Auditing your telecom environment A cornerstone of TEM project

Auditing your telecom environment A cornerstone of TEM project

Contents Executive Summary... 3 Essential in-house elements for auditing... 4 The size of the infrastructure... 4 Invoices... 4 Inventory... 4 In-house telecom policies... 5 Contract and supplier reviews... 6 The contract portfolio... 6 Benchmarking suppliers... 6 Processes and sourcing... 6 Understanding the environment... 7 Regulation... 7 Openness to the market... 7 Anticipating new uses... 7 Defining ambitions... 8 Identifying performance indicators... 8 Defining working vectors for the TEM project... 8 Conclusion... 9 About Anatole... 10 2

Executive Summary Over the last several years, telecom expenditure has become one of the largest budget items for businesses, accounting for up to 20% of the total IT budget of companies according to Forrester's consultants (Source Forrester: Q&A: Value of TEM solution). Firms often buy too much telecom capacity, do not detect invoicing errors and are unable to keep pace with technological changes. Furthermore, the conservatism of telecom policies in the face of technological change and changing user behavior make it more difficult to take a step back and take stock of telecom management within a company. In this period of economic difficulty and pressure from executive committees, many IT, financial or purchasing managers have to deal with certain issues. They need to control their expenditure, reduce costs, optimize their telecom assets and require greater visibility the more their organization is complex and globally-reaching. Such cost management must be carried out whilst maintaining service quality and performance, with sufficient visibility to anticipate technological changes and identify the right budget trends. In this context, to succeed in establishing simple, realistic and ambitious cost reduction objectives, amidst the complexity of telecom offers, requires a clear overview of the telecom situation. Auditing your telecom environment is one of the cornerstones of Telecom Expense Management (TEM), a telecom resources and cost management project. It enables an accurate estimation of the strengths and weaknesses of telecom setups within a company, revision of all telecom contracts and reappraisal of relations with telecom suppliers. It also allows for better knowledge of the market and for a review of the telecom environment in which the firm finds itself. An audit leads a company, on the one hand, to reduce its costs by identifying sources of savings and, on the other hand, to establish the basis of better management of telecom resources and costs. This better management involves defining and gauging key economic indicators as well as implementing a software platform, a unique reference system that brings together all telecom data. Auditing a company's telecom situation is one of the first steps in performing a Telecom Expense Management project. The audit helps to lay the foundations of clearly identified needs and realistic and ambitious objectives. These audits are rarely conducted in-house. Most often, they are carried out by external consultants working for telecom resource and cost management companies. The audit thus represents a part of such a company's full offering. This white paper endeavors to highlight the important elements to which attention should be given when considering a report on the telecom situation of a business. In the first part, the elements concerning the telecom network as well as the related tools and processes are presented. In the second part, the elements related to managing contracts and suppliers are covered. In the third part, the focus is on elements outside the company relative to its environment. Finally, the points to be underlined for defining ambitions are set out. 3

Essential in-house elements for auditing The size of the infrastructure The first point concerning the infrastructure is aligning the company's needs in telecom capacity with the company's current telecommunications network architecture. The company's needs in terms of infrastructure can generally be defined as the number of devices per user (land-line telephones, mobile phones), the number of links rented by the company on all of its sites, the bandwidth capacity necessary for the company, the amount of switching equipment for land-lines, etc. This concerns estimating these parameters and comparing them with existing resources in order to establish whether the company's telecom architecture is adapted to its needs. The second point is to review the business plans and purchase costs of resources depending on their usage and technology. This enables adjustment of return on investment for projects, better definition of priorities for projects and developments and better handling of strategic decisions. Lastly, adapting the technical environment to needs is the pre-requisite for preparing technological changes within the company. The most common example is the preparation of a switch over to Voice over IP for corporate telephone services. Invoices 80% of telecom invoices contain inaccuracies. This surprising figure is provided by the Forrester's Consultants (Source: Q&A: Value of TEM Solutions in a Recession). This generates overinvoicing of 5% on average. In order to avoid this sort of situation repeatedly, it is vital to ensure the compliance of invoices received from operators with the price terms negotiated on signing of the contracts. To avoid extra costs, it is also important to check and act upon certain points. First of all, having access to invoices often now distributed in electronic format is essential. Possessing the correct usernames and passwords is surely and simply the first step. Be clear about which services are invoiced. Do not neglect late payments which may give rise to extra charges. Be watchful with regard to unrequested services that may be invoiced without permission. Inventory It is paramount to audit the processes related to inventory management. This involves estimating the time and resources necessary to manage all the movements of elements within the inventory: additions, removals, change of assignment, replacement, etc. This estimate may also be applied to the telecom purchasing process. Savings in time and resources can be observed in day-to-day management and in negotiation phases, providing easier access and more efficient results in information gathering and verification of invoices by the user. The firm AOTMP, for example, estimates in its report entitled - 4

Best Practices for Telecom Inventory Management- that companies with an inventory that is strictly kept up-to-date gain approximately 35% to 50% in full-time resources for managing orders. Furthermore, auditing of an inventory also involves the key factor of how the information is entered into the inventory management tool. Relevant information is necessary, with the same meaning for all the users and with sufficient granularity to cover all the needs. Time and resources can be saved by reflecting on the required sufficient level of detail of the information and by standardizing the information in a single format. In-house telecom policies Technological advances, rapid changes in devices and their functions and growing developments of use in telecom give rise to new issues to be tackled in businesses. The most striking example is the emergence of smartphones. Human resources and financial departments are thus often faced with certain issues that should be identified and dealt with in order to harmonize telecom usage within a company. Personal devices brought into the place of work with use of the company's telecommunications network resources. Security and confidentiality of professional data available on employees' devices. Purchase cost of terminals. Personal use of professional telecommunications resources. Lack of time, skills and resources for managers to regularly check invoices. An audit helps to highlight these points and provide solutions to them. For example: Separation of personal and professional use. Invoicing employees for personal use of company resources. Contribution to the cost of the terminal by the employee. Implementation of compulsory verification processes for managers. 5

Contract and supplier reviews An audit also presents the opportunity to enumerate contracts and optimize how they are managed. It is also an opportunity to draw up mapping of suppliers and their services and to free the company from any possible economic dependence. The contract portfolio The wide range of telecom players and suppliers considerably increases the number of contracts to be managed. According to AOTMP (Benchmarking the Total Cost of Fixed TEM), on average, businesses have 9 suppliers for their land-line services, accounting for 23 contracts. On average, large businesses have 2 times as many contracts as small and medium sized businesses. They also have 3 times more suppliers. The audit allows these contracts to be streamlined and helps to find the right balance between the number of suppliers and related contracts and the actual needs of the company on a like-forlike basis, i.e. with an identical technical level and equal performance. This audit, as mentioned in the introduction, is an opportunity to enumerate contracts, establish checks on the terms negotiated in comparison with provision of the services and, in particular, to create a unique reference system for contract management. This enables quicker consultation, removal of service overlaps or redundancy and possession of a basis for comparing prices, price plans and services. Benchmarking suppliers Challenging suppliers is an exercise which is not often performed by purchasing departments. As such, relations follow the course of a costly routine developing for the company. Reviewing contract terms, challenging suppliers with regard to the general and pricing terms and comparing offers with competitors and market prices is often beneficial in terms of savings. Benchmarking is also an excellent preparation for future negotiations. The audit therefore helps to identify and record all these points in order to use them optimally at a later date. Processes and sourcing Selecting suppliers is a long, arduous and time-consuming affair. It is vital to have a formalized selection process (in terms of documents), formalized meetings with suppliers, validation landmarks and decision milestones. All the steps involved in selecting a supplier - Request For Information, Request For Proposal, Request For Quotation - should be optimized. Such optimization is a source of savings in time and resources. An audit allows the emphasis to be placed on dysfunction in the processes, a lack of formalization, or respect of procedures. 6

Understanding the environment Conducting an audit on all the issues required for launching a Telecom Expense Management project can only be done if a company positions itself in relation to the market and the firm's external environment. Opening up to the outside, comparing with competitors and obtaining knowledge of quantified elements on the Telecom Expense Management market is crucial. Regulation An international company must take into account all the telecommunications laws and regulations in each country in which it is present in order to start establishing a Telecom Expense Management project. Each country possesses its own telecommunications regulatory body and therefore its own laws on protection of personal data or on the transmission of invoices, for example. The European Union also has its own rules. For example, a directive forbids the transfer of personal data from a country outside the European Union which does not observe the terms of European standards on protection of privacy (source AOTMP: Globalizing TEM Programs). Other laws or directives also concern payment terms of invoices, respect of privacy and related information, etc. In order to develop a TEM project at international scale and in compliance with the laws enforceable in different countries, checks are essential and certain points can be highlighted thanks to an audit. Openness to the market Having the curiosity to constantly look around at what is happening in order to collect information is vital. Knowledge of the market often allows for greater leverage in negotiations. Knowledge of prices and discount rates practiced is a pre-requisite. This also allows new budget simulations to be made in relation to a company's own expenses. Maintaining contacts with suppliers, even those not retained for solutions within the company, enables a firm to be constantly in touch with the market situation. Keeping up-to-date with forthcoming technology and leading, quick-selling products allows a business to anticipate changes in use, behavior and technology. Acquiring information from the outside is a component of an audit. Anticipating new uses In the same way that knowledge of the "technology" market is essential, sociological knowledge is just as vital. Identifying trends in use and understanding consumer changes enables anticipation of changes or adjustments to be made within a company. The most common current examples are the emergence of smartphones and booming use of data, the use of mobile phones more than landlines even for calls within a same and single company, or even the explosion of purchase and use of mobility services. 7

Defining ambitions After having collected all the information to establish a report on the company's telecom situation, an overview needs to be drawn up from which the key indicators should be extracted. These will help to construct the TEM project and define the objectives in terms of savings and controlling of expenses, as well assist in decision making. Identifying performance indicators Defining the metrics for monitoring identified actions during the audit is a compulsory stage. Performance indicators must be developed in accordance with the needs and specifics of the company. For example: Indicators related to sourcing/benchmarking: to monitor contractual undertakings in the Purchasing or IT Departments. Operational indicators: to gauge the efficiency of the TEM project, especially for the IT and Admin Departments. Financial indicators: to check costs for the Financial Department. Management-dedicated strategic indicators: for better preparation of budgets and good handling of strategic decisions. Identifying and defining the metrics goes hand in hand with gauging them. The data and access to information must also be included in the audit report. Defining working vectors for the TEM project To be sustainable and reach its cost reduction and savings objectives, clear, realistic and nonetheless ambitious definition of needs is the basis of any project. The company should be able to recognize the priorities and reasons for developing a TEM project thanks to the audit. These reasons can vary in nature: Improving processes: Business Process Outsourcing (BPO). Reducing costs. Improving budget compliance. Centralizing technical, financial and operational elements to create a unique reference system for managing telecom. The audit will also help the firm to find the right sponsors to support and promote the project in executive committees. Furthermore, it will enable good input for preparing telecom business cases and defining suitable cost models. 8

Conclusion Auditing the telecom situation of a company is an essential step on the way to developing a Telecom Expense Management project. Auditing in-house telecom management gives a complete vision of the processes, resources and tools used for managing telecom. It allows the telecommunications network architecture to be reviewed, enables the supplier portfolio to be streamlined and contributes to optimizing contract management. The audit additionally provides understanding of the legal, technical and sociological environment concerning use of telecom in which the company finds itself. All these results will determine the financial, organizational and technological objectives as well as goals for implementing telecom policies within the company. These objectives must be monitored via identified and gauged key indicators. On these solid foundations, a Telecom Expense Management project can be built to last over the long-term. To ensure the continuity of actions identified during the audit, deployment of a software platform will be necessary if it is not already in place and Business Process Outsourcing should be examined. 9

About Anatole Anatole has been at the heart of telecom management for more than 15 years. As a major European player in Telecom Expense Management (TEM), Anatole provides support to companies on a daily basis, allowing them to retain control of their telecom spend in a context of constant changes. Anatole brings clarity and simplicity to a complex and changing environment with unstable prices and cost models. Anatole helps companies to reassess their processes, and offers tools allowing savings via a unique TEM approach specifically adapted to European companies. Anatole makes expert support available to companies to manage landline, mobile and a data telecom services and spending: implementation of automated processes, improvement of overall visibility of telecom costs, definition and implementation of a telecom policy, tariff optimisation. Anatole is supported by an expert Managed Services team, an effective Professional Services organisation and ATEM, an advanced platform in SaaS mode. With offices throughout Europe and more than 15 years of experience working for European multinationals, Anatole is the reference partner for companies to respond to the challenges of TEM and mobility, both in Europe and around the world. To find out more, visit www.anatole.net Offices and contact details Anatole France Anatole Benelux Corporate Headquarters Tour & Taxis 37 Rue Adam Ledoux Havenlaan 86C / 101A 92400 Courbevoie, France 1000 Brussel, Belgique Tel.: +33 1 41 38 49 99 Tel.: +32 2 340 33 30 Fax: +33 1 41 38 00 08 Email: sales@anatole.net Anatole Germany Anatole UK Walter-Kolb-Strasse 14 16 Great Queen Street 60594 Frankfurt, Germany Covent Garden Tel.: +49 69 53099 35 London WC2B 5AH Tel.: +44 7585000708 10