1. Initial - chaotic, ad hoc, requiring individual heroics with an undocumented process
2. Repeatable – minimal documentation makes it difficult to repeat and manage the telecom spending
3. Defined – the process is defined and confirmed as a standard business process
4. Managed – the process is quantitatively managed with common metrics
5. Optimizing – process management includes deliberate process optimization and improvement

While this process is written to reflect the capability of software and its applications, they can also be applied to TEM processes. The first stage speaks to organizations that have no effort or program to manage telecom spending. In this instance, telecom bills are not validated and there is a good chance that you are paying too much for telecom services. The second stage is reactive; and, knowledge sharing is incomplete among internal groups that manage aspects of telecom (procurement, sourcing, invoice processing and accounting).

Savings from a telecom audit and implementation of software or outsourcing of the expense management functions will range from 4% to 25% of the annual spending on expenses for organizations that are in the first two stages. The results depend upon contracts, move add change disconnect activity, availability of documentation to support billing claims, knowledge of carrier refund procedures and the ability to negotiate refunds.

At the third level, organizations are moving from reactive to becoming more proactive with thresholds for bill validation and analysis of spending trends. There is also some collaboration and knowledge sharing among individuals. Often at this stage, a TEM program has been implemented in a limited region, country or just for one area like voice, data or wireless services. With the fourth level, organizations are proactively using software to manage telecom expenses; they could also be outsourcing the program to specialists with TEM knowledge and expertise. Different functional groups that manage aspects of the lifecycle of a telecom expense are now identified from the second stage above and are working together as a team.

The fifth stage is ideal with programs that get to the root issue of billing errors and overspending from inefficient procurement and sourcing. Organizations are using best practices and metrics to not only monitor annual savings, but also monitor the performance of the TEM program. Continuous efforts reduce telecom expenses and ensure that the organization is achieving optimal savings on a global basis.

Knowing what level of maturity you have with your TEM program can help you decide what steps you need to take to save money. A balanced approach of focusing on short-term tactical efforts for savings and long-term goals for the program will ensure that you proactively manage operational performance and telecom costs.

The opening price point will increase by 33% or $5 with 300 MB of data from the old plan of 200 MB for $15. The second tier increases the price from $25 to $30, and it adds 1 GB to the old 2 GB plan. For subscribers who share a data connection or tether their wireless phone with other devices, the new 5 GB plan will increase by $5. The plan details are below:

• AT&T DataPlus 300MB: $20 for 300MB, additional 300MB for $20.
• AT&T DataPro 3GB: $30 for 3GB, additional 1GB for $10/each
• AT&T DataPro 5GB: $50 for 5GB, with mobile hotspot/tethering, additional 1GB for $10/each

iPad 3G users can choose from three plans:

• The existing 250MB for $15 plan
• AT&T DataConnect 3GB: $30 for 3GB
• AT&T DataConnect 5GB: $50 for 5GB

AT&T increased its data allowances because subscribers are using more data than ever. Verizon currently offers 5 GB and 10 GB mobile data plans, for 29.99 and $59.99 for its 5 GB plan. Subscribers that consume more than the 5GB limit face a penalty of $0.25 per MB. At that rate, 1GB of extra use costs $256 with Verizon, and $503.31 for that extra gigabyte of consumption with AT&T. Sprint charges $51.20 for unlimited data plans.

Corporate contracts protect the enterprise from these increases, but there are some important lessons to glean from these changes. First, managers need to recognize that employees are using more data. AT&T and Verizon are now starting to send usage alerts as subscribers consume data within their plan, but employees can ignore these alerts and organizations will want to take proactive steps to manage usage. Even organizations that have unlimited data plans need to begin monitoring and providing reports to employees regarding mobile data consumption. This is an important step to gaining control as employees are not familiar with how their activities effect data consumption. Moving forward, unlimited data plans may no longer be offered as in the case of AT&T and Verizon, or may become more costly.

Second, organizations need to determine if excessive data consumption is a result of devices, mobile apps, normal use for work, or excessive personal activities. Multitasking allows numerous apps to run in the background while actively communicating and downloading data. Managers should consider using a combination of policy and more proactive automated tools to address usage.

Finally, these price increases illustrate carriers’ strategies to use price increases to charge for the biggest consumers of data. Employers should ensure that employees are on the best service plans for their consumption needs and need to be empowered with the proper software tools to effectively manage expenses.

Financially strapped companies will take on new business as a loss leader to capture market share and secure funds from outside investors. In other cases, they are working to secure business that will attract another firm for a buy-out. These strategies are not validation of a sound business model. Venture Capital (VC) and buy-out firms have made bad investments, and they continue to do it. These VC firms expect a few big winners, and they take write offs on losers. This can lead to a firm closing its operations, in some cases very quickly. And, if your outsourcer suddenly fails, you will have to quickly find someone to start processing bills.

As the TEM industry goes through consolidation, you should be wary of weak firms that are likely to be bought out. This can mean that support staff and the software reporting platform that you have selected will be gone. Limited resources for your outsourcing program can also adversely impact the stability of your network. Here are some important considerations.

Extra Costs

• Penalties can result from late payments which can accumulate to over 1 ½ % each month when your invoices are not processed on time
• There can be over-payments for failing to identify duplicate carrier bills
• Be wary of firms that settle billing claims for less than their full potential to enable them to move resources to other work

Disruptions

• If MACD (move, add, change and disconnect) activity is not handled properly, there will be service disruptions
• Failure to pay bills can also lead to service disconnects

Stronger firms are able to invest in research and new technology. They have the resources to recruit more capable that will provide more reliable services and work to achieve your goals.

Telecom bills contain errors for a number of reasons. First, calculating charges is complex with items that have fixed charges, time sensitive (peak and off-peak rates), and volume-sensitive discounts. Second, telecom services have intricate tax issues that telecom providers must interpret and collect on behalf of local, city, state, federal and international government agencies. Third, carriers use different systems to manage order requests, service provisioning and billing. If items are not entered properly or disconnected items are not removed from bills, there will be overcharges. Finally, customers’ telecom inventory is constantly in motion with moves, adds, closed locations, new services and contract changes.

As rates drop, errors are likely to favor carriers. This could be a good indication that you should hire a specialist to perform an audit.

Seven Tips about Telecom Audit Specialists

1. Audits are their core competency.
2. Having performed hundreds of audits, specialists know where to look for billing errors and how to submit claims. This increases the probability they will receive refunds.
3. Specialists understand carriers’ internal processes and procedures for reviewing claims and authorizing refunds.
4. Specialists will have established precedents with carriers that allow them to get larger refunds than otherwise possible.
5. Specialists have tracking and reporting systems to track the progress of the audit, manage negotiations and resolution.
6. Thanks to their carrier relationships and dedicated resources, specialists can minimize delays in submitting claims. As carriers attempt to impose limitations on customers’ ability to file refund claims, specialists are able to work around those limitations to secure refunds.
7. Audits are more often performed on a contingency basis. This means if they don’t find anything, you don’t pay anything.

While historical audits are beneficial, enterprises cannot substitute them for a proactive TEM program. Without an ongoing program, the errors will reappear on bills. A historical audit requires documentation and information that may not be available after a period of time passes. And, many contracts now require enterprises to identify billing errors within 90 to 180 days of receiving the bill. Once the audit is complete, a good specialist can offer software and services to proactively manage the full lifecycle of telecom expenses.

2. Stop Making Mobility More Complicated Than It Should Be. Most organizations have a fierce debate going on between employees that want to bring their own mobile devices to work and the managers in IT, security and wireless expense management functions. If employees do not have sensitive data in their e-mails, it may be possible to allow a bring your own device (BYOD) policy for secure mobile operating systems and devices that have secure applications to flag malware. However, after a review, most employers will find that employees do have sensitive data in their e-mails that must be secured and BYOD programs will probably only work for a small group of workers. Acknowledge this challenge, and develop a policy with executive support that avoids making mobility more complicated than it has to be.

3. Stop Creating Custom Reports for Telecom Expenses. Departments, such as finance or procurement may come to you once a year for a special report on telecom expenses. Do they really need the information in this particular format? If you have a good TEM program, it will have several reports that will speak to all audiences of the organization in an automated fashion; saving you from the report you are trying to manufacture. In addition, drag-and-drop functionality will enable you to create multiple custom reports on-the-fly that will have the information much quicker than a custom report from a corporate ERP or financial applications.

4. Stop Overspending on Telecom Services. Many organizations simply procure telecom services from incumbent suppliers. Savings can be substantial when carriers compete for your business. This approach integrates the competitive dynamics of sourcing, in which carriers submit competitive price quotes, with a steady persistent approach to costs savings that TEM programs provide. A good system to manage quotes from carriers will pay for itself through cost savings and automation of the process of requesting new prices, sending reminders, adding new vendors, tracking vendor responses, comparing pricing, converting accepted quotes into work orders, and tracking historical performance.

The NTSB hopes to shape public opinion, but its call for a ban is unlikely to become a nationwide law because the NTSB does not regulate transportation. Therefore, each state will have to pass its own laws. The debate on this ban pits issues of personal freedom against government regulations that would completely prohibit use of cell phones including drivers with hands-free devices.

To further support the danger of using a cell phone while operating a vehicle, studies have shown that talking on a mobile phone is so mentally distracting that it is equivalent to driving under the influence of alcohol. At least when a driver is having a conversation with a passenger, passengers can respond to dangerous driving conditions by toning down their conversation.

Employers should use the call for a ban on use of mobile devices while driving as an opportunity to institute strong corporate wireless policies with clear mechanisms to enforce policy. The issues are open to interpretation, but employers are likely to face legal exposure for employees’ accidents. This liability will include employees with individual liable plan or BYOD (Bring Your Own Device) arrangements.

Companies must start with compliance to local laws, but employers have an advantage over lawmakers. They can quickly implement new policies and flexible responses based on driving conditions for employees. Organizations should remind employees of the dangers when they use mobile devices while operating all vehicles. In congested areas and under dangerous conditions, the policy should clearly state that employees are not permitted to use their devices when they drive.

These findings highlight the critical need for fixed and mobile Telecom Expense Management (TEM) programs to support massive change that is coming to networks and spending. Are you ready for these changes? Data and analytics from TEM reporting can help managers identify cost savings opportunities through consumption reporting. These reports can help identify services with low usage as employees switch from fixed voice calls to use of data and wireless services.

Once you identify opportunities to disconnect services, it will be critical to have systems in place to streamline your requests with carriers. TEM systems can archive disconnect requests and link the information with inventory. A good system will also automate reconciliation of inventory with bills to ensure removal of disconnected items from billing. If the carrier fails to disconnect a service, the TEM software can flag billing errors and provide documentation of disconnect requests to support billing claims. Carriers’ systems do not provide a reliable source for documenting claims.

Managers that seek to cut spending on telecom and network services can learn from Wayne Gretsky, one of the greatest hockey players of all time. He said, “A good hockey player skates to where the puck is. A great hockey player skates to where the puck will be.” In a similar way, for telecom expenses, it is critical to anticipate where the spending will be in the future. Without a good TEM program, expenses will be out of control as you pay expenses for fixed carrier services that employees no longer need, and new expenses grow for new mobile services.

Bill consolidation is the first step in reducing costs of processing bills and tracking payments for your accounts payable department. Enterprises report that the costs of processing an invoice can range from $75 to $125. This includes costs of receiving, transferring it from the mailroom to a manager that must approve it, payment, and storage/archiving.

Bill consolidation helps to minimize the likelihood of late payment penalties or uncontrolled service disconnects from missing or lost bills. Even more important, bill consolidation is a critical step to begin receiving bills electronically. Processing paper bills is not good for the environment with the paper and ink that to create the bill and the gas for delivery and transport within the organization. The benefit for carriers to providing an electronic offering is the cost savings. On average, an online bill costs a carrier approximately 20 cents to produce and process, which is considerably less than the cost of printing, mailing and processing a paper bill.

Why Bill Consolidation Is Not Easy

TEM outsource programs begin with bill consolidation. The problem is that carriers have many different products and they are often unable to consolidate bills from different products. This means that bill consolidation requires specialized knowledge and effort. In addition, carrier systems often revert to their old ways of billing items separately. If a customer makes any changes to its services or the carrier makes a change to the product or its pricing/billing system, it’s common to find three months later these items start to arrive on separate bills. This can present challenges because sometimes it is a duplicate bill and other times it is not. There is also risk unpaid charges that will lead to service disconnects. Automation can help flag these items and avoid duplicate payments or late payments.

Bill consolidation will save you money, and it is good for the environment. Unfortunately, rates of adoption for electronic bills are low because most organizations have a mountain of paper bills, and they do not have the time to initiate a bill consolidation project. However, it’s in your best interest to start now.

1. Using automation to identify billing discrepancies and submit billing claims with carriers create a scalable process for managing disputes and maximizing savings from telecom expense management.

Factors that impact the time to resolve a claim include

• Issue complexity
• The refund amount (larger issues require more approvals)
• The complexity of the timeline for the billing issue
• The documentation for the claim
• Client relationships with the carrier (larger accounts may have dedicated account teams that are more responsive and have more familiarity of the billing issues)

One best practice is to group similar disputes together to reduce the number of claims. It also makes it possible to escalate the billing issue by revealing the size of a billing problem and streamlines dispute tracking. Another best practice is to pay the bill in full because short paying bills can lead to potential late fees or service disconnects by carriers for accounts that have large unresolved balances. A third best practice that was discussed was the ranking of carriers based on billing accuracy and response time. These factors should factor into sourcing considerations when selecting a provider.

Timely submission of disputes is critical because carrier contracts and the statute of limitations can limit the time to file a billing claim. It takes about 20 percent of the effort to identify a billing issue and 80 percent to resolve it. Finally, dispute resolution provides ROI cost justification for the role of employees’ roles and activities or solution providers that manage TEM.

2. Managers looking for TEM metrics that matter will be seeing simpler dashboard reporting.

TEM is following the same trend as other enterprise applications with simpler dashboard reporting to empower managers with better reporting tools. Organizations want snapshots of data with graphical summaries of savings, open disputes, work orders, new circuits, open tasks and cost centers. Pie charts and trending reports allow managers to determine quickly if the program is on course to meet their objectives for spending and cost savings.

3. Quote Management introduces new functionality

Quote management is a new module that allows Telesoft clients to centralize and streamline their process of requesting new prices, sending reminders, adding new vendors, tracking vendor responses, comparing pricing, converting accepted quotes into work orders, and tracking historical performance. Many attendees were interested in the application because it has features that were designed specifically for telecom services. It integrates the competitive dynamics of sourcing, in which carriers submit competitive price quotes, with the steady persistent approach to costs savings that TEM programs provide.

4. Networking and learning from others

One of the greatest benefits of the conference continues to be informal networking. The conference provided many opportunities for participants to discuss their experiences with carriers and discuss challenges. The informal conversations allowed people to learn from each other and benchmark their TEM initiatives against their fellow users.

1. A recent survey found that Telesoft clients’ telecom budgets are polarizing with 37% under pressure to reduce spending and 23% reporting that they are increasing their budget.

These findings are a significant departure from the previous years. First, there are 7% more respondents or 44% growth over 2009 in the number of respondents that report an increase in their budgets. Second, although there was a slight increase in the number of responses from those that report their budgets must be cut, the pressure is also felt by 26% that are under pressure to keep the same spending as the prior year because employees keep demanding more form their communications network including mobile services and video conferencing.

2. Managers are under more pressure from employees that want to select their own devices.

A number of attendees indicated that employees are pushing for more options in selecting devices and executives are asking if it would be easier to let employees simply expense their charges for wireless services. Three firms indicated that they have analyzed this issue and determined that the security risks from corporate data on personal devices outweigh the simplicity of simply providing a stipend for the mobile expense. These firms have found that a well managed corporate liable wireless expense management program is far more cost effective and much simpler to manage than dealing with the security risks from employees bringing their own device (BYOD).

3. Clarifying confusion over IRS tax treatment of employer-provided cell phones and stipends

On September 14, the Internal Revenue Service issued guidance to clarify the tax treatment of employer-provided cell phones. A provision in the Small Business Jobs Act of 2010 (effective after 12/31/2009), eliminated taxes on employer paid cell phones.

The IRS will not require detailed recordkeeping of business use of mobile services for people to receive tax-free treatment. It also announced in a memo to its examiners a similar administrative approach that applies with respect to arrangements for employers that provide cash allowances and reimbursements for work-related use of employee-owned cell phones. Under this approach, employers that require employees, to “use their personal cell phones for business purposes may treat reimbursements of the employees’ expenses for reasonable cell phone coverage as nontaxable.”

Exclusions

The exclusions are not significant. Tax-free treatment of cell phones does NOT apply to reimbursements:

• That are unusual or excessive
• Made as a substitute for a portion of the employee’s regular wages
• Made for morale or good will of an employee
• To attract a prospective employee
• To provide additional compensation.