TELECOMS Expense management. Considerations for Large Enterprises Operating in South Africa

Transcription

1 TELECOMS Expense Considerations for Large Enterprises Operating in South Africa JANUARY 2013

2 CONTACT NEBULA SOUTH AFRICA WESTERN CAPE Tel: +27 (0) Fax: +27 (0) Address: 1 Ceres Road Milnerton 7441 Postal: po Box 227 Century City info@nebula.co.za GAUTENG Tel: +27 (0) Fax: +27 (0) Address: Eco Fusion 6, Block B Unit Witch-Hazel Street highveld Techno Park Centurion 0165 Postal: postnet Suite 43 private Bag X108 Centurion info@nebula.co.za LEGAL DISCLAIMER Article content is not intended to answer specific questions or suggest suitability of action in a particular case. Comments or questions about the article may be directed to the author at insight@nebula.co.za. ii NEBULA :: telecoms expense Considerations for Large Enterprises Operating in South Africa

3 CONTENT SECTIONS INTRODUCTION...page 02 Significance of for large enterprises...page 02 EXPENSE DRIVERS AND MANAGEMENT CHALLENGES...page 03 Telecoms expense areas and drivers...page 03 Telecoms expense challenges...page 05 MANAGEMENT FUNCTIONS AND OPERATING MODELS... page 06 Telecoms expense functions...page 06 Telecoms expense operating models...page 07 SYSTEMS, TOOLS and PROCESSES... page 09 Tools and systems for TEM...page 09 Processes and activities... page 12 ENABLING TELECOMS EXPENSE MANAGEMENT...page 13 What this means for large enterprises... page 13 FEASIBILITY AND BUSINESS ENABLEMENT...page 17 telecoms expense Considerations for Large Enterprises Operating in South Africa :: NEBULA 1

4 INTRODUCTION SIGNIFICANCE FOR LARGE ENTERPRISES As modern business strategies drive communication and data needs, telecommunications costs in large enterprises are growing at least at the same rate of company growth, and in many cases faster. Drivers for this growth include: Organic growth of large enterprises with increasing numbers of stores or branches including African expansion Increase in multi-channel requirements for sales, customer services and field services operations Significant growth in volumes of data that can be collected, thereby affecting data storage, data security and business intelligence needs Increasing demand from employees, suppliers, customers and partners to communicate with a wide range of non-standardised devices (computers, tablets, phones) Changes in the underlying IT infrastructure platforms driven by unified communications and cloud initiatives While the size of the expense item is significant in relation to other indirect expenses, the business value of managing telecommunications services and expenses in a disciplined manner translates to productivity benefits in business processes that are Telecoms Expense Size Telecoms Expense Size Business Process Dependency Business Process Dependency Strategic Significance of Telecommunications Expense Management (TEM) Strategic Significance of Telecommunications Expense Management (TEM) highly dependent on voice or data services (both fixed and mobile). There is therefore an undeniable benefit for large enterprises to invest some time in understanding the significance of telecommunications expenses, what makes them up, and the practices and tools that can improve their value to the business. Significance of Significance TEM of TEM Expense size Expense size Business Business process impact process impact Maturity of Maturity of practises practises Expense Drivers Expense Drivers User volumes User volumes Services Services Business activity Business activity volumes volumes Service levels Service levels Good Practise Good Practise Demand Expense IT Supplier Tools Demand Expense IT Supplier Tools 2 NEBULA :: telecoms expense Considerations for Large Enterprises Operating in South Africa

5 EXPENSE DRIVERS AND MANAGEMENT CHALLENGES TELECOMMUNICATIONS EXPENSE AREAS AND DRIVERS Telecommunications expenses constitute both fixed and variable expenses and are usually based on one or more of the following telecommunications expense drivers: Volume of end points needing access to services (users / clients, sites, devices, etc.) Range of applications, functionalities and services available to end-point users, clients, devices, etc. Transport of transactions or services over a mobile, wireless or fixed network Central hosting and availability guarantees for services, applications and functionalities Performance levels of services from cloud over network to enduser or device Volume usage of those services Accurately matching the needs of the business with the correct fit of telecommunications service types, service volumes and service levels will have a big impact on the efficiency of your telecommunications expenses. Service types and classes Volume of end-users Volume of end-devices Service types and classes Service levels Service volumes Call centre agents Mobile employees POS or ATM s Service types and classes Outbound calls / fixed voice / mobile / data Sales Transactions / data bandwidth Volume of end-users Call quality Transaction speed Availability Responsiveness Volume of end-devices Service types and classes Calls Transactions Service levels Understand Baseline profile Service and price catalogue User and usage profile Building insight into how these costs are constructed will start the process that will lead to improved POS or ATM s Sales Transactions capability of / data bandwidth this important expense item. The resultant understanding of how these costs are made up is an important foundation to govern the of telecommunications and the optimisation of Manage telecommunications Optimise services and costs. Procure Implement Support Report Standards Capacity Redundant services Call centre agents Mobile employees Outbound calls / fixed voice / mobile / data Call quality Transaction speed Availability Responsiveness Understand Baseline profile Service and price catalogue User and usage profile Manage Procure Implement Support Report Optimise Standards Capacity Redundant services telecoms expense Considerations for Large Enterprises Operating in South Africa :: NEBULA 3

6 EXPENSE DRIVERS AND MANAGEMENT CHALLENGES Below are more examples of the types of services and costs drivers for various enterprise telecommunications services: Telecoms Expense Area Cost Drivers Number of internal users Number of fixed locations Fixed voice access Number of clients, partners, suppliers, etc. Number of inbound and outbound calls Number of inbound and outbound fixed channels or access points Fixed voice calls Volume of calls by process sales, campaigns, customer services, back-office, etc. Number of wireless access areas and users Number of mobile connected devices and users Mobile or wireless access Available services and performance levels for those services Mobile voice users Mobile data users Mobile voice and data Number of business processes or channels and bundle subscriptions volume of mobile calls by process Number of mobile applications and data usage by services (e.g. , hosted applications) Number of sites Fixed data access Data types, data volumes and performance needs of data Number and location of sites Wide area network Performance and availability service levels Traffic and optimisation needs Cloud services driven by volume of users and Data centres and hosting services consumption services Numbers of servers, applications and users Availability and performance service levels Contact centres, unified communications, PBXs, Voice and gateways, IP telephony, extensions, handsets communications services Driven by volume of channels, services by channel, volumes of users and usage by channel Developing and maintaining an accurate and up-to-date baseline profile of your telecommunications environment is an important building block for improving your ability to understand, manage and optimise these expenses. Telecommunications Baseline Profile Users Devices Services Catalogue Services Consumption Profile Service Levels Voice Pricing Data Understand Baseline profile Forecast growth Forecast usage Forecast expenses Manage Set budget Determine standards Optimise Implement controls and optimisation initiatives 4 NEBULA :: telecoms expense Considerations for Large Enterprises Operating in South Africa

7 EXPENSE DRIVERS AND MANAGEMENT CHALLENGES TELECOMS EXPENSE MANAGEMENT CHALLENGES The primary challenges in managing telecommunications expenses firstly include understanding the current baseline of services and usage, and the planned levels of business activity that are going to drive telecommunications services. Some of the challenges that exist in these practice areas, together with example recommendations for these challenges, are as follows: Challenge Forecasting growth Required Management Insight and Capability Baseline Business activity volumes Services & service levels Users / devices / sites Service usage volumes Recommendations Develop a solid baseline of services and expenses Work closely with business to understand their future activity levels Forecasting budget Service and expense and optimisation Service Costs Unit prices and volumes Tiered pricing Volume discounts Service levels Price escalation Contractual periods Benchmarking Service efficiency Usage and demand Service level Expense reconciliation and assurance Telecommunications Baseline Profile Users Devices Services Catalogue Benchmarking Services Understand the pricing mechanisms for all services from incumbent providers Benchmark prices and pricing mechanisms in the market Develop efficiency and usage standards Reconcile costs against pricing, usage standards and efficiency standards Consumption Profile Understanding Service and Levels predicting future usage allows enterprises to more confidently negotiate volume and term Voice pricing discounts Data with suppliers. It also Pricing provides a basis for setting standards and a means for zero-based budgeting of volumes and costs, both of which can later be used as an internal control for this expense item. Understand Baseline profile Forecast growth Forecast usage Forecast expenses Manage Set budget Determine standards Optimise Implement controls and optimisation initiatives telecoms expense Considerations for Large Enterprises Operating in South Africa :: NEBULA 5

8 MANAGEMENT FUNCTIONS AND OPERATING MODELS TELECOMS EXPENSE MANAGEMENT FUNCTIONS The lifecycle of telecommunications expense requires certain specific internal services or capabilities. In large enterprises the lack of co-ordination across these processes and respective divisions often hampers the organisation s capability to effectively manage and optimise its telecommunications expenses. In addition there is often confusion about the ownership of standards or norms and the responsibility for managing compliance to these. Large enterprises also have the option of engaging a specialist provider of telecommunications services to support integration across these processes, divisions and suppliers. This is especially valuable where multiple service providers are involved in the provision of services or where users are spread across multiple business divisions and regions. TEM Functions Finance Business IT Sourcing Telecoms Service Provider TEM provider Sourcing and contract Order User and permission Device or inventory Service catalogue Usage Invoice and billing Expense reconciliation Single point of co-ordination Expense recovery Budget 6 NEBULA :: telecoms expense Considerations for Large Enterprises Operating in South Africa

9 MANAGEMENT FUNCTIONS AND OPERATING MODELS The roles of the various functions may also depend on the nature of the business and the structure of its and risk controls. These may be spread over the following areas: International or global standards and control responsibility South African head office standards and control responsibility Regional standards and control responsibility Business unit standards and control responsibility Line standards and control responsibility Service owner (IT) standards and control responsibility End-user standards and control responsibility TELECOMS EXPENSE MANAGEMENT OPERATING MODELS The various operating models for enabling telecoms expense are based on either in-sourcing (to IT, finances or sourcing) or outsourcing to the telecommunications service provider or a specialist telecoms expense service provider. In-source (IT, sourcing, finances) No single view of the mobile service. Difficult to co-ordinate across internal functions Outsource mobile service provider Vendor-focused view of mobile services Lack of alignment with internal policy and financial objectives Outsource mobile service Single integration of order, user support, financial and vendor activities Multiple interfaces with multiple vendors Difficult model with multivendor strategy Established interfaces into multiple vendors Access to industry best practices and latest vendor offerings Expertise in offering mobile services vs. offering enterprise mobile service Industry-specific understanding and expertise in mobile services Lack of access to purposebuilt processes and tools Vendor-aligned processes and tools Access to purpose-built processes and tools IT, business or sourcing aligned view of cost efficiency and compliance Vendor-aligned view of cost efficiency and compliance Independent view on cost efficiency and compliance telecoms expense Considerations for Large Enterprises Operating in South Africa :: NEBULA 7

10 MANAGEMENT FUNCTIONS AND OPERATING MODELS The biggest risks associated with in-sourcing are the lack of internal inter-departmental co-ordination to effectively govern expenses and usage, the limited access to industry tools and best practice processes, and the lack of purpose built processes and systems that interface into the external service providers. The biggest risks associated with outsourcing to your telecommunications service providers are the governance risks associated with outsourcing expense and policy controls to a vendor, the lack of co-operation between vendors and the conflicting objective of the vendors to increase their revenues and not reduce costs. Outsourcing to an independent TEM service provider can support shared service initiatives and provide quick access to best practices leading to some of the following benefits: Expense optimisation and elimination of waste expenditure Accurate and efficient recovery of savings Better utilisation of internal resources Improved workflow co-ordination and productivity Access to industry experience, insight and best practices Access to purpose-built tools, specialist training and resources Improved flexibility and scalability with both business (demand) and vendors (supply) Independent audit of vendor vs. actual billing and SLA compliance Improved reporting and budgeting capabilities 8 NEBULA :: telecoms expense Considerations for Large Enterprises Operating in South Africa

11 SYSTEMS, TOOLS AND PROCESSES TOOLS AND SYSTEMS FOR TEM Questions that need to be clarified with regards to the tools and systems that are used to support TEM processes include what tools or systems should be used, how are they covered as part of the BPO and how do they tie into existing third-party or internally managed systems. Some of the tools or systems that are part of the TEM ecosystem include the following: System Type Third-party Telephone Management System (TMS) Third-party telecoms infrastructure systems Third-party device systems Third-party TEM systems Service provider or vendor invoicing and bill payment systems Internal order and bill payment systems Internal supplier, contract and service level systems Purpose Used to assign users to extensions, track usage, monitor abuse and provide reports. Used to manage and configure telephony or network infrastructure and is specific to the manufacturer (e.g. Cisco or Siemens) Used to manage the allocation of devices and associated services and control services used on the device (e.g. mobile phones, ATMs, POS terminals, etc.) Used to support the TEM lifecycle processes of contract, service, user, policy and financial User access granted by service provider to electronically get access to invoicing and usage information Used internally to place orders, approve invoices, manage contracts Used to manage expense suppliers, supplier contract compliance and service level and credit Internal budgeting and cost systems Used internally to capture and manage budgets and do cost-centre level expense reporting The detailed functionality and relationships between these systems need to be mapped for each individual company to improve data integrity, avoid duplication of functions and increase the efficiency of TEM processes. telecoms expense Considerations for Large Enterprises Operating in South Africa :: NEBULA 9

12 SYSTEMS, TOOLS AND PROCESSES System Functionality TEM MDM TMS Finance Procure Help Desk Procurement Provisioning Device Application and service Security Usage monitoring and reporting End-user support Device policy compliance Usage and expense policy compliance Data privacy and security compliance Remote device Overall policy and configuration Inventory Organisations should at least maintain a high-level mapping of business processes, systems and functions that are deployed in their organisation and with their service providers to avoid duplication of functions, costs and improve efficiency of TEM business processes. The respective roles of internal resources, specialist TEM outsource providers and telecommunications vendors need to be considered against the following types of responsibilities for these systems and tools: Provide the proprietary tool or system (license, buy) Support and enhance the core application Bundle outsourced TEM business processes with the tool Authorised user of the system with pre-determined permissions for o Administration of the system o Configuring infrastructure, service, user and device standards o Activating, de-activating and managing the status of users, services and devices o Reporting and exception 10 NEBULA :: telecoms expense Considerations for Large Enterprises Operating in South Africa

13 SYSTEMS, TOOLS AND PROCESSES The relevant ownership of standards and controls specific to each large organisation needs to be taken into account and is a critical building block in developing your capability to manage telecommunications expenses. Utilising tools and systems is an effective means to managing standards and controls through the following process: Determine standards & norms Implement standards & norms Monitor standards & norms Enforce standards & norms At the end of the day proper governance would mean that the organisation Understand the has a clear understanding of the systems and user benefits of TEM permissions and across all these areas and is happy that the assignment of TEM responsibilities outsourcing is adequate to protect the standards and controls. An example of the type of view that an organisation would require is provided here: Develop evaluation and performance criteria for TEM providers Responsible Entity System Internal finance Internal business cost centre Internal IT Outsourced TEM provider Compile a TEM Strategy Telephone Management System Monitor usage and exceptions Approve users Provide standard IT support for system Activate users Reconcile users Exception Finance (budget and cost) Set budgets Budget requests Variance analysis Expense reconciliation Device Asset Device support Device to user allocation Inventory Note the table above does not reflect all the roles or users and is only provided as an illustration of the type of profile a large enterprise should maintain to govern its risks within TEM processes. telecoms expense Considerations for Large Enterprises Operating in South Africa :: NEBULA 11

14 SYSTEMS, TOOLS AND PROCESSES PROCESSES AND ACTIVITIES TEM processes and activities range from providing full outsourced services for TEM in the form of a BPO arrangement to the basic provision and support of reporting systems. They can also include input into related professional service activities such as RFPs or benchmarking exercises or audit and compliance roles. The appropriate allocation of these responsibilities should be determined by considering at least the following factors Experience and skills Established processes and interfaces Audit and governance independence A more detailed profile of the processes and activities that would need to be assigned is provided here: Sourcing and Contract Management Contract compliance Contract and price benchmarking Contract negotiation Discount negotiation RFI and RFP facilitation or input Volume discount threshold Order Management Service catalogue User and permission Service configuration and activation Devices or handsets order Service order Device pool and repairs IMACDs and service requests and reconciliation Device and Inventory Management Usage Management Inventory and asset Configuration database Asset and inventory change control Profile of services, inventory items, subscriptions, leases, etc. Inventory and invoice reconciliation Usage tracking and reporting Usage policy compliance Abuse Permission Budget, Expense and Recovery Management Demand and budget forecasting Expense tracking and reconciliation Variance analysis and Allocate charges Manage recoveries Invoice and Billing Management Service provider interface Process invoices and payments Item charge validation Invoice audits and invoice validation Invoice disputes and credit Payment term compliance and interest disputes Payment approval Journal and costs reconciliation 12 NEBULA :: telecoms expense Considerations for Large Enterprises Operating in South Africa

15 ENABLING TELECOMS EXPENSE MANAGEMENT WHAT THIS MEANS FOR LARGE ENTERPRISES Determine Implement Large enterprises are advised to take the following approach to standards standards implementing a TEM strategy in their businesses: & norms & norms Understand the benefits of TEM and TEM outsourcing Monito standa & norm Develop evaluation and performance criteria for TEM providers Compile a TEM Strategy telecoms expense Considerations for Large Enterprises Operating in South Africa :: NEBULA 13

16 ENABLING TELECOMS EXPENSE MANAGEMENT Understanding the Benefits of TEM Outsourcing Some of the drivers and benefits of TEM outsourcing that should be considered include the following: Financial Benefits Manage costs more effectively and enable faster recovery of savings Reduce costs without impeding service levels Improve usage and chargeback reconciliation and recoveries Eliminate waste and redundant services and recover billing errors Include rogue services in discount or managed services agreements Increase the scope of telecommunications expenses under Avoid late payment charges Optimise volume discount thresholds Governance Benefits Improve the integrity of risk, audit and compliance activities through independent TEM services Improve accountability of external service providers Realise consistent compliance to procurement, capacity, security and usage standards Supply and Demand Management Benefits Centralise the procurement and of services Improve contract terms and pricing of key telecommunications service providers Gain access to TEM expert processes, tools, skills and industry interfaces Exploit the TEM provider s investment in training and resources Improve business and supplier flexibility and scalability Optimise capacity or supply in line with demand and business requirements Optimise rental and consumption subscription Business Process Productivity Benefits Automate TEM processes and achieve outsourcing productivity gains in procurement, finances, IT and business resources Improve productivity of internal TEM processes Address lack of internal resources to support TEM processes Improve productivity of end-users Large enterprises should evaluate these potential benefits in the context of their own organisation against the following measures: Direct cost savings Productivity gains Benefit to current business strategies (outsourcing, expansion, etc.) 14 NEBULA :: telecoms expense Considerations for Large Enterprises Operating in South Africa

17 ENABLING TELECOMS EXPENSE MANAGEMENT Develop Performance and Evaluation Criteria for TEM Service Providers TEM service providers are likely to emerge from one of the following backgrounds: Provider of telecoms systems or tools Provider of expense reconciliation services Provider of outsourced telecommunications services Provider of telecommunications related professional services The suitability of the respective backgrounds of TEM providers for the specific organisation will depend on their own internal capabilities, preference for outsourcing and assessment of the benefit areas provided earlier. Some of the criteria that should be considered are provided below. However, it is recommended that each organisation compile its own evaluation and performance criteria specific to their organisation and its needs. Service Area Independence Length and depth of experience Scale and coverage of services, service providers and relevant countries Process maturity and governance Ability to offer service levels Ability to offer end-to-end services telecommunications expense, mobile service and related device Coverage of all telecommunications services mobile, fixed, wireless, voice, data, etc. Established system interfaces into vendor and internal systems Established processes that integrate into vendor, internal help-desk, financial and procurement functions Depth of audit and reconciliation ability Financial and optimisation reporting capability Risk, audit, compliance and assurance capability Ability to support automated and manual processes Cost- and item-level charge-out allocation User or line manager self-service or reporting capability Configuration database integration capability Integration into local service provider billing and payment systems Contract, pricing, service level, discount and penalty monitoring capability Service delivery and service interface capabilities Internal audit support capability Support for varied cost allocation and recovery rules Benchmarking capabilities Support for sourcing engagements Comply? Exceed Requirements? telecoms expense Considerations for Large Enterprises Operating in South Africa :: NEBULA 15

18 ENABLING TELECOMS EXPENSE MANAGEMENT Compiling a TEM Strategy Large enterprises should first compile their own profile of TEM functions and services and then develop a high-level strategy and performance criteria for the ongoing and optimisation of telecommunications expenses. TEM Services Scope Current Environment Baseline Profile Business Benefits Future Environment Service Provider Capability Review Internal Capability Review TEM Strategy, Business Case and Operating Models Having gained an understanding of the need for a holistic and integrated approach to TEM, organisations would be well positioned to profile the business benefits, determine the performance criteria for internal or outsourced TEM services and use these as input into company-specific TEM strategy, business case and operating models. 16 NEBULA :: telecoms expense Considerations for Large Enterprises Operating in South Africa

19 FEASIBILITY AND BUSINESS ENABLEMENT FEASIBILITY AND BUSINESS ENABLEMENT When reviewing or renewing your service providers and technology, Nebula proposes a structured methodology and approach which is independent of both internal and external vested interests and that aligns with your investment, sourcing and governance requirements. The Technology Business Enablement (TBE ) lifecycle is a structured methodology to enhance and protect your decision support process: Telecoms Business Enablement (TBE ) Nebula offers a Telecoms Business Enablement methodology, which covers the structured selection, planning and implementation of telecoms services or products from a vendor or service provider. It can originate as part of a Telecoms Optimisation Programme (TOP ) or Telecoms Strategic Decision Framework (TSDF ) Project, as a result of the recommendations of either, or as a standalone engagement. Secondly, TBE entails the development and customisation of the best-fit operating model needed to manage and support the new services and business function within the client s telecoms environment (a choice between managed services, business process outsourcing, traditional outsourcing or a hybrid model). The Nebula TBE methodology follows a six-phased approach: Phase 1: Feasibility analysis and approvals During this phase, the case for change in the client s telecoms environment is examined, along with its impact and the organisation s buy-in and readiness. Nebula supports the executive in its approval of the proposal and helps prepare the proposal. Phase 2: Sourcing and selection Once approval is obtained, Nebula oversees facilitates a period of insourcing or outsourcing, as well as a service provider evaluation and selection. Phase 3: Planning and preparation Once approval has been received to proceed with vendor appointment and contracting, planning and preparation for the client s transitioning to and operationalisation of the new operating model follows. Phase 4: Transitioning and implementation This phase will facilitate full transitioning from the current state operational environment and solution to the new one, including training, implementation and migration, change and compliance. telecoms expense Considerations for Large Enterprises Operating in South Africa :: NEBULA 17

20 FEASIBILITY AND BUSINESS ENABLEMENT Phase 5: Operations Once implementation is concluded successfully, the telecoms environment s successful on-going operations are ensured through a variety of measures, including service and performance assurance, configuration and migration data and best practice controlled handover. Phase 6: Renew or change supplier With continuous refreshing of the Telecoms Baseline Profile, the latest information in terms of in-scope services will, at contract maturity, lead to a decision whether to renew a contract or not. If not, the entire TBE methodology will need to be restarted. If renewal is in order, Nebula s Contracting Consulting function will be engaged. Feasibility Analysis & Approvals Sourcing and Selection Planning & Preparation Transitioning & Implementation Operations Renew or Change Supplier 18 NEBULA :: telecoms expense Considerations for Large Enterprises Operating in South Africa

21 Nebula is an independent professional services firm that creates business success through its expertise and holistic service offering across the telecoms spectrum, specializing in enterprise telecommunications Outsourcing, Consulting and Insight. We offer end-to-end advice allowing our clients to get value out of their telecoms investments, providing them with solutions and helping to implement them. Our engagement model is one of extensive and on-going interaction, resulting in a significant exchange of knowledge between our clients and us. This model enables us to create sustainable value for our clients, and thus guarantee their business success. Nebula operates independently of products or service providers with a team of highly skilled technology and business professionals, handpicked to deliver comprehensive strategic solutions for our clients that follow focused principles and methodologies. Please contact us if you would like to discuss technology strategy, investment or optimisation decisions and would like an independent party to assist you with those processes. WESTERN CAPE Tel: +27 (0) Fax: +27 (0) info@nebula.co.za GAUTENG Tel: +27 (0) Fax: +27 (0) info@nebula.co.za Companies > Nebula telecoms expense Considerations for Large Enterprises Operating in South Africa :: NEBULA 19