Planning for Your 2009 Budget: Doing More with Less presented by Joe Basili President & Research Director Thursday, November 20, 2008 Network Trends Now
Joe Basili is President & Research Director of Network Trends Now and a recognized thought leader with more than ten years of experience in TEM, telecommunications networks and IT asset management. Through research reports, public speaking, and advisory meetings he has provided best practices on how organizations can optimize their information technology (IT) systems, telecommunications network costs, operations, and procurement. The Network Trends Now motto from Dr W. Edwards Deming states: In God we trust, all others bring data. The customer insight model is simple: gain insights into enterprise needs, best practices, benchmarks, and market conditions by interviewing customers and developing surveys that collect hundreds of enterprise customers data. The research is compelling because industry knowledge is matched with statistical analysis and a real passion for the business. Joe has conducted research and written extensively on a wide range of topics that include wireless mobility management, IT and telecommunications environment management, network performance, and unified communications. He has been a keynote speaker and contributor to publications for IT, finance and procurement professionals . Joe holds a B.A. with a double major in Economics and Political Science from Vanderbilt University. Contact information: (973) 763-6265 [email_address]
Determining your baseline requirements
Establishing Predictive Reporting
Expected Bandwidth Requirements Source: AOTMP
Top Areas for Network Bandwidth Consumption Source: AOTMP
First Polling Question
Next year will your budget for spending on voice, data, wireless, and conferencing…? (select one)
remain the same
decrease by 1% to 10%
decrease by more than 10%
increase by 1% to 10%
increase by more than 10%
3 Steps to Survive the Downturn
Budget season is a great time to reassess everything and re-evaluate all expenses
Learn from your business partners: internal users and external customers
Find out what is working and what is not working
Change the dynamic from cost (or you will be stuck cutting costs) to business strategy and investments
Zero Based Budgeting Every expense must be justified from a "zero base" regardless of prior year’s spending
Favors smaller short-term projects over long-term investments
Increases spending restraint
Requires more time to prepare budget
Reduces entitlement mentality
Positives to Zero Based Budgeting Negatives to Zero Based Budgeting
Makes the budget review process more meaningful
May fall behind competitors willing to take on riskier investments
Current State of Telecom & IT Source: AOTMP
Building a Budget
What are your baseline requirements?
To understand where your company is going, it's important to know its history
Do you plan to deploy new communications technology?
Is there a clear link of business value from IT and network communications?
Mergers & acquisitions
What portion of the staff are contractors that can be cut without announcements of layoffs?
What controls are in place for on-demand applications and services?
Strategies: 1 - Start with Your Inventory
Build the inventory
All circuits installed prior to…
Orphaned wireless devices, locations
Second Polling Question What strategies do you expect to use to meet your budget in the upcoming year? (select all that apply) a. Aggressive renegotiation of contracts b. Centralizing control of IT & telecom spending c. Aggressive expense auditing d. Usage charge-back reporting e. Formal TEM program f. Deployment of new (VoIP, MPLS, Green IT, Virtualization) technology to dramatically reduce costs
Strategies: 2 - MACD Reconciliation to Billing
Which sites will have closing or openings?
How do you validate
contracts are applied properly for new services?
service disconnects are removed from billing?
Strategies: 3 – Control Wireless Expenses
Confirm all users are current employees and eligible for wireless services
Focus on peak minutes, SMS messages
Directory assistance… the cost of dialing 411 can cost $1.25 to $3.00 per call!
To use Google’s directory assistance, dial 1-800-GOOG-411 (1-800-466-4411)
The costs for spares and replacement devices can be negotiated for cost savings
Strategies: 3 – Control Wireless Expenses (continued)
Evaluate data consumption
How do variable costs change if more data is sent than the allocated amount?
Are there suspension charges?
Can termination penalties be waived?
Strategies: 4 - Control Your Entire Expense Lifecycle
Do you have mavericks that procure services on their own?
Do you manage all telecom spend?
Strategies: 5 – Which Vendors Are Flexible?
Are vendors willing to make concessions today for the potential to do more business in the future?
Minimum Annual Revenue Commitments
Technology migration clauses
When the economy improves will you be able to reward cooperative vendors?
Strategies: 6 Establishing Predictive Reporting
Create reporting on run rates vs. budget
Track variances for course corrections
Monthly spend vs. budget
Percentage deviation from budget
Provide company-wide usage and expense visibility to drive accountability
Spend by business unit, GL, location, or individual
“ Keep it simple, provide an incentive, and track results”
Work to change the dynamic from cost (or you will be stuck cutting costs) to business strategy and investments
Failure to make sound investments in IT and network infrastructure during tough times will leave companies behind
Final Thoughts “ While 2009 will be tough, managers must shift from talking solely about costs to focusing on business strategy and investments. Failure to do so will lead organizations to get stuck cutting costs and falling behind competitors. The key is to develop a clear link between spending and the business value from IT and network communications investments.” – Network Trends Now November, 2008
Expense Management Services Budget Planning for 2009: Spend Less, Do More Tony Bodetti, TnT Expense Management
– Today’s Unique Challenges
What is Telecom Expense Management
How TEM Affects Your Bottom Line
Dealing With Resistance
Budgeting Through Uncertainty
Expenditures are difficult to forecast accurately
Use zero based budgeting methodology
Use business intelligence reports and analytics
Companies have reluctance to incur new expenses
Do more with less when revenues are down
Focus on cost reduction and cost avoidance programs
Enterprise’s expectations don’t match internal abilities
Internal staff may not have the proper skills
Outsourcing will allow them to focus on their core competency
What is Telecom Expense Management? Sourcing/Contract Negotiations Audit & Bill Processing Inventory Management Network Provisioning Call Accounting Chargeback Physical Audit Project Management Full Spectrum of TEM Services Benefits of Outsourcing Telecom
Economies of scale
Allows you to focus on your business
Centralizes information for strategic planning
Benefits of Outsourcing Telecom
Increases optimization opportunities
Reduces overall costs and causes significant impact to bottom line
realize significant cost savings in billing errors
better forecast future needs and trends
TEM Budget - Action Plan
Self Funding Program - ROI
What form of TEM solution do you currently have in place?
In-house using our systems
In-house using licensed TEM software
Using TEM SaaS provider
Outsourced to a TEM BPO
No solution currently in place
Examples of TnT Case Studies **TnT Savings achieved following a previous TEM provider TnT specific case studies Industry shows on average 12% - 18% savings from a TEM solution 28% 1 st year save (Wireless) Manufacturing Client 27% 1 st year save (Landline) Large Online Travel Client 30% 1 st year save (Contract Savings) Large Pharmaceutical Client 33% 1 st year save (Landline) Hedge Fund Client 80% 1 st year save (Wireless) Large Global Reinsurance Client** 24% 1 st year save (Landline) Large Financial Stock Exchange Client 33% 1 st year save (Landline & Wireless) Large Global Financial Services Client** 31% 1 st year save (Landline & Wireless) Large Global Financial Services Client** % Save of Client’s First Year Spend Type of Client
Case Study – Bill Processing/Audit Telecom Run Rate Analysis $6,310,468 $5,680,063 $5,095,648 $5,073,398 $5,201,979 $5,046,752 $4,816,181 $4,441,455 $3,705,595 Spend This graph represents a 41% reduction over a two year TEM engagement $6.3 MM $3.7 MM
Reconciliation and Clean Up
Commissions, if any
ROI – Things to Consider
ROI = (Gain from Investment – Cost of Investment)
Cost of Investment
Bill Processing and Auditing 1139% Contract Negotiations 2043% Wireless Management 691% Network Provisioning 3015% Market Data 1273% Client Case Study - ROI since 2000
Mitigating Resistance Getting your TEM budget approved… We’ve done without this in the past, why do we need this now? Why shouldn’t we do this ourselves? Will there be any direct impact to the bottom line? How difficult will it be to implement?