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SPECIAL FOCUS: VOICE NETWORKS From the February 2005 issue of Communications News |
Five steps to reduce expenses Despite falling prices for telecom services, telecommunications still ranks as one of the top five corporate expenses. Organizations, however, can no longer rely on rate reduction negotiations to cut their telecom spending because service providers have already sliced their rates to the bone. Many companies are aggressively managing their telecom spending. This “telemanagement” strategy involves centralizing telecom administration in order to achieve the total visibility and control necessary to pinpoint savings opportunities. Centralization is particularly important for spotting usage patterns, rate discrepancies and other information that can point the way to cost-containment measures and aid in negotiating contracts. The goal can be accomplished with five basic steps designed to put telecom expenses under the microscope: Step 1: Track inventory. Create and maintain an accurate inventory of all telecommunications services, including items like leased lines, voice lines, wireless devices and PDAs. This process can identify circuits and services that are no longer in use but still appearing on invoices, those that have been ordered but are not yet activated, and other billing errors. The first inventory can be built from current carrier bills. From that point on, companies should have a provisioning system that automatically updates the inventory when new services are ordered or old services are disconnected. This type of system automatically identifies adds, changes and disconnected services. Step 2: Validate invoices. Once the inventory has been built, organizations should continually validate telecom providers’ invoices against the inventory and the contract rates. Studies of historic telecom charges have shown that 7% to 12% of invoices are in error. Matching inventory with the specific services billed ensures that the invoiced rates are accurate and that the invoiced services reflect current usage. An automated invoice presentation system expedites this process by eliminating the labor-intensive effort involved in manually reviewing individual hard copies of invoices and summarizing appropriate totals. The most advanced systems typically receive invoice data directly from one or more carriers, feed them into an application, and give users access to reports, graphs and data sheets that shed light on expense trends and usage patterns. They also provide month-to-month comparison reports that instantly identify additions and deletions to aid analysis. Step 3: Analyze charges. To achieve total spending visibility, invoices should be aggregated for every corporate location and every carrier used. Companies can then determine precisely what they are spending and easily review contracts to ensure they are receiving the best rates. This approach puts an organization in a much better position to take advantage of changing rates and new service plans, as well as to analyze rates and usage across the entire organization, providing useful ammunition for contract negotiations. Step 4: Assign costs. Companies should have an efficient process for charging back telecom expenses to cost centers. Charges should be allocated to individuals where they can affect costs and to cost centers to identify the real expenses of the business. By automating this process, companies can save the time that would otherwise be spent checking telecom invoices line by line and assigning them to the appropriate area. The most sophisticated systems can automatically report telecom fees by department and post them to the general ledger through the company’s ERP system. This not only expedites the chargeback process but also allows charges to be assigned to the right department to the penny. This approach also helps satisfy Sarbanes-Oxley regulations with a documented process that simplifies reconciliation. Step 5: Plug security holes. Traditionally, call accounting solutions have been used to track phone calls to help lower costs. Now, call-accounting solutions are also security and audit tools. A call-accounting solution that monitors all outgoing, incoming and interoffice calls across any form of communication can help guard against fraudulent activity. A centralized call-accounting solution that facilitates instant searches across the organization provides a security mechanism for tracking activity across a company’s network. Call-accounting solutions also enable companies to analyze traffic between offices, and thus determine if VoIP should be implemented to reduce long-distance costs. For more information from MBG: This article was provided by Richard Simons, chief operating officer of MBG, New York, a Web-based application service provider of telecommunications and IT expense-management solutions.
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