Webinar: Harnessing the Benefits of International TEM on September 18th.
Featuring AOTMP’s Joe Basili
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Quickcomm's Philosophy |
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If you were in a room with a group of CIOs and CFOs and asked them to define Telecom Expense Management (TEM), most would say that it's a way of processing large invoices more efficiently and paying bills on time. They wouldn't be wrong, (TEM does do that), but, in truth, such a definition misses the point. As large corporations continue to evolve, their telecom strategies become more complex. The result is a glaring need for telecom management platforms that go beyond invoice management and help companies manage their telecom resources more holistically and in real-time.
Handling invoices effectively is part of the picture, but Telecom Resource Management (TRM) also includes tracking inventory changes and making sure that capacity on all levels is aligned with usage. Companies that embrace such an approach are well-positioned to execute business strategies where telecommunications plays a central role in maximizing profit margin as opposed to eating into it.
The phrase "TEM" implies that telecom expense management exists in a vacuum somewhere in the accounting department, perhaps as an outsourced service. Quickcomm prefers to look at it as one point on a triangle that touches procurement, finance and IT. As an example, let's look at a company called Acme Global Enterprises. At Acme, a single business group may have 50 telecom accounts operating at a given time. Fifteen of those accounts are billed by Verizon, 15 by Sprint, 15 are billed by AT&T and the final 5 are billed by a local vendor. Each of these accounts includes individual units for hundreds of landlines, mobile phones, T1s, Blackberries and phone cards. While the company sometimes gets billed for these services as items in a single invoice, the invoice summary's don't reflect the actual infrastructure that supports these services. It is common that a device's related service and its physical location remain unaccounted for. To an engineer, whose sole responsibility is to maintain the physical infrastructure, looking at an invoice does not help.
The engineer needs to know who is using what, how it is being used, how often and when. This is the only way they can ensure that they have an optimal infrastructure. The best way to manage the infrastructure is to create three buckets, data, voice and wireless. But, because an invoice will show service units from all three categories itemized in one list that doesn't specify service type or purpose, IT usually maintains its own database to monitor inventory.
The problem with this is that business happens in real-time. When an employee leaves an organization, transfers departments or orders a new service, HR or accounting may be notified, but, too often, the engineer is out of the loop. When this happens tens of thousands of times per month, IT's telecom database is in a perpetual state of obsolescence. When a business can't measure usage against required capacity, and it absolutely cannot with an out-of-date database, the ensuing technical problems go without saying. In the case of Acme, like many other large corporations, the various IT databases are the only place in the entire enterprise that hold inventory-tracking information. Because there is no integration with HR and other premises systems, changes are not noted in any centralized system. As a result, there is no accurate 30,000-foot inventory snapshot for Acme's CFO.
Why does Acme's CFO need to have this 30,000 foot snapshot? Invoices alone are useless as a tool for revealing usage trends. Moreover, they are just as useless when it comes to reconciliation. A typical carrier invoice that goes to Acme may contain 10,000 units. Not only are these units not identified by service purpose (ie; what it is used for), they are also not identified by user or department. You can find a circuit number for each line, perhaps, but that number doesn't indicate where the circuit is connected and which department pays for it. As a result, it is impossible to efficiently verify that the particular service unit indicated on the bill is actually in use. This is a core source of wastage.
On the micro-level, this may mean the enterprise is paying for services that are dormant or non-existent, and, on the macro-level, it means the enterprise has no visibility into whether it may have too much capacity in one or each of the three telecom buckets. In both instances, an enterprise stands to lose millions of dollars per year. Regarding telecom, businesses, on the whole, are spending at least $7 billion per year above what they really need to spend.
In a recent report ("The Cost of Not Acting: The Total Telecom Cost Management Benchmark") Aberdeen Group's Joe Basili wrote: "Total Telecom Cost Management involves many areas often handled by internal groups that need to coordinate their activities and strategies. Management of the lifecycle for telecom expenses requires knowledge to understand how things are interrelated. Gaps in one area can cause problems in other areas."
While the term he uses is slightly different than what Quickcomm proposes, Basili nailed it. By relying less on invoices to manage a global telecom budget, TRM, or Telecom Resource Management, is an approach where human resources, accounting and finance, and IT are operating on one dynamic platform. The information is sliced and diced and stored in a single database shared by all three points on the triangle. Human resources and accounting staff log changes into the TRM database in real-time and IT uses that information to keep the infrastructure at optimal capacity. When invoices come in, finance uses the database to verify whether each item corresponds to an actual individual service in use and whether that line belongs to a current employee.
The CFO or any department head can, at any time, generate an up-to-date report that measures capacity against usage and cost. Simply put, you are replacing the "E" in TEM with an "R". However, in the profit equation, you are now tagging telecom as a "resource" instead of "expense." Making that happen should be the goal of any enterprise.
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