Telecom Expense Management for Large Organizations: A Practical Guide

By Claudio Basso and Luiz Augusto Carvalho

Managing telecom expenses is not easy; whats more, the larger the organization is, the more complicated that management gets. In Telecom Expense Management for Large Organizations, authors Luiz Augusto de Carvalho and Claudio Basso, who have each worked for more than a decade in the telecommunications industry, share their wealth of knowledge so you can slash expenses and manage business properly.

This practical guide is divided into five sections: managerial issues, managerial processes, bill processing, traffic analysis and specific aspects. Each section builds upon the previous one, helping you contract and negotiate with telecom service providers; design a well-controlled telecom structure; oversee the inventory of assets and services; manage contracts, processes, and challenges; and process invoices and navigate auditing processes.

This book discusses several techniques which will help you to organize the telecom cost/expenses management in your organization. Take control of your organizations future and plot a path that can help you enhance the quality of your telecom expenses management .

• Language: English
• Publisher: iUniverse
• Release date: Jan 24, 2014
• ISBN: 9781491720004

Claudio Basso

Luiz Augusto de Carvalho is a telecommunications engineer and business administrator who specializes in wide area network design. He formerly worked with Ericsson, BDO Consulting, and Lucent Technologies, and currently works for WANOPT, a WAN design specialist consulting company. Claudio Basso, an information technology professional, specializes in the management of telecommunications infrastructures. During more than fifteen years of work in the field, he has served as a telecom manager for several large organizations. He is currently a partner with CTSystem, a consulting firm that specializes in helping large organizations manage telecom operations.  

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Copyright © 2014 Luiz Augusto de Carvalho and Claudio Basso.

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ISBN: 978-1-4917-2002-8 (sc)

ISBN: 978-1-4917-2001-1 (hc)

ISBN: 978-1-4917-2000-4 (e)

Library of Congress Control Number: 2014900269

iUniverse rev. date: 01/22/2014

Contents

Preface

Chapter 1: Organizing the Telecom Area Administratively

1.1 Voice and Data Controlled Together

1.2 Telecom as Part of the Organization’s Information Technology Structure

1.3 Controlling Telecom in a Centralized Way

1.4 The Deployment of Telecom Expenditure Control Software

Chapter 2: Sourcing and Procurement

2.1 Negotiation Strategy

2.2 Interconnection Costs (Tariffs)

2.3 Benchmarking

2.4 Pitfalls to Avoid

2.4.1 Paying for the Gateways

2.5 Practical Tips for Outsourcing Networks

2.6 Managing Service Providers and Vendor Relationships

Chapter 3: Policies and Governance

3.1 Definition of Policies

3.2 Definition of Processes

3.2.1 Cost Control

3.2.1.1 Bill Processing

3.2.1.2 Internal Appropriation of Telecommunications Costs

3.2.1.3 Management of Telecommunications Contracts

3.2.1.4 Billing System Management

2.2.1.5 Expense Approval and Budgeting

3.2.2 Documentation and Administrative

2.2.2.1 Resource Inventory Control

3.2.2.2 Network Diagrams

3.2.2.3 Administrative Services

3.2.2.4 Telephone List Preparation and Distribution

3.3 Pitfalls to Avoid when Designing the Processes

3.4 Definition of Tasks and Responsibilities

3.5 Norms and Procedures

3.6 How to Allocate the Control Effort

Chapter 4: Cost Benefits of Expense Management Methods

Chapter 5: Asset and Service Inventory Management

5.1 The Meaning of Each Controlled Entity

5.1.1 Functional

5.1.2 Technical

5.1.3 Structural

5.2 How to Map the Information

Chapter 6: Service Ordering and Change Control

6.1 Unifying the Communication Channels with the Providers

Chapter 7: Contract Management

7.1 Unifying of Contracts

7.2 Service Level Agreement of Telecommunications Contracts

Chapter 8: Help Desk Management

Chapter 9: Invoice Processing

9.1 Receiving the Bills

9.2 Checking the Bill against the Historical Value

9.3 Auditing the Bills and Discussing Discrepancies

9.4 Generating Reports about the Bills and Costs

9.5 Attending Telecom Committee Meetings

9.6 Implementing Telecom Cost Planning

9.7 Automatizing Bill Processing

Chapter 10: Auditing

Chapter 11: Billing Systems

11.1 Effectiveness of the Billing System

11.1.1 Aspects Linked with the Installation

11.1.2 Aspects Linked with the Process

Chapter 12: Traffic Analysis and Optimization

12.1 Traffic Volumes

12.2 Traffic Interest

12.3 Traffic Hourly Distribution and Hourly Concentration Factor

12.4 Traffic Daily Distribution

12.4 Call Duration Patterns

12.4.1 Short Calls

12.5 Concentration of Traffic

12.6 The Type of Traffic (Fixed-to-Fixed/Fixed-to-Mobile)

12.7 Mapping the Mobile Traffic per Service Provider (Outbound)

12.8 Routing Traffic

12.9 Planning for Expansion

12.10 Capacity Planning

12.11 Evaluating New Technologies

Chapter 13: Mobile Device and Mobile Applications Management

13.1 Defining the Usage Policies and Usage Packet/Profiles

13.1.1 Eligibility

13.1.2 Plans of Service and Usage Limitations

13.1.3 Strategy of Device Deployment

13.1.4 Reimbursement Policies

13.1.5 Contingency Plans for Loss or Theft of the Devices and Maintenance Policies

13.1.6 Management Tools

13.1.7 Device Management Specifications

13.1.8 Implementation

Chapter 14: Risk Management

14.1.1 Points to Consider when Increasing the Reliability of the Telecom Structure

Chapter 15: Reports and Analysis

15.1 Users (Administration and Call Center)

15.1.1 Administrative Users

15.1.2 Call Center Operations

15.1.2.1 Tracking the Volume

15.1.2.2 Call Duration Reports

15.1.2.3 Call Concentration Reports

15.2 Accounts Payable and Accounting Departments

15.3 Department of Financial Planning (Budgeting)

15.4 TI and Telecom Area

15.4.1 Financial Reports

15.4.2 Volume and Profile of the Traffic

15.4.3 The Analysis of the Reports

15.4.4 How to Structure the Information

Chapter 16: Closing Words

Bibliography

Preface

Our objective in writing this book is to provide the reader with a practical guide addressing the most common issues associated with telecom expense management (TEM) in large organizations. This book is aimed at the telecom manager, and the techniques described here are practical and easily applicable.

Note that from our perspective, telecom expense management encompasses much more than just managing telecom bills and contracts. The way we see the issue, telecom expense management has almost the same meaning as telecom cost management (TCM). There is a trend in the marketplace to limit the meaning of telecom expense management to managing bills and billing, but our view is that billing systems are just a part of the bigger process. Throughout this book, we are going to detail this view.

The book is divided into fifteen chapters, each of which deals with a specific aspect of managing costs in telecommunications infrastructures; it falls into five sections: managerial issues, managerial processes, bill and billing processing, traffic analysis, and specific aspects.

The first four chapters are concerned with the structural aspects of managing telecom in large organizations. Chapter 1 explains our view about how the telecom area should be organized to enable the best results. Chapter 2 discusses strategies for negotiating telecom services in order to achieve good prices and easy management. Chapter 3 discusses the policies and governance strategies that are basic to having a well-controlled telecom structure, and chapter 4 discusses the delicate balance between effort and benefits of the control.

1. Organizing the telecom area administratively

2. Sourcing and procurement

3. Policy and governance

4. Cost benefits of expense management methods

The next section is concerned with the main processes associated with managing the telecom structure. Chapter 5 discusses managing the inventory of assets and services, which in our view is the basis over which all control is developed; chapter 6 deals with the process of adding, removing, and changing the assets and services contracted. Chapter 7 encompasses the processes and strategies associated with managing contracts, and chapter 8 discusses the process of registering problems internally and externally (with the providers).

5. Asset and service inventory management

6. Service ordering and change control

7. Contract management

8. Help desk management

The third section discusses what is more commonly known as telecom expense management. Chapter 9 deals with the processing of the invoices, chapter 10 focuses on the billing auditing processes, and chapter 11 discusses how billing systems can become an effective control instrument.

9. Invoice processing

10. Auditing

11. Billing systems

The fourth section discussess how traffic should be controled and managed. In our view, managing traffic is the core of any telecom cost management strategy. Chapter 12 explains how traffic should be controlled and discusses the main strategies to reduce telecom costs.

12. Traffic analysis and optimization

The final section deals with three specific issues that, in our view, deserve to be discussed in more detail. Chapter 13 is concerned with mobile devices and applications, which is a growing issue in the telecom control effort. Chapter 14 addresses an organization’s risk management (such as lack of connectivity), and finally, chapter 15 discusses how the information managed by the telecom area should be presented and distributed in order to be effective.

13. Mobile device and mobile application management

14. Risk management

15. Reports and analysis

This book is not meant to be read linearly like a story book; it is more like a manual, where you can jump directly to the chapter dealing with a particular issue. Of course, a linear reading is possible, given the fact that earlier chapters support or complement later ones. We hope you enjoy reading it; we also hope it will become a useful instrument for you. This area of expertise lacks a broad source of literature, and the lessons learned by the professionals in the field are rarely documented or shared. We made an honest effort to document and systematize this practical knowledge.

Chapter 1: Organizing the Telecom Area Administratively

Initially, we would like to focus on four administrative strategies that are usually associated with the effectiveness of a telecom area:

• voice and data controlled together

• telecom as part of the organization’s information technology structure

• controlling telecom in a centralized way

• deployment of control systems and consequent processes

Of course, these are general guidelines, and specific contexts may impose different strategies; however, these four points usually are the way to go. Subsequent sections will discuss the reasons.

1.1 Voice and Data Controlled Together

Although this strategy may seem obvious, some organizations do not control voice and data in a unified way. In today’s technological environment, it is very advisable to have a control structure wherein the same area within the organization manages both voice and data contracts. There are four main reasons for this:

1) There is a technological trend to unify voice and data services over the same equipment and protocols.

2) The providers of both services are usually the same.

3) The billing control processes are similar.

4) The technical and administrative skills required from the people involved in the control of both services are very similar.

These elements are at the root of the trend to unify the control of telecom resources (voice and data) under one area of an organization. That is by itself a very important administrative decision, which tends to improve the quality of resource management. Very often, by just unifying the control of voice and data resources, overall costs can be reduced.

Some organizations control mobile resources and devices separately; our view is that these devices should be controlled by the same group within the organization responsible for controlling data and voice resources.

1.2 Telecom as Part of the Organization’s Information Technology Structure

The structure and responsibilities of managing telecom within a large organization have changed over time as shifts in technology took place. Generally, the objective has been to bring telecommunications into the IT sphere of influence, unifying voice and data disciplines in a telecommunications/network area.

The migration of the telecom area from general services to IT is an administrative trend that follows the technological trend of integrating voice and data over the same network.

In addition, managing a telecom infrastructure in today’s large organization requires skills more often found in people working in the IT department than anywhere within the organization.

1.3 Controlling Telecom in a Centralized Way

Telecom management is one area where centralized control tends to generate better results. Of course it isn’t an absolute truth; multinational companies must balance the benefits of centralized management against the difficulties of managing infrastructures in different countries with different languages, currencies, and cultures.

It is our experience that policies and standards should be defined globally as far as possible. This creates an environment where teamwork and cross-regional support are possible, greatly enhancing the efficiency of the human capital deployed across the organization.

Here we emphasize the need to have unified inventory databases, processes, and technological standards. Sometimes, several arms of a large organization spread around the world do not understand the benefits of unified policies and standards. Usually, the telecommunications team in each country tends to believe that its own ways are the best, but anyone who has managed a multinational telecommunications area knows that having standards is better, even if they are not going to be optimal in every environment. When telecom management is centralized, it leads to the following benefits:

• better prices (usually due to global negotiation, where the full weight of the organization is brought to the table, yielding better discounts)

• better control (when only one group is responsible for telecom resources, it usually reduces problems such as overcharges, overlaps, and having unidentified resources or resources that are not used)

• lower operational costs (when headcounts are reduced, there is a consequent reduction in personnel costs)

Centralizing control usually enables the organization to identify its telecom expenses. That fact alone is usually enough to justify centralization, because it shows how much telecom represents within the IT/infrastructure budget and keeps the subject on management’s radar.

In more general terms, we have to keep in mind that telecom is a logistic system, and as such, the whole may be more than the sum of the parts.

It would be interesting to insert a caveat into the argument here that centralized management doesn’t necessarily mean a centralized operation. If you have the right tools, you may be able to control and contract in a centralized way and yet keep the operation distributed, enabling different telecom teams to operate in different countries, for example.

This is feasible, as long as you manage to make all teams use the same management tools, under a defined hierarchical framework. That means that the local telecom teams may have some autonomy to contract telecom resources (the ones not covered for the worldwide contract, for example), but they have to include each contract and resource in a corporate telecom management tool in such a way that headquarters can see all the telecom expenditures and all resources contracted in all countries. The local teams will see only their own expenditures and resources.

Therefore, we may divide the term centralization into two types: financial and technical. Even if operational aspects force technical decentralization, financial centralization remains crucial. The centralized telecom management has to keep track of what is contracted and how much it is costing.

Financial centralization refers to the following:

• centralized resource inventory (including data, voice, and mobile resources)

• centralized contract inventory (including voice, data, mobile services, and maintenance)

• centralized telecom bills (even if received in different countries, all bills would be included in a common tool in a standardized framework, allowing centralized control)

• centralized billing system

• centralized bill auditing process (at least in a country basis)

Technical centralization refers to the following:

• centralized help desk for telecom issues

• centralized point of contact with the telecom providers

• centralized point