According to Aberdeen
in the report titled The Challenge in Total Telecom Cost Management,
74% of mid market enterprises report that one department has primary
responsibility for managing telecom costs. They report 38% of the time it’s the
CIO and the telecom/IT staff that’s the sole department leaving the CFO and
finance team the sole department 62% of the time. This tells us in a majority
of mid market enterprises the CFO and finance team owns the telecom expense
outright and in a minority of cases the telecom/IT staff may have sole or
partial ownership.
Lets
look at a few ways finance and IT may be dealing with the 10-300+
invoices a typical mid market enterprise receives in a given month.
Finance
handles the telecom and wireless expense and processes the invoices
- Invoice
validated by finance by checking to see if the cost was similar to prior
months. If so it’s submitted for payment.
- Invoice
validated by finance by verifying service items on invoice are in use. If
believed to be accurate then it’s submitted for payment.
- Invoice
validated by finance by conversing with someone in telecom/IT to see if
any moves, adds, changes or disconnects were made and if so notating what
should be paid and what should be disputed prior to submitting for
payment.
Positives
- Invoices
remain with finance allowing for payments to be made quickly and
eliminating late fees.
- Cost
allocation based on whole or percentages of invoice amounts for quick
reconciling.
Negatives
- The
finance accounting systems do not keep an up to date inventory of telecom
and wireless services
- New
services and MACD’s (moves, adds, changes and disconnects) for employees
and locations are not communicated to finance in real time.
- Lack
of tools to charge back services to departments beyond basic percentage
cost allocation.
- No
visibility into total employee expenses or expenses for locations based
upon all carriers and services.
- The
invoices are not being validated to verify contract compliance.
Telecom/IT
handles the telecom and wireless expense and processes the invoice
- Invoices
are reviewed for discrepancies and may be cross checked against new orders
and MACD’s and then submitted to finance for payment.
- Inventory
may be extracted from the invoices by manually inputting into it into
spreadsheets. The spreadsheets then act as a repository for MACD’s and
gives a way to provide reporting and track billing discrepancies.
Positives
- Having
the department responsible for ordering services and MACD’s allows for
better validation and more accurate payment of invoices.
- Managing inventory using a spreadsheet allows for better reporting and cost allocation
of employee and site location costs across all carrier invoices.
Negatives
- To
complete the validation and manually extract the data from invoices
without late fees kicking in the invoice must be processed within 15-20
days. For more on this click here.
- Invoices
may be directed to individual telecom/IT personnel via e-mail, CD and web
download eliminating visibility of the expense across the work group.
- The
invoices are not being validated to verify contract compliance.
As Aberdeen
states ““Enterprises need to think more strategically about their telecom and
network investments. As a result of inefficient processes to manage telecom
expenses, late payment penalties, carrier billing errors, incomplete comparative
benchmarking of sourcing, and inadequate visibility into spend, mid-market
enterprises are forfeiting opportunities to reduce telecom expenses by an
average of 3% to 10% of their spend.”
If that is the case enterprises should
look to acquire Telecom Expense Management Software along with partial or full
management of processing, validating and auditing of invoices. This may yield
substantial savings.
Which department implements a solution
may depend upon your point of view. According to the Aberdeen
report The CFO’s View of Telecom Cost Management,
“CFOs and financial executives bring different perspectives in how they view
the world compared to CIOs and IT executives. For example, 75% of financial
managers identify lack of staff expertise as the top challenge to effective
management of telecom costs while only 33% of IT managers see staffing
expertise as an obstacle. 70% of IT managers point instead to not having accurate
inventory as their primary challenge”.
Communication between finance and
telecom/IT is a key requirement to achieve the best results when implementing a
TEM software solution. A solution that addresses the finance departments
concern of staffing expertise, and visibility of expenses and gives telecom/IT
the inventory information they need through automation and/or business process
outsourcing is likely to get the best results.
At Vocio we designed our software to
address these concerns. All paper, web, CD-ROM and EDI invoices are loaded and
mapped into V-Vision to automate the processing of invoices. The software then
examines all invoices, compares them against existing contracts and tariffs,
and systematically identifies errors. It also inventories all of an enterprises
telecom assets — lines, circuits, and wireless devices — and ties them to site
locations or employees and then identifies usage patterns for internal cost
allocation.
Both the CFO and CIO will benefit from a
dedicated centralized application that will reduce operational costs for
managing telecom and wireless expenses. This will free resources to focus on
higher value projects such as upgrading to newer technologies, refining
procurement processes, sourcing and other areas of the telecom environment.