Telecom Expense Management Blog

Wireless Expense Management Optimization Strategies

Mon, 21 May 2012 18:25:00 GMT

There are three primary strategies used for wireless expense management optimization. These are:

Periodic Audits
Flat-Rate Auto-Pilot
Pool-Central Monthly Monitoring

Wireless Expense Management using Periodic Audits

It is not uncommon for companies to utilize a “rear view mirror” approach to wireless expense management. They will periodically assess cost effectiveness based on what was done, rather than looking forward to determine potential savings and usage challenges. Periodic audits are certainly better than relying strictly on your carrier’s support. Unfortunately, of all the strategies used, periodic audits typically result in the least amount of cost savings and are often the most costly to implement and maintain.

It is common for companies to work with outside consultants who handle the audit process. Unfortunately, even with the expertise of consultants the audit process has one major flaw. Once completed, the audit provides a one-time course correction that does not lock in a long-term change. Furthermore, there are multiple ways for costs to increase, given that the device stays with the employee. While one time audits are effective for uncovering previous cost discrepancies and perhaps locating current optimization savings, the periodic audit will not address recurring overpayments.

Wireless Expense Management using Flat-Rate Auto-Pilot

Flat-rate voice plans provide the benefits of low recurring costs and better overage rates as compared to minute buckets (typically half). The idea is that flat-rate plans require less ongoing monitoring and expense management. Carriers set the plans with flat rates for voice, allowing the company to put the entire plan on auto-pilot. The downside to flat-rate plans is typically they have a higher cost per minute than pooled plans.

Unlimited minute plans surfaced later and rendered the auto-pilot approach unusable. These smorgasbord plans again created the need to monitor monthly usage to determine whether a device should stay on a flat rate plan or be moved to unlimited minutes. There were carriers that minimized a company’s ability to maneuver by forcing minimum overage requirements on flat rate users. The final downside for flat-rate plans is they do not address the increasing need to add data, messaging and international overages to plans.

Wireless Expense Management using Pooling

Pool-centric, monthly monitoring is the most efficient method of wireless expense management. This strategy minimizes carrier invoices and almost always involves using either a technology solution that analyzes your invoice or engaging an expert with appropriate tools. Either way, you are guaranteed that continual monitoring occurs. The biggest decision to be made is whether to engage in an automated solution or hire an expert. Automated solutions are more cost effective than a consultative solution that relies heavily on manpower.

Companies can choose to handle this strategy in-house. However, there will come a point where this is prohibitive as the number of devices to manage becomes quite large. At that point, technology solutions are required. Then another decision is needed. Do you develop in-house or use an already existing solution? The reality is that in-house development is expensive, and there are many good tools available on the market. With the continued use of Cloud technology and Software as a Service (SaaS), companies will find it much more cost effective and significantly easier to implement an existing technology solution to handle wireless expense management.

Wireless Expense Management – Why Optimize?

Tue, 15 May 2012 18:40:00 GMT

Wireless plans have become more complicated over time. As new and advanced features and extensive data plans are more commonplace, the need to pay close attention to wireless expenses becomes more critical.

Some of the complexities now faced by organizations include:

Increased pricing for larger minute blocks.
Fluctuation of usage between employees.
Over and underutilization of plans each month.

Scanning an invoice can provide information regarding the plan usage while looking for high overage charges. However, allocating resources for even a simple scan can be difficult for many companies. In addition, the person scanning has to recognize certain issues that are not always obvious. For example, over utilization costs more, but underutilization still wastes money, so appropriate adjustments are needed to maximize cost savings.

Utilizing technology to perform wireless expense management analysis has provided much-needed relief for many corporations with regard to the tedious nature of “stare and compare” invoice scanning. Unfortunately, the use of technology created other issues. For example, the resulting reports often recommend too much “head room” to prevent overage charges. The downside here is that you risk overprovisioning every device with a big voice plan to implement this strategy.

As a result, pooled plans have popular. While pooling did bring forth a more intelligent system of containing costs, new expenses management challenges associated withdata and text messaging were emerging. Left unmanaged, these two areas became a hot bed of overage charges. On top of this, international charges management became even bigger issue. Again, technology solutions were devised to manage all of these varying but important components.

Unfortunately, even the best technology solution could not provide assistance with the limitations of data pooling. Unlike voice pooling, data pooling is extremely hard to predict. Just one data card with a usage spike can push the entire pool over the limit. In addition, corporate users were not provided the ability to utilize text message pooling, which was reserved for family plans.

The continued changes within the wireless expense management arena create interesting and often intractable challenges for many organizations. The reality is that optimization is a necessary component to manage expenses in a way that is beneficial to the company while providing the best utility for each user.

When It Comes to Wireless Expense Management, What Do Your Carriers Think?

Mon, 07 May 2012 16:46:00 GMT

While you may have a responsive telecom carrier account team who treat you well, they still are in business to maximize the profits they earn from you. Hopefully, your experience with your carrier has been good. Unfortunately, it is possible that your experience has not been a positive one. You may be suspicious of extra charges on an invoice or you do not feel your account team is supporting you. Whatever the case, it is important to understand what motivates carriers in order to understand how to effectively perform internal wireless expense management.

Carriers are under extreme competitive pressure. Couple that with antiquated systems that are too expensive to update easily, and you have a perfect conditions for overbilling. Often carrier account teams are compensated by plans that entice them to push your organization into features and other expenses you do not need. Sales rep compensation plans are focused on recurring charges, not on overages. While it is in the carriers best interest to recommend optimization suggestions, often the teams are ill-equipped to provide good ideas for true wireless cost management.

The Life of a Telecom Carrier

When it comes to providing useful information, it is not unusual for carriers’ internal systems to be ineffective at providing regular, automated reporting. That leaves it to the carriers’ account team to manually create effective reports, which often makes them simplistic. Furthermore, client satisfaction often takes a back seat to revenue generation. After all, there is more money to be made by increasing your device count. While carriers will not stand in the way of you managing your wireless expenses to reduce expenses, they will not typically bring to your attention that you are overpaying unless they fear losing your business.

The bottom line is wireless carriers are not your friend. That being said, they are also not your enemy. Most organizations simply want to pay a fair price. The thought of spending hours determining if you are being overcharged is unpalatable. Plus, carrier invoices are difficult to understand. If you spend some time analyzing your bills, then you are probably catching some of the issues. If you do not spend any time analyzing and rely solely on your carrier’s representative to take care of this for you, your organization is definitely overpaying.

Carriers are in business to make money, and that is fair. However, you must spend time protecting your organization against overbilling, and that takes time and effort on your part. Spending time and effort to engage in some wireless expense management to review invoices and ensure that they are in alignment with your organization’s needs is worthwhile

Want to Save Money? Start With Wireless Expense Management

Thu, 03 May 2012 21:07:00 GMT

A large component of an organization’s wireless expense management process is reviewing expenses on a regular basis. Many organizations, find it is necessary to perform a rigorous evaluation of current wireless expense management processes with an eye on areas that require updating and overhauling. Minimizing the carrier invoices often requires significant internal coordination. While this may seem like a daunting task, it is not unusual for significant savings to be realized from these efforts, often in a short period of time.

There are steps that any organization can take to ensure you are not overpaying for wireless services. These include:

Optimization of plans and features
Elimination of unnecessary features and devices
Identification and removal of billing errors
Identification and control of excessive spenders

Whether your organization spends significant time and energy managing wireless carrier expenses or not, there are often large savings that can be realized by performing a gap analysis. Typically, employees come and go, leaving the task of overhauling a carrier bill to someone who may or may not have access to the right information. Furthermore, policies change based on new features and staff needs. By performing a gap analysis, you will uncover savings that will not only save you money in the short term, but make you aware of issues to flag for future reference. This will keep your carrier invoices at a reasonable level and ensure you have a system for wireless expense management.

In upcoming posts, we will provide several activities that make up a solid gap analysis. These activities will ensure that you have a not only performed a solid analysis of your carrier invoices, but also create a system for providing ongoing reviews. Your organization will receive the best benefits from your carrier relationship while optimizing your plans for maximum savings. Our upcoming posts will include information on Wireless Expense Management Optimization, the best tips for Pooling, Feature Optimization and Identifying Billing Errors. This series will ensure you have a solid plan for reviewing your carrier invoices and improving your return on investment.

Overview of Different Methods of Allocating a Wireless Pool Plan

Thu, 29 Sep 2011 19:58:00 GMT

There are several ways a wireless expense manager can allocate the cost of the pool plan to different cost centers.

Average per line. With this method, you simply add the total monthly recurring and peak charges and average per each line in the pool plan.

100% Cost per Minute. With this method you take the total monthly recurring and peak charges and divide by the peak (non-mobile-to-mobile) minutes to derive a cost per minute. Then you allocate the pool costs by charging each user the cost per minute times their peak usage. Users with zero peak usage in that month should be charged nothing for the voice component. Of course, if they only made text or data charges, those costs would be directly allocated to the individual and not averaged in the pool.
Base Plus Cost per Minute. This method is a hybrid of methods 1. and 2. Here you would allocate a base charge (say $39) to all users in the pool. This is the cost to have the potential benefits of a cell phone, regardless of how much you use it. Any excess costs (pool monthly and peak charges) above the base charge times the number of users is converted to a cost per minute. Thus, each user is allocated a base plus the cost per minute times their peak minute usage.
Everyone Gets Unlimited. While this may not be the most cost effective option, it does simplify order, administration, and monitoring. If your company is large enough, you might be able to negotiate the unlimited plans down to $89/line.

If you need help with your wireless expense management, contact us today or call us at 877-219-8012

Switching from Individual Wireless Plans to a Wireless Pool Plan

Thu, 29 Sep 2011 19:55:00 GMT

You would think that it would be easy to get approval from senior management to migrate to a pool plan to reduce wireless expenses. This is not always the case. Migration can become a complex and contentious issue when there are multiple cost centers. Cost center managers that have low usage individual lines do not want to subsidize the high usage cost centers that share the pool. For example, cost center 1 has 10 users on the lowest individual plan of 450 minutes (at $39/line) and cost center 2 and 10 users on the highest individual plans of 2,000 minutes (at $89/line). So the total pool size needed is 24,500 minutes for an average of 1,225 per user. The closest plan that the carrier has is 1,500 minutes so you put all 20 users on the 1500 minute plan (at $59 per line). Cost center 1’s cost has gone up $190 in the pool even though the company reduces wireless expenses and saves $100 ($1,280-$1,180).

In my next post on wireless expense management, I will explore different ways you can allocate a pool plan.

Choosing the Right Size Wireless Pool Plan for Your Users

Thu, 22 Sep 2011 19:15:00 GMT

As a manager with responsibility for Wireless Expense Management you may be challenged with converting individual plans to pool plans. If you do some analysis, you can see that it is possible to reduce mobile phone expenses by a significant amount by simply placing all of the lines into an optimal pool plan.

There is another benefit of the pool plans. The number of minutes an employee uses in a given month can vary by as much as 100%, especially if the individual occasionally travels. However, with all the users on a pool plan, the total usage usually doesn’t vary by more than 10%. Obviously, the larger the pool, the less the monthly variance will be. Therefore it is much easier to monitor and manage a pool plan rather than individual plans. If you manage your pool using a manual process or a spreadsheet, we think the optimal pool size is one that gives you about a 20% buffer over your average monthly usage. If you use a Wireless Expense Management solution, you can save money by reducing the number of minutes in your pool to give yourself a 10% buffer

Once you decide on the cost allocation methodology, the next step is to determine the monthly process to monthly monitor the pool plans and implement the cost allocation methodology. I’ll discuss some ideas regarding this in my next post on Wireless Expense Management.

Handset Insurance for Company Liable Mobile Devices: A High-Cost Product with Low Expected Value

Thu, 18 Aug 2011 14:52:00 GMT

In my last post on this subject, I provided some background information on wireless handset insurance and discussed the hidden terms and conditions associated with these products that make them unattractive.

Now, because we are in wireless expense management business, let’s do some math. The biggest risk we can manage with Handset Insurance is the cost of a new phone with no upgrade; let’s say that’s $250. To manage that risk, we pay an average monthly premium of $6 per month and a deductible of $89 in the event of a loss. After a device life of 12 months, the net value of the risk we have managed is marginal; $250-((12*$6) + $89) or just $89. Assuming a device life of 24 months, the net value of handset insurance is even less attractive; as $250-((24*$6) + $89) is just $17.

There’s an old truism that states one should buy insurance to protect against catastrophic loss and self insure less significant risks. If spending $250 to replace a smartphone represents a potentially catastrophic loss to you, go ahead and buy wireless handset insurance. For most business wireless expense managers, replacing a smartphone is a nominal risk that makes better financial sense to self insure.

Handset Insurance for Company Liable Mobile Devices: An Expensive Way to Manage a Small Risk

Thu, 18 Aug 2011 14:50:00 GMT

Almost everyone has had the experience of buying an expensive piece of technology like a smart phone, laptop or even a refrigerator and being asked at checkout if we would like to buy some sort of insurance for our new purchase. The sales rep who is working with us can earn a big commission on this “upsell” and may pressure us into making a snap decision. We don’t have a lot of information about the potential risks to our new purchase or the economic value of those risks. We might be nervous about how our new acquisition is going to work out and the sales rep is offering an inexpensive-sounding solution to assuage our anxiety. It’s tempting to buy handset insurance for wireless devices, but it’s almost never a good deal, especially not for company liable mobile devices that are part of a wireless expense management program.

Before we dig into the economics, let’s review some background information about wireless handset insurance. The top four US wireless providers all have different names for the product, but the underlining carrier is always the same: Asurion. This company stays under the radar but insures millions of wireless handsets around the world. Wireless carriers charge between $5 to $12 per month for handset insurance, depending on the model of phone and the level of coverage. Insured users are covered if their phone is lost, damaged, or destroyed. Wireless carriers tend not to over advertise two important aspects of the wireless handset insurance coverage they offer. First, many claims are subject to a substantial deductible, sometimes as high as $89. Secondly, carriers fulfill customer claims with used, refurbished equipment. The average market retail price for a used, refurbished handset is $100.

In my next post on the subject of wireless expense management, I’ll do the analysis to show the poor expected net value of buying wireless handset insurance.

Loss of Company-Owned Mobile Devices: Company Data Security

Wed, 10 Aug 2011 16:04:00 GMT

The use of mobile devices increases the risk of loss of company data. This risk can be mitigated by using company liable mobile devices and following two practices. First, the company should maintain an accurate and updated inventory of all company-owned mobile devices along with each device’s user assignment. This is usually done as part of a telecom expense management process. Second, the company should acquire the capability to remotely “wipe” or disable and delete all data from lost or stolen mobile devices.

Loss of Company-Owned Mobile Devices: Personnel Data Security

The use of mobile devices also increases the risk of loss of private data belonging to employees. An example of this type of loss could involve a human resources manager who loses a mobile device that contains company personnel data, such as employee tax identification numbers or medical information. If this type of loss occurs, we recommend employers notify employees immediately. Here again, the employer can mitigate risk by implementing wireless expense management and maintaining an accurate inventory of mobile devices and corresponding user assignments, along with the capability to remotely “wipe” mobile devices.

Mobile Devices and Enterprise Network Security and Performance

In addition to the risks discussed above, the use of mobile devices introduces vulnerabilities and potential performance issues into an enterprise’s network. Network security risks increase exponentially as an organization adopts mobile devices with e-mail and internet browsing capabilities, as a portfolio of such devices provides numerous attractive access points into a company’s network for viruses and hackers. Telecom and IT managers must ensure that appropriate security measures are deployed to drive down risks as far as possible. Highly effective tools to manage risk include data encryption, firewalls, virus protection and the use of passwords.

It is very easy for employees to download applications onto company-owned smart phones, PDAs or mobile data devices. Some of these applications may create security risks or create network bandwidth bottlenecks. Employees should agree not to download software that is not approved by the company onto company-owned devices. Your service provider may provide utilities that prevent users from downloading unauthorized software or content.

Again, the employer can mitigate these risks by implementing wireless expense management maintaining an accurate inventory of mobile devices and corresponding user assignments, along with the capability to remotely “wipe” mobile devices. It is not good practice for the company to rely on wireless service providers to maintain this device and user assignment inventory, as it must be accurate and available at a moment’s notice.

My next post on the topic of wireless expense management will discuss the implications of employee use of company-liable wireless services.

Negotiating a Minimum Annual Revenue Commitment and Avoiding an Exclusivity Clause

Wed, 10 Aug 2011 15:56:00 GMT

When you are negotiating your telecom contract, you should set your negotiation goal to be a Minimum Annual Revenue Commitment (MARC) that is 60% to 70% of the total annual spend with a telecom supplier. Your account rep will suggest that he or she can offer lower rates in exchange for a higher MARC. The truth is that, with larger dollar volume telecom contracts, there is very little correlation between rates and the level of MARC.

Define all services and fees that contribute to the MARC and try to get as many charges as possible to contribute. Your agreement should specify that services being used by new businesses or acquisitions will contribute towards your MARC.

Do not commit to using one supplier exclusively. You want to be able to move some services to another supplier during the term of the contract to exert leverage, if necessary. Avoid language that requires you to prove you are giving a certain percentage of your business to any carrier.

In my next post on the topic of telecom expense management and negotiating a great telecom contract, I will write about the so called “regulatory fees” telecom carriers use to pad their profits.

In my next post on the topic of telecom expense management and negotiating a great telecom contract, I will write about selecting an optimal agreement term and include a business downturn and business divestiture clause.

Telecom Contract Negotiation Tips

Wed, 10 Aug 2011 15:50:00 GMT

In addition to the subject matter-specific information I provided about negotiating a better telecom contract, we offer the following general negotiating tips:

Begin sourcing services 8-12 months before you need them so you don’t negotiate with your back against the wall.
If you do have a deadline coming up, don’t disclose it to the seller.
Understand what you need in great detail (this is the hardest and most time consuming part!).
Get quotes from multiple carriers to understand the market rates for the services you are sourcing.
Make a prioritized list of deal points to be negotiated. Be sure to include some items you can concede because they are not important to you.
Offer a justification for every negotiating position you take.
There is tremendous power in patience. Always tell the seller you do not have sole decision-making authority. This creates the perception of “institutionalized” patience.
“Silence is Golden.”
Never make two consecutive concessions to the seller. You can’t negotiate with yourself and obtain a favorable outcome.
It is easier to negotiate with friends than with adversaries.
Nobody likes to be made to look stupid.
Ask for additional small but important concessions from the seller at the end of the negotiating process as a condition of closing the deal.

Negotiating Billing Terms of a Telecom Contract

Wed, 10 Aug 2011 15:41:00 GMT

A significant source of gross profit for telecom carriers is late payment fees. Carriers often set unreasonably short payment intervals that begin at their invoice date. They then take their time mailing their monthly invoice to you. As a result, many customers receive their invoices with less than two weeks to process them and remit payments. When customers are not able to process invoices this quickly, carriers charge them late payment fees of as much as 6.5% of the unpaid balance!

Your goal should be to get the carrier to waive late payment fees. This goal is very hard to achieve, as there is a time value of money and businesses typically do not extend free credit to each other. If your carrier will not waive late payment fees, see if they will agree to extend the payment interval to something your accounts payable process can make every month, like 45 days. You can also ask your carrier to specify that their payment interval begins on a date you can verify; such as the date you receive their invoice. Do not put yourself at the mercy of the carrier’s inefficient invoicing process. It can be expensive!

Two carriers we know of try to include language in their agreements that limits the amount of credits or refunds they will provide for billing errors to the most recent six months’ overcharges. We recommend rejecting this type of limitation for obvious reasons. Additionally, these limits are not competitive and they signal that the carrier has low confidence in the accuracy of its provisioning and billing processes.

If you plan to implement a telecom expense management solution during the term of the contract you may want to ask the carrier to specify if they offer invoices in Electronic Data Interchange (EDI) format.

In my next post on the topic of telecom expense management and negotiating a great telecom contract, I will write about some great negotiating tips.

Refresh Technology on Your Terms, Not the Supplier’s.

Wed, 10 Aug 2011 15:33:00 GMT

When negotiating a telecom contract, you should consider including a technology refresh clause. Technology refresh clauses address the risk that the lower-priced future technology could replace the existing higher-priced technology you currently use during the term of the term of the contract. You should negotiate a commitment from your supplier to upgrade you to future technology at no charge and reduce your minimum annual revenue commitment to reflect lower prices.

You should avoid giving your suppliers the right to migrate your services to a different technology at their discretion. As an example, in the recent past, many carriers attempted to commit customers to migrating from their existing Frame Relay networks to MPLS networks. You want to reserve the right to reject technology changes that create possible compatibility issues or impose significant additional costs.

In my next post on the topic of telecom expense management and negotiating a great telecom contract, I will write about including a technology refresh clause in your contract.

Selecting an Optimal Agreement Term

Wed, 10 Aug 2011 15:22:00 GMT

When negotiating a telecom contract It is our opinion that, in most instances, the ideal term length is 36 months. With longer contract term lengths, you risk being locked into a contract as your business changes, as the market rates for the services you use drop, or as technology changes to your potential benefit. For shorter term lengths, carriers will typically not waive installation fees and only offer higher rates.

Your carrier agreement should state that at the end of the term, the contact will continue on a month-to-month basis with no change in rates. Your goal should be to avoid the inclusion of an auto renewal clause in your contract. If you cannot achieve this goal, your “fall back” position might be to include an auto renewal clause that limits each renewal term to one year and requires the carriers to provide 180 day notification of an impending auto renewal according to the terms of the notifications clause in the agreement.

All telecom contracts should include a business downturn and business divestiture clause. A business downturn clause stipulates that the supplier will renegotiate the agreement’s volume or revenue commitment if an unforeseen reduction in the customer’s revenue occurs. A business divestiture clause stipulates that the supplier will renegotiate the agreement’s volume or revenue commitment if the customer’s need for services is reduced due to sale or divestiture of a subsidiary, affiliate or operating unit that uses services provided under the agreement.

In my next post on the topic of telecom expense management and negotiating a great telecom contract, I will write about including a technology refresh clause in your contract.