Untangling Wireless Expenses

By Al Subbloie

June/July 2006

In the United States there are more than 175 million cell phone subscribers, over a third of whom are business users.  Though a vital part of daily business operations, more and more corporations find they lack the control over their wireless costs that they enjoy in other telecom areas.  Unlike traditional corporate IT or wired telecom services, wireless communication was not generally initiated or engineered by the corporation; it crept in the backdoor, so to speak, through employees - early adopters looking to enhance traditional methods of communication.

The speed with which cell phones and other devices were absorbed into the day-to-day operations of the enterprise was impressive.  In 2001 U.S. corporations spent $37 million on wireless communication; by 2009, according to Cahners, business spending on wireless data will reach $11 billion.  Naturally, as wireless usage continues to grow, management of those assets becomes more complex.

Surprisingly, very few companies actually know exactly how much they spend on wireless hardware and services each year.  Take cell phones for instance.  For years cell phones were considered the personal property of the employee and the corporation had nothing to do with choosing a phone, deciding on a plan, or paying the invoice.  But as more workers began using these "personal" devices for business purposes, the corporation began to absorb more of the cost - usually via the expense report - an expedient (if terribly inefficient) method.  In fact, one analyst (Meta) estimates that 30 to 40% of companies allow employees to expense their own cell phones and select appropriate plans.  They know they'll foot at least part of the bill eventually, but they've chosen to let their employee make the decisions.  With some 12,000 constantly changing wireless carrier plans available, employee wireless contracts vary according to carrier, plan, cost per minute, roaming charges, monthly usage, and overage charges. 

As a method of managing spending, the expense report is woefully inadequate - providing the least management control and the maximum usage costs; it fails to provide visibility into the company's wireless usage and spending, offers few consistent budgeting capabilities, restricts corporate buying power, and limits inventory awareness.  So it's no wonder that so many corporations lack the control over wireless costs that they enjoy over traditional communications.  They have little or no say over which carriers or plans their employees are choosing, have no real knowledge of their inventory, and no way to effectively audit what exists. 

To a larger degree, organizations that are failing to manage their wireless costs are missing a large opportunity for savings.  While analysts differ about the percentage of savings to be realized by implementing tighter management controls (the number ranges between 15 to 30%), what they do agree upon is that organizations need coordinated service procurement and management, as well as consistent documented policies, in order to minimize wireless costs and measure a return on investment.

Wireless Automation: The solution to the problem of unchecked wireless spending is to integrate wireless into the organization's overall enterprise communication strategy.  Wireless services do, after all, share common processes with traditional voice and data services, including contract and bill management, cost allocation, procurement, inventory management, analysis, and reporting.  In the long run, failure to establish a unified voice, data, and wireless process will result in a deficient solution that will always be operating at less than optimum. 

In addition, there are profound benefits to be had in integrating wireless into an overall telecom expense management plan:

• Improved bill auditing and error detection capabilities

• Increased accuracy of enterprise telecom expense allocations

• Improved visibility and understanding of enterprise telecom costs

• Consolidated enterprise-wide service inventory

• Optimized carrier service rates

• Right-sized inventory levels

One of the primary benefits to organizations that integrate wireless through effective use of resources, technology, and expertise is significant savings.  But taking into consideration the intricacies of the technology, the volume of plans, a constantly evolving wireless infrastructure - issues that often affect global organizations on a country by country basis - the ability for an organization to single-handedly achieve a position of wireless self-sufficiency is, at best, limited.  The sustained ability to manage wireless, voice, and data expenses is best achieved through a specialized provider of comprehensive, automated Telecom Expense Management (TEM) systems and services.

What Should You Do?  If wireless telecommunications costs are "running wild" in your organization and there is no system in place by which to manage costs, then something must be done.  But doing something, and doing the right thing, often have entirely different outcomes with remarkably varied results.

To ensure that wireless expense management activities are appropriately focused, organizations should take control of costs by adopting a wireless policy for usage and management, followed by negotiation for corporate-wide service contracts.  Gartner Group estimates that enterprises can save 15 to 35% on their wireless costs by instituting consistent and documented policies, coordinated service adoption, and stringent management of wireless services.

In order to achieve this goal, corporations should enlist the aid of a knowledgeable TEM vendor that can address the multiple fundamental concepts that comprise telecom expense management.  Although basic in nature, these concepts serve as guideposts for the organization and help ensure maximum bottom-line benefits to the organization.

Consolidate - Consolidating wireless operations should include administration and management areas, as well as procurement, billing, allocations, auditing, and negotiations.  Consolidation will lead to simplified management, the standardization of adoption and usage policies, and will provide increased control and improved cost structure through the elimination or reduction of operational redundancies.

Aggregate - It's an arduous task, but in order to achieve a collective view of usage, organizations must gather information about their disparate wireless activities.  An aggregated view of the wireless spending will aid in a significant realignment of corporate buying power; without this holistic view organizations cannot purchase or contract in bulk, bundle services, or negotiate the best prices.

Automate - Organizations should deploy automation tools with functionality tightly integrated between wireless processes.  For instance, creating an inventory of enterprise-wide equipment and services may yield positive benefits in the contract negotiation phase.  However, without the ability to link inventory to contracts, billing, auditing, procurement, reporting, and allocations, inventories that were once accurate - and the resultant benefits - become outdated.  The process areas requiring tight integration include, but are not limited to:

• Contracts - Automated contract management lets companies manage all aspects of their carrier/vendor agreements by capturing all applicable details including service and product descriptions, rates, discounts, commitment levels, and contract terms.  A consolidated view of contracts allows organizations to achieve optimal terms, rates, and conditions by examining agreements, eliminating overlaps, and conducting timely, well-informed agreement negotiations.  Automated contract management capabilities also serve as a foundation for automated rate tests, usage threshold comparisons, and inventory discoveries.

• Inventory - Manually creating and maintaining an accurate wireless equipment and services inventory would be pointless given the average number of services and inventory items to manage within an organization, not to mention the frequent changes resulting from employee hirings, dismissals, transfers, and moves.  Automated inventory capabilities that enable an accurate and up-to-date inventory, give organizations the ability to capture, analyze, and allocate monthly spending and utilization activity at the line item and employee level.

• Provisioning - Provisioning enables requests and orders for services and equipment to be handled on an enterprise-wide level.  With a centralized provisioning ability, companies can centrally manage moves, adds, changes, and disconnects for a wide array of products and services.  Automated provisioning is a vital component in establishing a closed loop "procure to pay" process and should not be overlooked when considering an automated solution.

• Billing - Automated billing should include of all aspects of invoice processing including the receipt, loading, audit, allocation, approval, payment, and tracking of carrier billing.  Billing automation simplifies the processing of invoices by providing a standard, consolidated view of all telecommunications expenditures, not just wireless.  With the ability to handle automated billing feeds, an automated telecommunications expense management system can eliminate paper bills, reducing turnaround cycles and late fees.

• Auditing - With accurate inventory and contract data, organizations can regularly and frequently audit contact rate and terms, billing, service inventory accuracy, employee spending, market factors, trend and spending variances, utilization, and configuration services.  Through automated auditing, enterprises can identify discrepancies and errors, allowing telecommunications staff to focus on best revenue generating/expense management practices rather than on administrative data manipulation and comparison.

• Reporting and Analysis - By using a consolidated data structure, an automated TEM process will provide the ability to "slice and dice" information across multiple functional areas.  With standard reports writing and analysis capabilities users can develop customized reports on everything from usage and allocation to billing and inventory - all of which enables greater understanding for improved manageability.  In addition, "what-if" analyses functionality helps organizations identify and target opportunities for reducing and controlling costs.

Optimization - Organizations must be able to interpret what is going on within their organization in order to make reactive and proactive changes.  With automation comes the ability to optimize infrastructure and implement the process, policy, and staff-related changes necessary to leverage wireless investments and resources in a strategic manner.

If the organization doesn't recognize the processes of change and adaptation as critical components of managing wireless expenses, it will ultimately subject itself to unnecessary frustration and less than optimal benefits and savings.  Centralization allows companies to report and manage their operations with a higher degree of understanding and responsiveness.  Therefore, organizations should carefully consider the ability of their automated solutions and processes to adapt to the growing needs of their organization and their market.

Al Subbloie is an Internet pioneer, and the President and CEO of Tangoe, Inc.