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Total Telecom Cost Management: Factors and Benefits

Telecom Cost Management

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June 05, 2008

Total Telecom Cost Management: Factors and Benefits

By Anuradha Shukla, TMCnet Contributor

According to a white paper by Aberdeen (News - Alert) Group, organizations realize that, by using procedures and systems, they can holistically manage the complete lifecycle of telecom expenses. Aberdeen research indicates that most companies manage less than 67 percent of their telecom expenses and this is in part because of the decentralized nature of network services with local providers.

Most enterprises are challenged with issues such as fragmented telecom contract management procedures, procurement, invoice processing inefficiencies, ineffective management of contract compliance, inadequate analysis of spending, and bill payment. Each of these items is discussed below.
Fragmented telecom contract management procedures — Aberdeen research shows that more than two thirds of the companies don’t have formal procedures for creating and managing contracts. In most cases they do not have accurate information of their spending when they are sourcing contracts.
Procurement challenge — Only 31 percent of the companies surveyed have procurement technology for service orders with carriers. The organizations are challenged with total telecom cost management (TTCM) problems if the orders are not managed properly. They should invest more in technology to improve accuracy and streamline order entry.
Invoice processing inefficiencies — Although two thirds of the market have adopted applications, processing invoices is still an inefficient process. Aberdeen advises that organizations can use service level agreements (SLAs) to drive visibility and help address the deficiencies for enterprises that are managing the program internally and those that have purchased a solution.
Ineffective management of contract compliance — One of the most challenging aspects of TTCM is compliance. Companies are challenged due to a lack of visibility into pricing terms as few items are priced according to the contract and others are priced from tariffs. They are also challenged by the inability to truly automate the reconciliation process. However, all this can be improved by using the right technology.
Inadequate analysis of spending — Enterprises also face problems due to the loopholes in procurement process and automation. They also have to deal with invoice processing challenges. Because enterprises don’t have effective reporting and asset-tracking, this makes for spend analysis that is often based on incomplete information. Ultimately, the accruals for billing that has not been received or expenses that have not been processed create a drag on finances.
Bill payment — Carriers disconnect services for organizations that don’t have a streamlined process to identify missing bills and get them paid in a timely fashion. Due to the threat of disconnected services, many accounts payable departments are driven to focus on the transactional aspects of paying bills and don’t look at the process.
There are many areas of TTCM that are often handled by internal groups needing to coordinate their activities and strategies. For managing the lifecycle of telecom expenses, executives must understand how things are interrelated as gaps in one area can cause problems in other areas. By using TTCM, enterprises can get greater value following a fully integrated approach to address the complete source-to pay lifecycle of telecom expenses.
Aberdeen’s research shows that all top-performing enterprises have formal TTCM programs. These companies distinguish themselves from others by proactively managing all or close to all of their telecommunications expenditures. The top-performing enterprises use a comprehensive holistic approach with a system that pulls data together, drives a structured workflow, and encourages collaboration among different groups internally. The key characteristics of top TTCM performers include telecom cost management program longevity; greater sourcing efficiency; faster invoice processing cycles; and broader use of technology.
The key business value findings from Aberdeen’s research in its TTCM Solution Selection Report show that choosing the best vendor begins with getting an accurate inventory. Also, knowledge of the current needs and resources of the enterprise will help the executives determine the best path. Although cultural fit and alignment is important, large enterprises with strong teams can make demands that compromise the ability of the vendor to deliver. In this situation it is best to try and understand which demands need customization and which items are configurable.
Aberdeen said that there is rarely one single area that will address all of the problems discussed here and therefore TTCM requires a comprehensive, holistic approach. Companies must identify gaps in managing the end-to-end lifecycle of a telecom asset and search for technology to address those gaps.
Anuradha Shukla is a contributing editor for TMCnet. To read more of Anuradha’s article, please visit her columnist page.

Don’t forget to check out TMCnet’s White Paper Library, which provides a selection of in-depth information on relevant topics affecting the IP Communications industry. The library offers white papers, case studies and other documents which are free to registered users. Today’s featured white paper is Fixed Service Strategies for Mobile Network Operators, brought to you by Comverse (News - Alert).


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