Wireless Expense Management: New Priorities for Today s Challenges

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1 A Nielsen study found that mobile calls peaked in 2007; mobile data communications have passed voice communications. The use of data is rapidly growing as businesses leverage applications that use GPS and other capabilities from new wireless technology and growing processing power in smartphones. These new applications for wireless services are contributing to increases in employee productivity, but they come with a significant cost. This report will provide some cost saving measures that managers can implement to reduce their wireless expenses. Copyright 2010 Telesoft

2 Table of Contents Introduction... 3 Asset Management for Wireless Services... 3 Optimization... 4 Audit... 5 Directory Assistance Charges... 6 Accountability... 6 International Expenses... 7 Educate International Travelers... 8 Implement a Pool of Loaner Devices... 8 Utilize SIM Cards... 8 Use Technology... 8 Conclusion... 9 Next Steps Free Telecom Cost Savings Analysis Page 2

3 Introduction The latest earnings reports from telecom carriers show they are reaping gains with significant earnings growth on wireless services. When telecom carriers fastest growing source of revenue is wireless services, it is also sure to be one of the fastest growing expenses for enterprises. In these uncertain times, budgets are tight, but employee expectations for wireless services are high. New smartphones that use wireless technology have driven these high expectations. This new technology encourages employees to consume more services, and the impact to corporate budgets is just beginning. This report is written for managers that must deal with the pressures of rising consumption of wireless services and demands to cut the telecom budget. It will show you how to cut spending while providing more services to your employees through better asset management, optimization of service plans, and improved accountability for expenses. Asset Management for Wireless Services Asset management and control procedures are the foundation to manging wireless expenses. Maintaining an accurate inventory of these mobile devices and the services that employees use is critical for expense management. Unfortunately, the very nature of mobile devices, used outside the traditional four walls of the corporate workplace, makes it difficult for enterprises to maintain an accurate, up-to-date, and comprehensive inventory. With recent staff reductions, from the most recent economic down turn, many organizations find that the inventory of wireless devices holds the key to the most important areas for savings on wireless services. Identifying service plans with no use and wireless bills that continue to be paid for former employees will drive significant savings. Questions to ask yourself are:» Do you have a good process to ensure that you are no longer paying bills for employees that take the device with them?» Do you always disconnect service plans when employees leave your company? It is critical to determine when the contract ends for these abandoned plans because contracts for wireless services usually have steep penalties for early cancellation. One approach to avoid early termination fees is through suspending the services instead of canceling them. Suspended plans can be assigned to new employees. The challenge in implementing this tip is that it requires an accurate, up-to-date inventory of devices and contracts. Page 3

4 Develop an Inventory of All Company-Paid Devices There are four places to start in creating an inventory of all corporate paid devices:» Human Resources can provide a listing of all current employees» Accounts Payable should have a list of all mobile service providers that receive payments and employees that submit an expense report for reimbursement of mobile bills they pay directly» Service Providers can provide an inventory (AT&T refers to this as a Smart Report; other carriers have different names for this report)» Send a memo or to all employees that have a service plan that is directly paid or one where they are reimbursed for expenses, indicating that they must complete a short online form which captures inventory information All of these inputs to develop an inventory provide starting points that need a thorough validation. The inventory should collect the following information:» Employee name» Status working no longer working for firm» Job role/function, department» Mobile phone number» Mobile Service Provider» Plan activation and contract expiration date» Device model number and International Mobile Equipment Identity (IMEI number)» The eligibility date for new hardware that is subsidized or free» Services: voice, data and international use» How the bill is paid (direct by company, reimbursement, stipend) Optimization Most organizations have plans that are not suited to employees actual usage. This means you are paying extra by forfeiting unused minutes each month or paying overage charges for exceeding the monthly allotment of voice or data services. For voice services, organizations usually will find that grouping employees together and buying them a large pool of minutes works better than having each user on their own plan with a fixed bucket of peak minutes. Pools enable organizations to reduce the number of minutes for individual plans to avoid overage charges. In addition, companies are often able to buy pooled minutes at a substantial discount. When developing pools for users, it is important to identify large volume users or pool busters that should be on unlimited plans. These high volume users will have a lower cost-per-minute if they use an unlimited plan rather than being included in a pool with other employees. Managers should also evaluate data plans. Text messages and s are now replacing voice calls. AT&T s has eliminated unlimited data plans for new subscribers after June 7 and Page 4

5 Verizon is also planning to follow this approach. Even if your employees have unlimited plans that are not changing, matching data usage to consumption is more important than ever. Data plans follow a similar approach to voice usage, but there are no distinctions for peak usage, free evenings, and no free weekends. Instead of measuring the minutes consumed, these plans measure data consumption using kilobytes (KB), megabytes (MB), or gigabytes (GB). This makes it difficult for employees to monitor their actual consumption. It takes a bit of extra work and inquiries to get the data from carriers that breakout the data consumption each month for employees that are on unlimited plans. Once you have this information, you will need to determine if employees need unlimited data plans. AT&T said that 98 percent of its smartphone customers use less than 2 gigabytes of data each month. This means that nearly 98 percent of their users are likely to find savings if they were to switch from an unlimited data plan to a less costly plan. There will be a few rare cases where some employees may have some months with low data consumption and other months where the penalties for consuming more than the 2 GM allotment may exceed the savings from being in a less costly plan. Before managers rush to switch all of their employees out of unlimited data plans, they should determine if current consumption patterns will grow to a point where they need unlimited data plans. One of the biggest risks is that most organizations will fail to evaluate their data consumption. The worst outcome would be one in which a company continues to pay extra for unlimited data plans when they are unnecessary and then switches to a limited data plan when employees need plans with bigger allotments for data consumption. Audit Wireless service providers do not produce Customer Service Records (CSRs) so the information to perform audits simply require contracts, terms and conditions, and several monthly bills. Frequently, the number of phones under contract establishes volume discounts. Be sure to verify the dates and number of phones on the account to determine if the discount was applied and calculated properly. Verify that master contracts that consolidate individual users plans are properly applied and that the master contract supersedes all individual contracts. In addition, managers should verify that peak minutes do not include charges for free mobile-to-mobile calls among employees using the same carrier s network, or evening and weekend calls. Duplicate phone records or duplicate phone lines can appear in billing because wireless data is gathered at the base station and duration of calls is pieced together from separate base station records. Sorting lines numerically can help to identify these duplicate line charges. In addition, determine if calculation of charges on bills is in advance or in arrears. If charges Page 5

6 are collected in advance, any changes to service plans should not lead to charges for prorated services. Instead, the prorated charges should appear as credits when there are changes in the service plan. Scrutinize Other Charges Carrier wireless bills contain many additional charges with errors or opportunities for cost avoidance savings. Not all of these items will provide refunds, but here are some areas to investigate for cost avoidance.» Taxes for organizations (state, federal government and reporters often have tax exemptions for mobile charges)» Premium text and content charges» Unauthorized ringtones and application downloads» Text and data plans for users that don t need them» Employees billed for the wrong service plan(s)» Contracts that are not applied to billing» Handset insurance and roadside assistance charges (Managers of corporate plans can often negotiate retroactive credits for handset insurance and roadside assistance charges if they were never used.) An automated system can help to identify erroneous charges each month. Directory Assistance Charges Directory assistance charges can add up quickly. Employees may feel that they do not have time to use a directory or search the internet for a phone number when they are out of the office, but there are ways to obtain directory assistance at no charge. The following numbers offer less costly alternatives.» Goog-411» » FREE-411 Tip sheets and s also can promote the use of these services, but a number of firms have found that the best approach is to pre-program phone numbers into devices. Accountability Organizations can also save money through improving visibility and accountability through expense charge-backs and reporting. Employees will often curb their consumption when they see the costs associated with their wireless service plan. Managers can take this accountability further by using reports to identify outliers that consume more than their peers do. In some cases, these outliers are true road warriors or dynamos driving business, but often these employees are abusing this entitlement. Page 6

7 Reporting from Wireless Expense Management (WEM) solutions provides managers and individuals with visibility into the longest calls, most expensive calls, and biggest spenders by job role. By monitoring employee consumption patterns and service plans, costs for wireless devices, data, and air cards can be optimized automatically flagging opportunities to move employees to the most cost-effective plans each month. Reporting can also help by aggregating wireless spending from multiple accounts with each carrier to gain better leverage to help compare and negotiate the best rates. International Expenses International roaming charges quickly add up and fees are assessed each time a call crosses another country s network. These roaming charges are determined by the service provider's pricing plan and local regulations. Some wireless carriers also charge a separate fee for the establishment of a call. If this flagfall charge cannot be negotiated as part of a contract, organizations should consider using a different wireless carrier. International roaming charges contrast sharply with the nationwide plans offered by wireless carriers with one network in the United States and India that eliminate these fees. The European Commission (EC) is seeking to make the European Union (EU) 27 member countries more competitive with regulations that require mobile carriers to lower their roaming fees. On July 1, 2010, the EC cut the cost of roaming on another carrier s network by approximately 7.5 percent. Now, the maximum price for making a mobile call roaming on another telecom carrier s network will fall from EUR 0.43 to EUR (This would be from 0.54 U.S. to 0.50 U.S.) The cost excludes the Value Added Tax (VAT). Receiving a call will cost at most EUR 0.15 per minute down from EUR 0.19 (This is 0.19 from 0.23 in U.S. currency.) It is also forcing operators to put strong anti-bill shock measures in place. Below are some of the new requirements:» Limits to the price for sending a text message while abroad at (Receiving an SMS in another EU country is free of charge.)» A maximum wholesale cap of 1 per megabyte downloaded to reduce the cost of surfing the web and downloads with a mobile phone while abroad.» A cut-off mechanism once the bill reaches 50, unless users choose another cut-off limit to protect users from bill shocks.» Reductions in prices for mobile roaming calls with a maximum tariff of 0.43 for making a call and 0.19 for receiving one.» Changes that will introduce per-second-billing for calls received and per-secondbilling after the first 30 seconds for calls made.» Subscribers must receive notifications of data roaming charges. Page 7

8 Educate International Travelers Employees should turn off the phone when they are not available. This avoids charges for calls to the handset on the foreign network, and forwarding of the call from the handset back to the domestic voice mail server. Where possible, employees should also avoid downloading attachments using wireless services. It is more cost effective to wait until a LAN or Wi-Fi connection is available. In addition employees devices should be disabled so they do not perform automatic updates to software applications or attempt to perform background synchronization. Disabling applications that automatically connect to the network can help to avoid costly downloads that use the foreign cellular network. Implement a Pool of Loaner Devices Set a corporate policy that requires employees to use a loaner device that has optimized plans for international travel. This can make a big difference in costs for employees that do not regularly travel overseas or those that travel to different countries. These mobile devices can be optimized with reduced calling and data plans for international travel through the selection of mobile providers and service plans. Employees can arrange to have domestic phone calls and forwarded to the loaned device. Utilize SIM Cards Removable country specific Subscriber Identity Module (SIM) cards hold personal identity information, cell phone number, phone book, text messages and other data. It is possible to use a SIM card to switch carriers and continue to use the same phone. The phone must be unlocked, however, and SIM cards must be used with carriers that operate on the Global System for Mobile Communication (GSM) network. Using a third party to provide unlocked GSM phones or SIM cards for employees that have unlocked phones will enable employees to leverage the benefits of a third party aggregator that is able to negotiate large volume discounts for international roaming. Use Technology Implement Fixed Mobile Convergence (FMC) for International Sites FMC technology allows wireless users to seamlessly transfer calls and call features from a cellular network to a WLAN and back using one device, one phone number, and one voice mail. The enterprise specifies the preferred connection type on employees devices such as Wi-Fi preferred over cellular to avoid more costly use of the cellular provider s network reducing roaming charges in locations with Wi-Fi connectivity. It has limitations, and it does not address inbound calling because location information for the device is not available to the home provider to enable call routing. Page 8

9 Conclusion A Wireless Expense Management (WEM) solution can help automate policy compliance through the implementation of business rules. Web-based ordering portals for employees can help manage requests in a consistent manner for new devices and services, upgrades, replacements, and cancellations. Only pre-authorized devices and services should be in the online catalog. Generally mobile carriers do not provide this functionality, but WEM solution providers offer these features. An automated approval process for requests can streamline the approval process and provide opportunities to reinforce policy. In addition, managers should look to automate invoice processing by aggregating invoices and automating labor intensive manual processes of receipt, approval, usage chargeback and bill payment. Expense management functions can often be incorporated into invoice processing functions. This should include auditing of charges to identify potential fraud, misuse of devices, and billing errors. Enterprises should recognize that this is an area where funds are forfeited each month if they do not have a process to efficiently reconcile monthly usage to service plans and quickly implement service plan changes with wireless carriers Finally, reporting can provide managers with detailed and accurate information on telecom expenses, budget tracking and trending in a graphical format. The reporting should tie all of the expense management functions together with information to manage policy governance, sourcing activities, expense control and accountability through usage chargeback to employees. WEM functions can provide significant savings. Managers are often surprised to learn how quickly wireless expenses have grown and the labor-intensive work that is involved in managing these charges. If you do not have the resources, consider outsourcing these functions because the savings from an effective WEM program can pay the costs of outsourcing it. Page 9

10 Next Steps Free Telecom Cost Savings Analysis Telesoft is the trusted partner in Telecom Expense Management (TEM) software and services. For more than 25 years, Telesoft has worked with clients to reduce fixed and mobile telecom spend to improve their bottom lines. Let Telesoft help you uncover savings. In just 30 minutes we will:» Show you how much you can save with telecom expense management.» Pinpoint opportunities to lower your current telecom expenses.» Provide a detailed report showing the savings you can expect in 4 major areas of telecom expense management. Telesoft Corp E. Camelback Road Suite 300 Phoenix, AZ info@telesoft.com Page 10