solid software application powering their offer.
- Consultants - There are a number of consultants available who can assist in gathering information and provide invaluable advice on how to move forward on the project.
Ta-da! The groundwork has been laid. Once all of the steps above have been accomplished and you have researched the best options for your team, you will be in a position to implement any TEM solution. Now is the time to hurry up! You're probably losing money on a daily basis. Do you want your CFO asking you how it happened or do you want to be the one who fixed it?
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