Author: Bruce Macfarlane
Telecom services have traditionally been the sourced from a single supplier. And from the limited pool of tier 1 suppliers. Anywhere in the world this means that competition was limited to a pool of four suppliers. Add in the additional cost factors of line and device procurement, invoice processing, and the soft touch of a familiar account manager, and the final single supplier is often an incumbent.
This approach no longer holds true because telecoms is now a strategic business enabler, able to contribute to both sales performance, and service cost reduction. To realise the telecom profit promise CPO’s now need to accommodate a best-of-breed application architecture with advanced sourcing and automated spend management.
A many headed hydra
Typing ‘sales and marketing application landscape’ into a Google image search demonstrates the hundreds of applications available to improve sales performance. Even if a business’ executives have endorsed an enterprise application suite, a wily analyst in the marketing team will a easily implemented, light-weight, cloud application with their corporate credit card. And will be delivering results with outsized business value. Results that in a non-cloud-based-best-of-breed world, used to have to wait for the next release of that enterprise application.
It’s Complicated: Inside Sales Landscape
Procurement isn’t IT. CPOs don’t need to police strategic and business led application choices. But they do need to source an environment that allows their business to act as nimbly as a start-up. Otherwise they face near-term disruption and a rotation of new job interviews.
Revenue at risk needs operational synchronisation
As businesses recognise that they can run integrated by autonomous business processes, Forrester [i] anticipates that operational control will be devolved downward to individual brands and divisions. Getting business units to dynamically connect across people, processes, things and services means creating a digital mesh[ii]. Disasters will happen when customer interactions can’t be handed off between business units (like an IVR not giving up details a customer keyed in while waiting to talk to someone). But businesses that get it right will achieve a more intimate and responsive customer relationship. With a corresponding bigger share of their customers’ wallet.
Telecom service management
To manage increased business complexity CPOs, need a solution that delivers oversight on telecom service providers. Historically these requirements were met by Telecom Expense Management (TEM) suites. But like the telecom services they manage, modern TEM suites are evolving to deliver more functionality, with more automation, and rapid cloud based deployment.
Removing complexity from vendor management
More vendors, providing more services, means more invoices. Adopting a best of breed application strategy also means making sure that the accounts payable team doesn’t get drowned in paper.
Incumbent service providers don’t help CPOs manage increased vendor numbers. Standard telecom service billing practices are to provide summary invoices. Line item detail needs to be sourced from supplier portals. And without that detail it’s impossible to allocate costs across an enterprise. When there’s only a few vendors, relying on AP teams to collect the detail is OK. When the number of vendors increases, AP teams can’t keep up with the demand. The consequence is unpaid invoices, increasing late payment fees, and duplicate payments.
By automating invoice collection, TEM providers are meeting the challenge of AP overload. Scheduling robots to collect, and transform invoices into usable data. Allowing consolidated invoice files to simplify AP processes, and create remittance files that can be reconciled against payments and invoices. Stopping supplier claims that invoices are unpaid.
Direct cost reduction starts with users
Automated invoice collection allows for ‘living’ service and asset inventories. Inventories that are maintained by invoice data and can synched with employee records and finance cost codes. This integrated approach to telecom service and asset management delivers spend analytics to end-users and their managers. Service messages of high usage and high spend can be anticipated. While under used services are not overlooked.
In legacy TEM solutions, these monitoring tasks are manually provided and often cost one to three consulting days per month. Modern TEM solutions automate monitoring, actively removing costs from standardised processes.
Advanced sourcing relies on automation
Telecommunication infrastructure is now a commodity. And the separation of services from connections, gives CPO’s an opportunity to drive category spend towards a lowest cost basket of vendors.
Achieving a ‘cherry pick’ cost target relies on being able to tell vendors what is wanted, and then to rapidly compare alternative offer combinations. A data framework of inventory and spend history are pre-requisites. While online procurement, with supplier pricing feedback on alternative contract configurations, are the delivery mechanism.
Telecom Expense Management solutions are automating the processes to managing vendors. The outcome is lower cost sourcing.
A multi-vendor strategy is now BAU
Long the pariah of cost reduction strategies. Today’s business environment demands a best of breed multi-vendor strategy. CPO’s can only overcome cost objections by implementing a category management plan. Including a TEM solution that reduces vendor complexity and delivers on business strategy lets CPOs digitally dominate.
Bruce Macfarlane is the founder of Kansoly a source to pay telecom expense management and cost reduction platform for business.
[i] Forrester, 2017 Predictions: Dynamics That Will Shape The Future In The Age Of The Customer. October 2016