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Assessing the Impact of Total Telecom Cost Management


Telecom Cost Management Featured Article

October 23, 2008

Assessing the Impact of Total Telecom Cost Management

By Anuradha Shukla, TMCnet Contributor

Telecom cost management delivers a strong return on investment ROI and this has resulted in a proliferation of suppliers. But there is no industry standard for what should be included in a telecom cost management offering, and as a result companies searching to cut their expenses must assess their current processes, competencies, inventory, and future plans for a converged network infrastructure to determine how a total telecom cost management (TTCM) solution can provide the most value.

It is very important for organizations thoroughly evaluate costs and current processes; if not, disputes may develop with the TTCM provider. To identify and prioritize opportunities for TTCM improvements, an enterprise must begin by conducting an internal assessment of its competencies.
According to research from Aberdeen (News - Alert) Group, companies should identify and prioritize opportunities for TTCM improvements, and begin by conducting an internal assessment across five competency areas: organization, process, knowledge, technology, and performance measurement.
Organization — Management should assess organizational structures, skills, and decision-making alignment across the enterprise. According to Aberdeen, companies should determine whether the executive team views TTCM as a cost center or a profit center.
Process — Management should assess process standardization and efficiencies. It is important to identify which processes ensure that invoices are received, processed and paid on time. Aberdeen Group suggested finding out if the internal controls provide an audit trail. Also, companies should know how wireless assets are managed and what quality control programs are in place.
Companies must be able to identify a clear entitlement policy for which people in the organization receive cell phones and wireless devices and usage policies. It is important to figure out how well the network services and policies are aligned across the enterprise with business goals. In addition, companies should know if their business units have visibility and accountability for expenses.
Knowledge — Companies should assess visibility into product performance, technician availability and customer history. Aberdeen suggested that companies find out if they have an accounting system for expenses that is able to accurately estimate what portion of the billing is currently proactively managed. It also helps to know the tenure and industry experience of the people managing the program and how telecom rates and terms and conditions are benchmarked.
Technology — Companies should assess automation levels and how well these are integrated throughout the service chain. It should be clear which primary technology used to manage invoices and the steps needed to convert paper invoice to electronic media. It is critical to understand how managers are reconciling tariffs, contract pricing, physical inventory and MACD (moves/adds/changes/deletes) activity.
Companies should make efforts to know which procurement and sourcing processes have been automated and their level of effectiveness. This includes early alerts when contracts are up for renewal and TTCM being a high-priority investment area for the company’s executive team. It will also be helpful to know if the company can make the necessary adjustments to continue processing invoices in a timely manner when carrier billing media changes.
Performance Measurement — For this area, companies should assess level and
consistency of measurement as well as actual performance against each metric. They should aim to know the metrics and procedures used to measure TTCM performance and whether there are internal service level agreements (SLAs) in place to enforce these standards.
Companies must know if they have a system to track spending for specific services and spending with specific vendors. An accrual system will help determine what funds will be owed in the future and they must also be aware about the trends for expenses compared to budget. Aberdeen Group also suggested that mangers should know the reporting tools their service organization uses to monitor assets and spending and how effectively it meets the enterprise’s reporting needs.

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Anuradha Shukla is a contributing editor for TMCnet. To read more of Anuradha’s article, please visit her columnist page.

Edited by Mae Kowalke

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