Well, first of all, we all know that we are being cheated, unknowingly or knowingly, as nobody can or will spend their time checking the bills that we receive month after month to make sure that they are correct.

Second of all, the service level is practically non-existing, or put differently: you as the customer should be happy that they even bother having you as a customer.

This was just two of the most common reasons for our aversion against the telephone companies. Considering that the telephone companies are aware of this problem, why do they not try to improve?

Part of the explanation is that you, just like at the tax collector’s office, are guilty until you as a consumer have proven that you are innocent. This reverse problem means that most consumers, businesses as well as private customers, cannot find the strength to take up the battle against their telephone company. And those who try often end up giving up, as the telephone companies are experts in stalling.

Another explanation is that the telephone companies know that they are selling a product that is a necessary evil, and no matter how much rubbish they make us put up with, people will always buy their product.

So, can we do something about it? Yes, take up the battle with your telephone company, never accept a no, and as a company, get expert help, enabling you to spend your time on what you are good at and leave it to others to make sure that you get the right prices, subscriptions etc., and not least, make sure that you get the credit notes that you are entitled to due to incorrect invoicing that has taken place.

By: Flemming Ulrich Bøgh, CEO, Telcom Danmark A/S.

The current state of the Telecom Expense Management (TEM) and Wireless Expense Management (WEM) market is vibrant and better than ever. This is true because TEM Solution Providers have adapted to client needs and TEM offerings encompass far more than just bill auditing and invoice processing. In fact, many TEM Solutions Providers feel that the TEM acronym fails to reflect the full range of capabilities that they offer today and their future vision of the industry.TEM helps IT organizations analyze how technology investments contribute to the top line and control the bottom line. TEM is now growing to include a set of best practice principles that extend far beyond telecommunications. The new vision for TEM reflects a proactive best practice framework in which analytics and business intelligence help drive value.

TEM Origins
To understand TEM, it is necessary to know its history. Until 1984, AT&T owned and operated most of America’s telephone network. Customers were dealing with one company that had a monopoly. It determined the services and equipment customers could use and the prices they would pay. This arrangement may not have been ideal for customers, but it was simpler.In 1984, the settlement of a federal government anti-trust suit, lead to AT&T’s divestiture of its local telephone system and split into seven independent Regional Bell Operating Companies (RBOCs) or Baby Bells. AT&T kept its long distance network and its business telephone system service. MCI, Sprint and other firms began offering competitive long distance services.Similar break-ups of state owned telecom carriers coupled with privatization and deregulation efforts occured in many countries. Billing overcharges provided one indication that AT&T and other carriers were facing challenges adapting to the new competitive environment.

Extract from: Temia & Telcom Danmark A/S: A Vision for the Future of TEM (pdf).

Illustration: Who is in Charge -- The IT Manager or the CEO? Creative Commons: Kumar Appaiah

The lack of knowledge about IT, data and telephony mean great costs for the companies
The managements of Danish companies lack knowledge about IT, data and telephony, so the IT departments become small kingdoms within the great kingdom.

Achieve average savings of 30 – 50% per year
Time after time we see that the managements trust their IT crew blind, and even though the management is presented economic facts, which indicate that actions by the IT departments cost the company 30 – 50 % too much per year, the management still hesitates to do something about it.

To employ small self-appointed kings is expensive for the companies – so expensive that if shareholders were to find out, they would demand the complete management fired.

By: Flemming Ulrich Bøgh, CEO

Everyone gets flawy invoices
After 13 years in the telephone counseling branch, it is still a riddle to me, why Danish businesses accept the way, telephone companies treat their customers. Everyone gets more or less flawy invoices but only few do something about it.

No customers have optimal agreements and prices, since they often are blind when negotiating with their telephone company and it is ultimately the telephone company that decides what the customer gets.

For the past 4 years, we haven’t found under 20% of yearly savings for our customers, and even though our fee only is a small part of the customer’s savings, many customers still hesitate to see expert help. Why?

The only sensible explanation I have, is that since the customers don’t know enough about the telephone market in general, and in fact don’t understand all the different types of subscriptions and forms, the telephone companies have to offer, the customer would rather pay too much year after year, instead of admitting that they need help.

By: Flemming Ulrich Bøgh, CEO

Financial guidance scenario 1: Negotiation of the agreement

We typically obtain prices that are 30-40% better than the ones the clients can obtain, because we know the prices of the individual calls, connections and services. We take part in more than 50 negotiations every year for over a 100 million DKK. This gives us an insight into the market and prices that nobody else possesses. That knowledge is stored and supplied in relation to the suppliers.

Financial guidance scenario 2: Optimisation of an existing agreement:

Typically, most companies have a three-year agreement where negotiations with other providers are not allowed. However, it is possible to optimise the agreement to fit your requirements. You should be aware of the fact that your usage in this area goes up 5-10% every year due to the growth in communication and the constant increase in product supply and product development from the suppliers.

Mobile data
For example, mobile data has increased by a factor of 10 within the past two years. Thus, if you spent 100,000 two years ago, you might spend 1 million today. But few people know that they can cut back drastically on the expense in this area without less usage. We have saved up to 40% of many companies’ expenses towards mobile data without cutting back on their amount of data.

High number of invoice mistakes
Two other significant areas include mistakes on the invoice and reviewing the subscription.

Our experience shows that around 10% of all invoices from your service provider are wrong and almost always in favour of the telecommunications company. We find the mistakes and obtain a credit note for you.

Reviewing the subscription usually also results in 10% cutbacks and in many cases much larger cutbacks than that. Your company often has too many and in certain cases too few or the wrong subscriptions due to difficulties in understanding the offer from the service providers. Thus, customers sign it without having analysed the agreement. They trust the service provider, because they know they are unable to analyse and compare the consequences.

The larger the company, the more communication and the harder it is to understand, control and remember to terminate subscriptions. In many cases, we can terminate 5-20% of the subscriptions in cooperation with the customer, since they can no longer be used, but have not been terminated.

Head of IT, Maria Juhl Christensen, Valcon, Denmark

For 10 years, Valcon mainly used the same telecommunications provider; and, in the main, the majority of their traffic constituted mobile telecommunication. Valcon negotiated a new telecommunications agreement app. every third year; and, till now, the result has been to continue with the existing telecom provider.

In recent years, data consumption has undergone a significant growth; and, combined with an increased mobile traffic, the result was that Valcon’s telecom consumption for 2009 totalled app. DKK 2.5m.

Telecom agreement negotion and optimisation

When, in the beginning of 2010, Valcon was once again facing a renegotiation of their telecom agreement, the company chose to involve the assistance of the experts from Telcom Danmark.

”In connection with each renegotiation, we spent much time obtaining new offers from several providers. We were always of the opinion that, at each renegotiation, we subjected the various elements of our new contracts to a thorough analysis; however this time – having Telcom Danmark participating as consultant at the negotiation table – we experienced a far greater transparency. We have been in a position to place heavier demands to improvements in the agreement. And this way we achieved increased future savings”, says Valcon’s Head of IT, Maria Juhl Christensen.

The assignment

Telcom Danmark provided Valcon with a dual service. One part consisted of going back in time and investigate whether Valcon actually got the prices stipulated in the existing contract.
The other part consisted of Telcom Danmark carrying out a thorough analysis of the call patterns and the types of calls and, on this basis, obtained new offers from several telecom providers.

Naturally, when the new contracts were negotiated, Telcom Danmark was present as Valcon’s consultant with expert knowledge within the area. Due to their core competences and their expert systems, Telcom Danmark could provide a solution to both assignments and, also, because of the unique and extensive knowledge about relevant market conditions that they posses from their experience with daily negotiating with telecom providers.

“We have always pursued a hands-on policy with respect to our telecom consumption. And we have kept a very keen eye on all data and telecom invoices”, says Maria Juhl Christensen, continuing: “At each new negotiation of our contract, we always tried to compare prices from various telecom providers, but we found it difficult to grasp the price structure, since different telecom providers offer different products.”

“In retrospect, we can just observe that only because of Telcom Danmark’s core competences and expert knowledge was it feasible to compare offers from the various telecom providers and, at the end of the day, this fact constituted the decisive factor as to why we achieved such a considerable saving”.

“I cannot help thinking of the saving potential existing for companies not pursuing a hands-on policy within the area of telecommunication”, says Maria Juhl Christensen.

Camilla Lindegaard, Valcon, Denmark

Valcon: Pleasantly surprised with saving benefits

Likewise, Valcon is positively surprised that the work in connection with the saving benefits has been extremely limited. “The time we spent on the project practically only consisted of two brief rounds of negotiations and then the actual signing of the contract – in all we spent less than two days of the project period of app. 3 months.

This was made feasible because Telcom Danmark assumed the overall responsibility for obtaining all the data necessary for analysis as well as for the drawing up of the contract documents”, Maria Juhl Christensen explains.

The result

Camilla Lindegaard, who is a consultant at Valcon and works with sourcing projects, states that – internally in Valcon – there is enthusiastic appreciation of the scope of the cost saving actually achieved by the company and, further, that people are surprised that what was initially considered a highly competitive market should, in the end, prove to contain such a huge potential for cost saving.
Namely more than 50%, or DKK 3.5m on the bottom line during the term of the new agreement.

According to Camilla Lindegaard, savings of such a scale have only been made feasible through the accessibility of the right expert knowledge and the right competences.

FACTS ABOUT VALCON
Valcon is one of Denmark’s fastest growing consultancy houses. Since its establishment in 2000, the company has undergone an impressive growth. Represented in Scandianvia (Denmark, Sweden and Norway) and, internationally, in the Czech Republic, India and China, the company today employs app. 150 consultants.

One of Valcon’s core competences is consultancy within the area of sourcing. “We have been in a position to make heavier demands on contractual improvements; and this way we obtained increased future savings”, says Maria Juhl Christensen, Head of IT at Valcon.

FACTS ABOUT TELCOM DANMARK
Telcom Danmark has more than 12 years’ experience within the field of analysing the data and telecom consumption of medium-sized and large businesses – with a view to create cost saving solutions.
Telcom Danmark’s unique expert knowledge is owing to the fact that, for as long as it has existed, the company has solely been focusing on and worked within precisely the sourcing area.

Telcom Danmark’s work is typically performance-related, and thus the fees will be calculated on the basis of the savings obtained.

In short, a sourcing project will be free of charge for the customer in the event that no savings can be obtained.