TEM for MidMarket Companies

MidMarket companies will get the most out of TEM 

Telecommunications expense management (TEM) has become a best practice among the Fortune 500 and Global 2000, and is gaining ground among mid-market companies as an effective means of reducing telecom costs. TEM services can run the gamut of total telecom service life cycle management (from proposal and ordering, through full service management and disconnection), but the bulk of the hard savings come from validation, competitive service prices and the visibility provided by the TEM applications. Increased visibility into telecom inventory, telecom usage patterns and opportunities to benchmark prices and evaluate services across the entire company will yield considerable cost savings.

MidMarket companies cannot leverage their purchasing power in telecom service volume, hence have to use smarter ways to contain their expenses. Volume purchasing power however is largely a myth in telecom. With the proper competitive and benchmarking information, pricing across telecom service categories and service types can be brought to very competitive levels by our specialists. Add to that the increased visibility and usage management brought in by a TEM solution and it becomes clear that introducing TEM in MidMarket companies produces higher savings levels than with their larger peers.

These savings go directly to the bottom line of the MidMarket company and become very visible for top management, that is closely watching in the companies’ performance and often owns part or all of the company. Which means that the increased shareholder value derived from bottom line savings from the TEM initiative will help to improve the balance sheet.

In midmarket companies the finance department takes responsibility for managing telecom expenses as opposed to larger organizations where it is a shared responsibility between finance and ICT departments.

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. Aberdeen reports that 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 means that 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.

While finance may own the responsibility, the finance accounting systems typically do not keep an up to date inventory of telecom and mobile services. New services and MACD’s (moves, adds, changes and disconnects) for employees and locations are not communicated to finance in real time.

There is a lack of tools to charge back services to departments beyond basic percentage cost allocation and little or no visibility into total employee expenses or expenses for locations based upon all carriers and services and the invoices are not being validated to verify contract compliance.

When ICT owns the problem, invoices may be 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.

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. 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. In most cases the invoices are not being validated to verify contract compliance.

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.

Convergence provides the software and services to address these concerns. All paper, web, CD-ROM and EDI invoices are loaded and mapped into the Telecom Management Platform (TMP) 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.

Contact us to learn more about a telecom expense management solution to help improve the bottom line of your company.