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.

Changing Mobile Handsets

Apple’s launch of the iPhone to Verizon in January and Sprint in August of 2011 helped grow its market share to 29% of U.S. smartphones. Android’s operating system (OS) share of smartphone sales grew to 53%. While Android and Apple saw gains in 2011, Research in Motion’s (RIM) Blackberry market share slipped from 25% in 2010 to 10% through October of 2011.

Malware on Smartphones Reaches New Highs

Since July, Juniper Networks found that Android users have seen a 472% increase in malware. These malicious applications target communications, location, or other personal identifying information. Another popular attack uses SMS Trojans, which operate in the background without the user’s knowledge sending SMS messages to premium rate numbers owned by the attacker. The identities of premium rate numbers are usually anonymous, and the money is not recoverable. With this in mind, employers that have not placed any controls on mobile expenses will experience bill shock from rising costs for mobile service expenses in 2012.

End of Unlimited Data Plans

Last year, carriers saw greater demand from customers’ use of wireless spectrum. However, the explosion in data traffic did not produce corresponding gains in data revenues for operators due to unlimited data plans. In 2011, Verizon acted to address this issue by following AT&T’s strategy of eliminating unlimited data plans for new customers. Most organizations have corporate plans that protect them from immediate increases in mobile data costs, but the carriers will now be seeking to raise prices for heavy users of data services including mobile web surfing, e-mail, and other mobile applications. Organizations will also see rising costs for mobile data charges in 2012, as employees replace their Blackberry devices. This can have a significant impact on data consumption because Android and iPhone smartphone users consume four and a half to nearly four times more data compared to Blackberry users.

Planning for 2012 with Wireless Expense and Mobility Management

Managers need to meet these three trends of growth in employees using Android devices and iPhones, the elimination of unlimited data plans, and smartphone malware with new tools to monitor data usage and mobile spending. TEM reports for wireless services provide dashboard reporting that highlight spikes and variances in charges. TEM programs can also distribute usage reports directly to employees and their managers to help augment security and policies designed to limit malware. In 2012, organizations will need to add new controls to prevent runaway mobile expenses.

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.

For most enterprises, multiple groups including Finance, IT, Procurement, Operations, Facilities Management, and Human Resources handle some aspect of telecom expenses. These groups rarely see the downstream impact of how their activities impact other groups however, which makes comprehensive TEM lifecycle management an organizational challenge.

CIOs should take a lead role in centralizing management of telecom expenses, leveraging economies of scale for purchasing decisions, procurement processes, and the operational costs to manage these expenses. Ultimately, the name of the game is cost reduction a direct result of a TEM solution but you’ll also gain new visibility into telecom budgets to better manage cash flow and earn a return on investment.