Seven Areas That Drive Efficiencies With a TEM Program
This is part two of a blog on efficiencies for Telecom Expense Management (read part 1). Below you’ll find information to consider in seven key areas that can drive new efficiencies. The post is especially relevant for organizations that don’t have a TEM program in place or those that are seeking to improve an existing program.
Procurement/service order activity
When enterprises do not have an automated TEM system, service orders for move, add, change and disconnect (MACD) activity require manual labor intensive steps. Enterprises often use spreadsheets to track orders placed by phone or email.
Even the most sophisticated TEM software will not be able to completely automate the process because carriers use many different provisioning systems with limited e-bonding or APIs to integrate with outside systems and automate the process. TEM programs address these challenges by combining software augmented with people to help enterprises streamline these inefficiencies. In addition, a good program will provide new efficiencies tracking key milestones for service activations and disconnects.
A lack of standards for telecom bills makes it difficult for organizations to process bills. Service providers use a variety of different billing formats including CD-ROM, CSV files, EDI, HTML web bills, MS Excel spreadsheets, PDFs and other electronic media. The same carrier will often provide different bills depending on the size of the customer or the types of services that they use. A small customer may download the bills from the carrier’s website. Medium size customers can use the telecom carrier’s billing application, and large customers receive EDI bills. Access to these different billing platforms may come through regular mail, e-mail, downloads from carrier websites, FTP downloads, Value Added Networks (EDI VAN), private networks, or other mechanisms.
TEM invoice management programs automate the process of receiving billing data, including paper invoices. Automation reduces the costs of manually processing paper bills. Where carriers are unable to provide bills in an electronic format, TEM programs can help streamline data entry into the system.
Telecom bills must be validated with a process that compares contracts, tariffs, and inventory to invoices. A TEM program reconciles MACD activity with bills to ensure services are not billed before they activated and that disconnected services are removed from bills. Identification of billing errors and overcharges is a small first step. The next step requires more effort: all errors must be documented and claims must be filed with carriers in a timely manner with a follow-up to resolve open items.
With telecom optimization, expenses can be cut by disconnecting unused or underutilized lines and services. There may also be cases where services do not have a contract or the contract is not competitive. Unless inactive lines and circuits are maintained for emergencies, most can be disconnected for savings. Moving services to higher capacity, lower cost services can also drive savings. The challenge with optimization is identifying the savings opportunities and implementing the changes. Many organizations simply don’t have the resources to act once the savings have been identified.
A TEM program promotes accountability for service consumption, and visibility through expense chargeback. Peter Drucker, the management consultant once said, “what gets measured, gets managed.” Individuals incur the charges for usage of telecom services, but organizations often fail to chargeback for expenses at the right level. Looking at spending by region does not provide insights into which divisions, departments or employees are consuming more than their peers. With telecom expenses, too often the link between individual consumption and accountability is broken.
Incorrect cost center allocations lead to disputes with managers over who should pay for charges. The level of detail for chargeback can include call detail tracking. Analysis of utilization reports, employee phone productivity, calling trends and traffic will uncover opportunities to further reduce expenses.
The ability to pay invoices on time has a significant impact on the ultimate cost of telecom services. Contrary to conventional thinking, many firms incur late payment penalties. Cycle times of 30 days or less, from receipt to payment, frequently spirals out of control. This simply isn’t enough time for many organizations to move bills from the mailroom to accounts payable and all the steps of reviewing charges.
It may seem insignificant at .5% to 2%, but the impact over several months produces an average of 2.9% late payment penalties. The effective yield is higher if one considers the compounding effect, redeploying these funds. TEM Solutions Providers can offer automated systems to streamline the workflow and automate communication with the enterprise’s accounting system. The program should also include a feed that allows for tracking the invoice payment date, the amount that was paid, the name of the Service Provider, the address or account that received the funds and when the funds cleared.
In many cases, the customers have the TEM program where the TEM provider pay the bills on behalf of its customers with an account for customers to transfer funds for the TEM provider to pay carriers. The benefit comes from closing the loop on the full lifecycle for managing expenses. This can address disruptions that come when bills are paid late and carriers disconnect services. It can also provide resources to address situations where carriers apply bills to the wrong invoices. Finally, it can address late payment penalties. Often these penalty charges are hidden on invoices and buried in a miscellaneous category or other charges and not broken out or labeled clearly. [Aside: Comview offers free bill payment services to customers]
Reporting provides detailed information on telecom expenses, inventory, and budgets. The reports should be available in usable formats that are readily accessible to managers. Effective reporting will provide dashboard information in a graphical format with trending for expenses, allowing managers to take action based on the data.
A major challenge with Telecom Expense Management for enterprises is ownership. Many people from different departments play a role in the seven areas listed above. Fragmentation of ownership often leads to a misunderstanding of who does what. Without a central point of contact or accountability inefficiencies creep into the budget. Establishing an efficient workflow with smooth hand-offs is difficult. Ultimately, telecom expense management is a bigger challenge than most organizations realize. Yet this represents an untapped opportunity for big potential efficiency savings if addressed properly.
The first post (Searching for Efficiencies with Telecom Expense Management) referenced the need for several key elements:
- A system to aggregate telecom expenses, and unify how they are managed.
- Adequate management controls with people and reports to track expenses.
- A combination of people and software to manage telecom spend.
- The time and resources to analyze cost savings opportunities and implement savings.
Organizations often reach the conclusion that they need to outsource their TEM program to an organization that has the time, resources, software and people to implement controls that will drive new efficiencies.
Talk to Comview to discuss ways your organization can improve efficiencies and reduce expenses around fixed and/or mobile telecom.