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Total telecoms expense management - looking beyond cost cutting to gain greater value

Total telecoms expense management - looking beyond cost cutting to gain greater value

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QUOCIRCA INSIGHT REPORT
April 2008
Total telecoms expense management
\u2026looking beyond cost cutting to gain greater value

Voice and data communications are taking up an increasing amount of organisations\u2019 budgets as more information is shared between and across more businesses. Person to person contact now includes richer media, more participants and is becoming increasingly mobile. Historically, telecoms expense manage- ment has focused on the mechanistic processing of bills, payment and costs of individual items. It is too simplistic to make blanket cuts or restrict use and opting for cheap alternatives may lead to a loss of busi- ness value. A better approach is needed for managing telecoms expense, so what best practices should companies adopt to meet their total communications needs and avoid unnecessary costs?

Too much focus on just cutting telecoms costs can lead to a blinkered view
\u2022\ue000

It\ue000is\ue000easier\ue000to\ue000measure\ue000and\ue000manage\ue000those\ue000responsible\ue000for\ue000cost\ue000centres\ue000on\ue000objective\ue000criteria\ue000such\ue000as\ue000meet- ing\ue000or\ue000beating\ue000budget\ue000line\ue000items,\ue000than\ue000assess\ue000an\ue000individuals\u2019\ue000broader\ue000impact\ue000on\ue000value\ue000to\ue000the\ue000organisa- tion.\ue000However,\ue000an\ue000overemphasis\ue000on\ue000targeting\ue000separate\ue000telecoms\ue000costs\ue000means\ue000businesses\ue000run\ue000the\ue000risk\ue000of\ue000 missing\ue000out\ue000on\ue000wider\ue000ef\ue001ciencies\ue000and\ue000bene\ue001ts.\ue000

Reducing expensive line items does not always translate into reducing organisational costs
\u2022\ue000

More\ue000companies\ue000perceive\ue000that\ue000total\ue000mobile\ue000costs\ue000are\ue000rising\ue000even\ue000as\ue000individual\ue000tariffs\ue000are\ue000falling,\ue000citing\ue000 increasing\ue000usage\ue000and\ue000increasing\ue000numbers\ue000of\ue000users.\ue000Restricting\ue000users\ue000or\ue000usage\ue000is\ue000ultimately\ue000ineffective,\ue000 so\ue000growth\ue000needs\ue000to\ue000be\ue000factored\ue000into\ue000planning\ue000and\ue000procurement.\ue000

Lack of consolidation means that individual bills do not re\ue000ect the bigger picture
\u2022\ue000

A\ue000diversity\ue000of\ue000suppliers\ue000and\ue000services\ue000makes\ue000life\ue000complex\ue000to\ue000manage\ue000at\ue000the\ue000contract\ue000level.\ue000This,\ue000and\ue000 variations\ue000in\ue000the\ue000level\ue000of\ue000apportionment\ue000to\ue000cost\ue000centres,\ue000means\ue000that\ue000managers\ue000will\ue000rarely\ue000have\ue000the\ue000full\ue000 set\ue000of\ue000facts\ue000they\ue000need\ue000to\ue000make\ue000accurate\ue000decisions.

Poor cost centre management practices are re\ue000ected elsewhere
\u2022\ue000

Organisations\ue000where\ue000managers\ue000have\ue000complete\ue000visibility\ue000and\ue000take\ue000action\ue000on\ue000discrepancies\ue000or\ue000overruns\ue000 are\ue000likely\ue000to\ue000be\ue000more\ue000proactive\ue000and\ue000regularly\ue000auditing\ue000their\ue000telecoms\ue000needs.\ue000Visibility\ue000and\ue000interest\ue000at\ue000 senior\ue000levels\ue000has\ue000an\ue000impact\ue000on\ue000motivating\ue000those\ue000managing\ue000costs\ue000at\ue000a\ue000lower\ue000level.

Lack of resources is the main challenge to effective telecoms management
\u2022\ue000
Those\ue000companies\ue000with\ue000total\ue000telecoms\ue000spend\ue000of\ue000less\ue000than\ue000\u00a31m\ue000per\ue000year\ue000are\ue000also\ue000limited\ue000by\ue000the\ue000tools\ue000and\ue000
technology\ue000they\ue000have\ue000at\ue000their\ue000disposal.
Personal use of business mobile phones is not always tightly accounted for
\u2022\ue000

For\ue000almost\ue000half\ue000of\ue000businesses,\ue000employees\ue000make\ue000only\ue000a\ue000partial\ue000or\ue000zero\ue000contribution\ue000to\ue000personal\ue000calls\ue000 costs,\ue000and\ue000although\ue000almost\ue000two\ue000thirds\ue000of\ue000organisations\ue000fully\ue000and\ue000accurately\ue000account\ue000for\ue000the\ue000personal\ue000use\ue000 by\ue000their\ue000employees,\ue000the\ue000remainder\ue000are\ue000less\ue000strict.\ue000

The format of billing data does not always support the need for precision and visibility
\u2022\ue000
Fewer\ue000than\ue000half\ue000of\ue000companies\ue000consistently\ue000receive\ue000fully\ue000itemised\ue000electronic\ue000bills,\ue000reducing\ue000the\ue000timeli-
ness\ue000and\ue000visibility\ue000of\ue000information\ue000that\ue000is\ue000necessary\ue000to\ue000impact\ue000employee\ue000behaviour.\ue000
CONCLUSION:\ue000Many\ue000companies\ue000naively\ue000think\ue000they\ue000are\ue000doing\ue000a\ue000reasonable\ue000job\ue000managing\ue000their\ue000tel-

ecoms\ue000 expenses,\ue000 but\ue000 the\ue000 reality\ue000 is\ue000 that\ue000 most\ue000 could\ue000 do\ue000 more\ue000 at\ue000 both\ue000 ends\ue000 of\ue000 the\ue000 problem\u2014usage\ue000 and\ue000 billing.\ue000There\ue000is\ue000a\ue000need\ue000to\ue000focus\ue000on\ue000the\ue000day-to-day\ue000details\ue000to\ue000make\ue000sure\ue000billing,\ue000invoicing\ue000and\ue000payment\ue000 accurately\ue000re\ue002ect\ue000the\ue000services\ue000delivered,\ue000meaning\ue000that\ue000those\ue000with\ue000responsibility\ue000for\ue000costs\ue000understand\ue000their\ue000 impact\ue000and\ue000personal\ue000accountability.\ue000However,\ue000these\ue000details\ue000should\ue000not\ue000drive\ue000the\ue000overall\ue000strategy.\ue000This\ue000 has\ue000to\ue000take\ue000a\ue000broader\ue000corporate\ue000view\ue000rather\ue000than\ue000that\ue000of\ue000individual\ue000\ue001efdoms,\ue000looking\ue000at\ue000the\ue000needs\ue000of\ue000the\ue000 business\ue000and\ue000the\ue000value\ue000and\ue000effectiveness\ue000derived\ue000from\ue000communications,\ue000not\ue000just\ue000the\ue000cost.\ue000Some\ue000con- verged\ue000thinking,\ue000combining\ue000IT\ue000 and\ue000telecoms\ue000budgets\ue000as\ue000 the\ue000technologies\ue000 converge,\ue000will\ue000help,\ue000as\ue000 will\ue000 bringing\ue000in\ue000outside\ue000support\ue000with\ue000rigorous\ue000processes\ue000and\ue000wider\ue000strategic\ue000insight.\ue000This\ue000is\ue000not\ue000a\ue000one\ue000off\ue000 exercise\ue000and,\ue000like\ue000the\ue000careful\ue000regular\ue000accounting\ue000of\ue000budgets,\ue000has\ue000to\ue000take\ue000place\ue000on\ue000a\ue000suf\ue001ciently\ue000frequent\ue000 basis\ue000for\ue000the\ue000organisation\ue000to\ue000properly\ue000manage\ue000and\ue000optimise\ue000its\ue000total\ue000telecommunications\ue000estate.\ue000\ue000

\ue000
Research Note:
The\ue000information\ue000presented\ue000in\ue000
this\ue000report\ue000is\ue000based\ue000on\ue000a\ue000sur-

vey\ue000 of\ue000 120\ue000 organisations\ue000 in\ue000 the\ue000UK.\ue000It\ue000was\ue000completed\ue000in\ue000 February\ue000of\ue0002008.

Those\ue000 surveyed\ue000 included\ue000 organisations\ue000 with\ue000 an\ue000 annual\ue000 total\ue000

telecommunications\ue000 budget\ue000 of\ue000 over\ue000 \u00a3250,000,\ue000 with\ue000 around\ue000 half\ue000 of\ue000 those\ue000 interviewed\ue000 having\ue000 a\ue000 budget\ue000 totalling\ue000over\ue000\u00a31m\ue000per\ue000annum.\ue000 These\ue000budgets\ue000include\ue000mobile\ue000 and\ue000\ue001xed\ue000telephony\ue000as\ue000well\ue000as\ue000 internet\ue000 and\ue000 other\ue000 data\ue000 com- munications\ue000costs.

Quocirca\ue000would\ue000like\ue000to\ue000thank\ue000
all\ue000the\ue000respondents\ue000to\ue000the\ue000sur-
vey\ue000 and\ue000 the\ue000 sponsors\ue000 of\ue000 this\ue000
report.

Contacts:

Rob\ue000Bamforth
Quocirca\ue000Ltd\ue000
Tel\ue000+44\ue0001962\ue000849746

rob.bamforth@quocirca.com

Bob\ue000Tarzey
Quocirca\ue000Ltd
Tel\ue000+44\ue0001753\ue000855794

bob.tarzey@quocirca.com

Matt\ue000Atkinson
AKJ
Tel\ue000+44\ue0001634\ue000673800

Matt.Atkinson@akjl.co.uk

Aldo\ue000Rossi
ttMobiles
Tel\ue000+44\ue0001235\ue000829400

Aldo.Rossi@ttmobiles.com
Total telecoms expense management
Page 2
\u00a9 2008 Quocirca Ltd
April 2008
www.quocirca.com
Contents

Introduction.........................................3 The\ue000inexorable\ue000rise\ue000of\ue000usage\ue000............................3 The\ue000cost\ue000/\ue000value\ue000balancing\ue000act\ue000...........................4 Naivety\ue000and\ue000bad\ue000practice...............................5 Visibility\ue000and\ue000control..................................7 Conclusion\u2014the\ue000need\ue000for\ue000converged\ue000thinking\ue000..............9 Appendix\ue000A:\ue000Interview\ue000sample\ue000distribution................10 References.........................................11 About\ue000Aurora\ue000Kendrick\ue000James\ue000.........................12 About\ue000ttMobiles.....................................13 About\ue000Quocirca\ue000.\ue000.\ue000.\ue000.\ue000.\ue000.\ue000.\ue000.\ue000.\ue000.\ue000.\ue000.\ue000.\ue000.\ue000.\ue000.\ue000.\ue000.\ue000.\ue000.\ue000.\ue000.\ue000.\ue000.\ue000.\ue000.\ue000.\ue000.\ue000.\ue000.\ue000.\ue000.\ue000.\ue000.\ue000.\ue000.\ue000.14

Total telecoms expense management
Page 3
\u00a9 2008 Quocirca Ltd
April 2008
www.quocirca.com
Introduction

This\ue000report\ue000looks\ue000at\ue000the\ue000degree\ue000to\ue000which\ue000today\u2019s\ue000UK\ue000businesses\ue000 adequately\ue000 manage\ue000 their\ue000 total\ue000 telecommunications\ue000 expendi- ture\u2014including\ue000\ue001xed\ue000line\ue000and\ue000mobile\ue000telephony\ue000and\ue000external\ue000 data\ue000communications\u2014and\ue000where\ue000good\ue000practice\ue000is\ue000lacking.

It\ue000is\ue000intended\ue000to\ue000be\ue000read\ue000by\ue000those\ue000who\ue000carry\ue000out\ue000this\ue000task\ue000in\ue000their\ue000 own\ue000 organisation,\ue000 and\ue000 those\ue000 who\ue000 are\ue000 looking\ue000 to\ue000 see\ue000 how\ue000 to\ue000 get\ue000the\ue000best\ue000value\ue000out\ue000of\ue000telecommunications\ue000right\ue000across\ue000their\ue000 business,\ue000rather\ue000than\ue000it\ue000simply\ue000being\ue000seen\ue000as\ue000a\ue000cost.

The\ue000research\ue000behind\ue000this\ue000report\ue000involved\ue000interviews\ue000with\ue000120\ue000 UK-based\ue000 senior\ue000 managers\ue000 with\ue000 operational\ue000 or\ue000 commercial\ue000 responsibility\ue000 for\ue000 telecommunications\ue000 in\ue000 organisations\ue000 with\ue000 annual\ue000total\ue000telecoms\ue000budgets\ue000of\ue000over\ue000\u00a3250,000.

Quocirca\ue000would\ue000like\ue000to\ue000thank\ue000all\ue000the\ue000participants\ue000for\ue000their\ue000time\ue000 to\ue000take\ue000part\ue000in\ue000the\ue000telephone\ue000interviews\ue000from\ue000which\ue000the\ue000data\ue000 for\ue000this\ue000research\ue000was\ue000derived.\ue000Without\ue000their\ue000participation\ue000such\ue000 reports\ue000would\ue000not\ue000be\ue000possible.

The inexorable rise of usage

The\ue000 use\ue000 of\ue000 sophisticated\ue000 information\ue000 technology\ue000 has\ue000 spread\ue000 from\ue000smallish\ue000numbers\ue000of\ue000isolated\ue000powerful\ue000computers\ue000to\ue000per- vasive\ue000information\ue000and\ue000access\ue000to\ue000applications\ue000almost\ue000anywhere\ue000 through\ue000open\ue000and\ue000interoperable\ue000standards.\ue000At\ue000the\ue000same\ue000time,\ue000 telecommunications\ue000capabilities\ue000have\ue000grown\ue000in\ue000speed,\ue000capac- ity\ue000 and\ue000 reach,\ue000 including\ue000 high\ue000 bandwidth\ue000 \ue001xed\ue000 and\ue000 low\ue000 cost\ue000 mobile\ue000 networks,\ue000 bringing\ue000 voice\ue000 and\ue000 data\ue000 communications\ue000 everywhere.

The\ue000IT\ue000and\ue000telecoms\ue000industries\ue000have\ue000\u2018collided\u2019\ue000with\ue000a\ue000conver- gence\ue000around\ue000open\ue000standards,\ue000and\ue000this\ue000has\ue000increased\ue000the\ue000avail- ability\ue000and\ue000use\ue000of\ue000technology\ue000for\ue000both\ue000consumer\ue000and\ue000business\ue000 purposes.\ue000 Each\ue000 feed\ue000 off\ue000 the\ue000 other.\ue000Where\ue000 once\ue000 the\ue000 business\ue000 world\ue000led\ue000with\ue000concepts\ue000that\ue000then\ue000emerged\ue000into\ue000the\ue000consumer\ue000 marketplace,\ue000now\ue000the\ue000reverse\ue000is\ue000more\ue000often\ue000true.\ue000All\ue000this\ue000makes\ue000 the\ue000 business\ue000 of\ue000 managing\ue000 an\ue000 organisation\u2019s\ue000 communications\ue000 needs\u2014voice,\ue000data,\ue000\ue001xed,\ue000mobile\u2014more\ue000complex\ue000as\ue000a\ue000whole\ue000 set\ue000of\ue000different\ue000technologies\ue000merge.

Depending\ue000on\ue000their\ue000job\ue000role,\ue000many\ue000employees\ue000have\ue000come\ue000to\ue000 expect\ue000to\ue000use\ue000some\ue000form\ue000of\ue000mobile\ue000or\ue000remote\ue000access\ue000device\u2014 phone\ue000and/or\ue000laptop\u2014and\ue000some\ue000form\ue000of\ue000network\ue000connection.\ue000 Whether\ue000provided\ue000by\ue000the\ue000employee\ue000or\ue000the\ue000business,\ue000the\ue000mobile\ue000 phone\ue000has\ue000become\ue000an\ue000important\ue000part\ue000of\ue000many\ue000people\u2019s\ue000lives\ue000 and\ue000has\ue000become\ue000a\ue000very\ue000useful\ue000business\ue000tool.\ue000Also\ue000the\ue000number\ue000 of\ue000mobile\ue000users\ue000continues\ue000to\ue000grow\ue000(Figure\ue0001).

The\ue000initially\ue000simple\ue000proposition\ue000of\ue000providing\ue000a\ue000mobile\ue000phone\ue000 on\ue000a\ue000corporate\ue000tariff\ue000is\ue000now\ue000more\ue000complex\ue000as\ue000individuals\ue000have\ue000 their\ue000 own\ue000 personal\ue000 preferences,\ue000 styles\ue000 and\ue000 usage\ue000 criteria\ue000 for\ue000 mobile\ue000phones.\ue000The\ue000business-supplied\ue000mobile\ue000phone\ue000has\ue000also\ue000 at\ue000times\ue000necessitated\ue000a\ue000more\ue000intricate\ue000sharing\ue000of\ue000costs\ue000between\ue000

employee,\ue000employer\ue000and\ue000taxman\ue000as\ue000the\ue000line\ue000between\ue000personal\ue000
and\ue000work\ue000use\ue000blurs.

Remote\ue000access\ue000to\ue000IT\ue000increases\ue000this\ue000complexity.\ue000Whilst\ue000remote\ue000 working\ue000once\ue000might\ue000have\ue000involved\ue000a\ue000hotel\ue000network\ue000connection\ue000 for\ue000a\ue000road\ue000warrior\u2019s\ue000laptop\ue000to\ue000dial\ue000in\ue000to\ue000read\ue000email,\ue000it\ue000is\ue000now\ue000far\ue000 more\ue000likely\ue000to\ue000encompass\ue000other,\ue000faster\ue000forms\ue000of\ue000connection\ue000and\ue000 other\ue000locations,\ue000in\ue000particular\ue000the\ue000home\ue000(Figure\ue0002).1

This\ue000 further\ue000 blurs\ue000 the\ue000 divide\ue000 between\ue000 personal\ue000 and\ue000 business\ue000 use,\ue000especially\ue000if\ue000an\ue000employee\ue000is\ue000regularly\ue000expected\ue000to\ue000work\ue000 in\ue000diverse\ue000locations,\ue000whilst\ue000still\ue000remaining\ue000in\ue000an\ue000environment\ue000 controlled\ue000 and\ue000 secured\ue000 by\ue000 the\ue000 IT\ue000 department.\ue000 The\ue000 remote\ue000 employee\ue000might\ue000be\ue000using\ue000other\ue000business-critical\ue000applications\ue000 in\ue000addition\ue000to\ue000email,\ue000or\ue000they\ue000may\ue000be\ue000using\ue000IP\ue000telephony\ue000bridged\ue000 into\ue000 the\ue000 corporate\ue000 PBX\ue000 to\ue000 appear\ue000 like\ue000 any\ue000 other\ue000 extension,\ue000 even\ue000when\ue000working\ue000from\ue000home,\ue000therefore\ue000increasing\ue000the\ue000need\ue000 for\ue000quality\ue000and\ue000security\ue000controls.\ue000

Even\ue000 within\ue000 the\ue000 of\ue001ce\ue000 there\ue000 are\ue000 new\ue000 applications\ue000 to\ue000 make\ue000 further\ue000use\ue000of\ue000the\ue000available\ue000communications\ue000facilities,\ue000and\ue000to\ue000 enhance\ue000the\ue000simpler\ue000methods\ue000of\ue000communication,\ue000such\ue000as\ue000basic\ue000 phone\ue000calls\ue000or\ue000text-based\ue000email\ue000messages\ue000with\ue000richer\ue000content\ue000 and\ue000increased\ue000interactivity.\ue000This\ue000is,\ue000in\ue000part,\ue000also\ue000driven\ue000by\ue000the\ue000 needs\ue000and\ue000requests\ue000of\ue000end\ue000users\ue000(Figure\ue0003).2

All\ue000 sorts\ue000 of\ue000 collaborative\ue000 tools\ue000 are\ue000 used\ue000 by\ue000 consumers\ue000 for\ue000 social\ue000 interaction,\ue000 either\ue000 by\ue000 phoning\ue000 or\ue000 texting\ue000 their\ue000 friends\ue000 and\ue000family\ue000via\ue000a\ue000mobile\ue000phone\ue000or\ue000sharing\ue000photographs\ue000and\ue000vid- eos\ue000on\ue000the\ue000internet\ue000with\ue000increasingly\ue000large\ue000social\ue000groupings\ue000of\ue000 \u2018friends\u2019\ue000and\ue000network\ue000contacts.\ue000This\ue000widespread\ue000use\ue000makes\ue000it\ue000 inevitable\ue000that\ue000these\ue000consumer-friendly\ue000technologies\ue000will\ue000also\ue000 move\ue000into\ue000the\ue000workplace\ue000(Figure\ue0004).2

As\ue000they\ue000do,\ue000the\ue000communications\ue000managers\ue000in\ue000every\ue000organisa- tion\ue000will\ue000be\ue000faced\ue000with\ue000more\ue000users,\ue000mechanisms\ue000and\ue000messages\ue000 clamouring\ue000for\ue000capacity\ue000in\ue000the\ue000network.

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