Auditing services cut telecom costs

Telecommunications bills are large, complex, and often inaccurate. Auditing services can offer significant financial savings.

By Paul Korzeniowski | Posted Oct 7, 2000
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As strategic manager for MIS at GlaxoWellcome Inc., of Research Triangle Park, N.C., Dion Blanchard is constantly on the lookout for ways to improve the company's international network, which supports 100,000 employees. So, periodically, he calls upon Tel-Adjust, Inc., a Southfield, Mich., firm that specializes in telecommunications audits. I've worked with the company for more than 10 years and found that they consistently identify ways for us to save money, he said. In this article, I'll present the benefits of regular audits. Let's begin by identifying areas in which audits can save you money.

"Keeping billing data up-to-date is a complex process because carriers constantly change pricing plans to attract new customers: AT&T has more than 3,500 pricing plans."

Unintentional errors on both sides

Tel-Adjust's service is based on the premise that telecom bills are large, complex, and often inaccurate. By closely examining a firm's charges, companies like Tel-Adjust identify cases where firms have been overpaying for telecommunications services for months, or even years. One Tel-Adjust customer had been overcharged for six years and eventually recouped $350,000 in excess charges.

Seldom do carriers overcharge on purpose; problems usually arise from human error. Keeping billing data up-to-date is a complex process because carriers constantly change pricing plans to attract new customers: For instance, AT&T Corp., of New York, has more than 3,500 pricing plans.

On the customer side, medium and large companies have ever- changing, large, complex networks. Seldom do they rely on a single carrier; instead, they work with multiple telecommunications service providers. Although it helps to increase network reliability, this approach also generates complex, multipage bills from a variety of suppliers.

In most cases, corporations pay little attention to their invoices. Telecom managers are busy and do not have either the time or the inclination to examine their bills line-by-line each month, said Dean Rowen, president of Communications Audit Service Inc., of Lake Forest, Calif. After selecting a plan or signing a contract, many managers consider their jobs done--but they may actually have just begun.

Billing discrepancies arise haphazardly as medium and large companies order new lines or change their telecommunications services. In certain cases, an alteration may not make its way from the point where the salesperson take the order to a carrier's back- end billing system. The order may not be properly entered: Telephone companies have numerous charges for similar services, so a wrong code may be entered. With tariffs and pricing plans constantly changing, a customer may be billed under an old rate even though it has moved to a new plan, or a special discount may not be applied to a particular service. Also, software bugs can create problems: An application may not recognize a new billing formula or billing information may not move from the order entry to billing engine properly.

Such problems can arise with any type of service. The most common problems we see involve frame relay and ISDN lines; they are rarely billed properly, said Peter Laws, president of Tele Guard Systems Inc., a Plano, Texas, auditing firm.

Usually, a quick scan of the monthly bills will not illustrate any discrepancies. Because carriers summarize so many charges, customers may not be sure what they are paying for. Sometimes, a company finds telephone lines that it didn't even know existed, or ones that were supposed to be taken out and off the books by the phone company, but weren't. Or, a company could be paying for equipment that has been returned to the phone company or removed as part of a network upgrade.

Not all the problems are the carrier's fault. Some problems can arise from a lack of communication between a business's home office and remote locations. In many organizations, bills are paid centrally but services are delivered locally. Although the head office thinks remote users are working with one service, a branch manager may have purchased another service after hearing a local promotion. Consequently, the company has duplicate services at the branch office.

Typically, employees in the field are not allowed to pick long distance companies or buy equipment, but sometimes they are responsible for reviewing their groups' telephone bills to ensure they are accurate. With little knowledge about various billing options, they often lack the expertise to evaluate the bills precisely.

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