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Why Do Telecom Expense Management Projects Fail?

As professionals in the telecommunications industry, we all can appreciate the complexity of managing an enterprise’s overall communications environment and expense. With today’s challenging economic conditions, enterprises are even more likely to consider telecom expense management solutions in hopes of achieving cost savings and improving efficiencies. That’s good news for the channel. The bad news is that many of them will fail.

The main reason TEM projects fail is a misalignment between the client’s goals and the offered solution. There are many aspects than can contribute to the misalignment. To ensure success, our firm applies a methodology popularized by Cisco Systems Inc. for defining the continuous lifecycle of customer services: Prepare, Plan, Design, Implement, Operate and Optimize.

 

 

 

 

 

 

 

The first three steps are the most critical. Failures here will increase the likelihood of failure of the entire TEM project.

Prepare

Preparation must involve all stakeholders — IT, finance, HR and executive management. Too often, TEM projects do not have all stakeholders involved, and in many instances, only IT is involved. At the outset, the stakeholders should align around the definition of TEM. This is important because one company may use TEM as a term to simply describe the process of logging and auditing invoices; while another company may describe TEM as the process of managing inventory (to assist in cleaning unused resources, leveraging service providers), managing costs (reduce cost, increase predictability of cost, assist in budgeting), managing MACDs, comparing invoices to contracted rates, creating service provider score cards and SLA measurements, auditing invoices and even the outsourcing of all these functions.

The distinction is important because the first definition can be accomplished with basic tools such as Microsoft Excel spreadsheet or Access project management programs, while the latter needs a more advanced solution such as an enterprise application.

Preparation also should define scope and success. The business case should be clear with a long-term objective. The TEM project scope should set a long-term goal of inventory management, change management, financial management and vendor management of all core communications services supporting the enterprise — local, long-distance, toll-free (8XX), conferencing, WAN services, IP services and mobile services.

After determining service scope, the biggest hurdle is to agree on the business goals that need to be achieved. TEM is a tool to achieve business goals and cannot be the end result. Projects that focus too much on TEM and not enough on the business goals are doomed to fail. With specific, measurable, achievable and realistic goals set for a specific time frame, a business case and implementation plan can be made.

The project success should be improved overall management, reduced unit cost, improved utilization management, better end-user support and service. While a cost savings is always a key goal of success, we recommend not setting a specific target in year one, but rather creating a three-year business model with a 5 percent to 20 percent cost savings target versus the current state.

Plan

The plan for the overall project must be in detail and anticipate all critical tasks. Most TEM solutions providers can provide the task list for implementing their solutions; however, this task list does not necessarily provide all the tasks for the enterprise. What is more challenging is aligning around the appropriate timeline; many enterprises set timelines that are too aggressive typically because they don’t fully understand the complexity of the task.

As a general rule, for a complete implementation of all services, a timeline of nine to 12 months is required. In many cases, we recommend a phased approach, wherein we first implement a single service type, such as a TEM project for mobile services, which can be up and running in less than 90 days.

Design

The design of the TEM solution is sometimes very difficult. While communications services are similar, every enterprise is different in the way they manage and account for communications services. For example, many variables can impact a TEM implementation. These include company size, number of business units, number of locations, company accounting requirements, geographical locations (especially international locations) and industry vertical. The applications the enterprise uses — Oracle, SAP, JD Edwards, Remedy, Peregrine and HP — also can impact the outcome.

The key to successful design is identifying and aligning with all the core business processes. The project also should challenge the current process and requirement; and where necessary, change those processes to be more effective with the new TEM solution.

Implement

The second phase of a TEM project is the execution: Implement, Operate and Optimize. If the Prepare, Plan and Design phase has gone well, the TEM implementation should be straightforward. There will be challenges, however, such as inventory compilation, invoice readers, system training, business interfaces, system performance and TEM team development issues.

Depending on the solution, the recommend implementation typically is a parallel environment for 30 to 60 days. This mitigates risks and disruptions to the business and expected service level of end users.

Operate

Too often, an enterprise underestimates the effort required to properly manage and operate its TEM solution. In many cases, customers mistakenly assume the software application will do all the work. I call it the “Staples Easy Button Syndrome.” While the application will enable the management of TEM, the application requires support and input to make it effective.

A current trend is for enterprises to require a fully managed TEM solution, wherein the TEM provider operates the application to deliver the solution and desired results. The demand for a fully managed solution creates an enormous opportunity for channel partners to align with TEM application providers and deliver a solution to their enterprise clients.

Optimize

Once a TEM solution is operating, the enterprise should be able to leverage the solution to achieve intended results, e.g., reduced unit cost, etc. Over time, the solution becomes more effective as it’s fine-tuned. Processes inevitably will change, but such decisions will be made with power of information and knowledge of the enterprise’s overall communications environment and expense.

Solutions providers and sellers of communications services should discuss TEM strategies and objectives with their enterprise clients. By helping clients in this way, channel partners might create an opportunity to provide assistance or resell a TEM solution, thereby creating additional revenue and providing additional services to clients. In contrast, if solutions providers neglect to assist their client with proper preparation, planning and operation, their clients’ TEM initiative likely will fail, prompting them to look elsewhere for a successful solution.

Tim Wise is a co-founder and co-president of Advocate Networks LLC, a telecom agent and telecom management company. He can be reached at tim.wise@advocatenetworks.com.

 

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