Making the Case for Telecom Expense Management

By this time, the CIO and the IT team would have briefed CFOs and other executives about UC, which stands for Unified Communications. Traditionally, the basis for deploying UC within the enterprise is to save costs, which is of course one of the many provinces of finance.
 
By leveraging on the existing corporate data network to transport voice traffic, rather than depending on the more expensive public fixed-line networks to perform this task, companies in theory can significantly pare telecommunications spend, including IDD calls.
 
However, we have found that, once a UC project has been fully implemented and the post-mortem review takes place, the response has generally been lukewarm. Why is this so? 
 
The reason typically is that the enterprise had not been able to quantify just how much was actually saved as a result of deploying the UC solution. This is because it could not quantify or baseline how much was spent before deploying the solution and how much was spent after implementing the UC project.  
 
TEM to the rescue
We are not surprised. In the area of telecommunications, CFOs continue to be challenged with the job of getting a completely clear view of their underlying communications cost base, in addition to gaining an unobstructed view of the tasks required to manage these complex environments. 
 
But total up the IT and telecommunications resources in each country, department and business unit that manage their own “unique” environment, and suddenly any transformational program starts to look like a good idea. 
 
The added ability to make tangible changes faster and confidently also indirectly provides an immediate positive impact to the bottom line, while at the same time minimizing the risk of downtime.
 
One approach we find works well with our clients is combining UC and Telecom Expense Management (TEM) programs. By bringing TEM into the fold, the enterprise acquires the proper financial and operational framework to baseline, measure, adjust, and optimize their UC infrastructure to achieve their cost and productivity objectives.
 
The rationale for deploying both UC and TEM together brings about cost and productivity benefits that greatly enhance the success of this cost transformational program.  Consider the following point:
 
With UC solutions and TEM, the business realizes a level of cost and usage visibility that was never achievable before, allowing cost allocations to be made to a country, business unit, department and even individual user levels that is so much easier than what is currently possible. 
 
What is TEM?
Telecom Expense Management is a comprehensive telecom-focused cost management framework consisting of industry best practices and technologies to deliver a holistic solution that aims to enable enterprises to optimally manage their voice, data, and mobility expenditures. A success TEM deployment can result in increased profitability, more productivity, higher accountability, and greater spend visibility.
 
With TEM, organizations acquire tools and capabilities to baseline their existing spend at the beginning of their telecom cost transformation program, and granularly track and quantify the results of their telecom costs through each review phase of the project.
 
Large multinational organizations traditionally deployed their own TEM cost management programs in-house. But the trend today among companies, especially SMEs, is to deploy TEM through specialized TEM Managed Service Providers.  
 
In theory, these providers have the specialized knowledge, technology platforms and operational economies of scale to bring a compelling value proposition to an organization to have them outsource their TEM processes to a qualified third party.  Some examples of TEM Managed Services Providers in Asia Pacific are Tangoe, IBM/Rivermine, Vodafone/Quickcomm, and Eastcom Systems.
 
These types of outsourcing engagements turns what would traditionally be a CAPEX engagement (where the customer would have to buy the TEM software and manage it in-house) into an OPEX cost model (where the customer pays a third party to manage their telecom expenditures via a term contract with fixed monthly payments). 
 
When UC projects fail
It is still uncommon for strategic projects like those we see of regional or global UC projects to undertake the use of a before and after analysis approach, and it is even more unusual to use a TEM platform to deliver that capability. 
 
More often than not this is because of incorrect perceptions of what TEM actually is.  Even in the telecom industry, it is not unusual to have industry “experts” think of TEM as a call accounting solution.
 
In fact, TEM can represent a suite of tools and services that can provide a breakdown and analysis of business spend at a forensic level for both historical and current spend analysis, as well as provide relevant and actionable recommendations.
 
TEM, as a cost operational framework, bridges the gap between key Finance and IT divisions, and maps telecom spend to the business needs.  An IT manager or his cohorts are unlikely to have the skills, least of all the time, to navigate the complexities of cost allocation, project appraisals and budget forecasting. 
 
Bringing a TEM approach to bear on a cost transformation project makes the overall task of mapping costs and savings to the original project appraisal much more straightforward.  The business leaders will have a clearer view of where the project stands financially, and most importantly have significant confidence in the data to justify the project, identify further projects and finally deliver positive messages to key stakeholders.
 
Failure to follow through with these steps results in a project that has weak measures of post-implementation business-benefits, with only a clear view of what the original project costs were and what overruns were incurred.  It is for these reasons we see many “successful” deployments of UC solutions stall. 
 
If the business can’t justify the costs or quantify the savings achieved it becomes painfully obvious that approving further expansion of the project is going to be difficult to justify. 
 
This isn’t a failure of the technology, vendor or the delivery partner. It’s a simple failure to understand that the stakeholders of the business need the evidence of the benefits that were pitched at the time of the project conception.
 
Conclusion
Imagine the possibilities that can arise when a post-project completion conversation can answer clearly:
 
  • What did we have before?
  • What was it costing us then?  
  • How long was it taking us to adapt our technology to suit our business users? How has our user behavior changed?
  • Have we realized any savings?
  • If so, what savings have we realized since we implemented the project? 
  • Where could we identify further savings?
 
If these questions can be answered and delivered as a key post-project message, it becomes easier to justify additional project expansions to derive further benefits, because now the data is real, quantifiable and puts all the project stakeholders in a position of strength. 
 
TEM shouldn’t be seen as additional cost to a project, but as a fundamental component of project auditing and accounting, and a means to ensure that costs are under control.  Ultimately the shareholders need to see value, and the only way to do that is to “show them the money”.
 
About the Authors

Osman Ahmed is Head of Unified Communications & Mobility (APAC) at BT Global Services.  Peter Hum is the Managing Director of StrateValue. 

 

Photo credit: Shutterstock

 

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