More turning to telecom expense tools

Telecom expense-management tools and services aren't new, but more businesses than ever are finding them necessary.

Reasons include the fact that service providers continue to bill customers in error, of course, but also the ongoing concerns over industry consolidation - as well as outright scams.

"There's a lot of interest in billing tools and analytics today," says Rick Saia, research analyst for Aberdeen Group's global supply-management practice. Most companies use such tools to monitor invoices, contract terms, departmental reconciliation, service rates and payments, he says.

Aberdeen estimates that 7% to 12% of telecom service charges are in error.

"I've seen an increase in marketing and offerings of third-party expense-management services in the past 12 months," says Dan Rathbun, indirect commodity manager at Pentair in Golden Valley, Minn.

Sprint Nextel, one of Pentair's wireless service providers, brought TEM company Integrated Mobile to Pentair about a year ago. Integrated Mobile provides a suite of services including order fulfillment, configuration and bill management for a customer's end-to-end wireless service needs.

"It was a great thing for us," Rathbun says. "The benefit is not just an expense management tool, but it has the effect of placing you at a different point in the supply chain, because [Integrated Mobile] does fulfillment, rate optimization and distributed billing on a monthly basis."

Pentair, which provides water movement, treatment and storage products, uses Integrated Mobile to manage about 1,000 wireless devices and contracts.

Pentair also uses telecom bill-auditing services at certain locations for wireline voice and data services.

One big error Integrated Mobile picked up on was an order for 16 new lines that didn't come through its fulfillment system and therefore was immediately flagged as possible fraud. The charges for these lines were immediately placed in dispute.

When going with a TEM vendor, customers are told they can reduce monthly telecom costs by about 10% after initial contract rate reductions. "And yes, we've seen that," Rathbun says.

Other considerations

But saving money is only one aspect of TEM. Another is helping customers mine the vast amount of data that's included with their invoices. For one national retailer of office supply products, that data mining capability has made it possible to flag third-party billing scams.

The telecom manager, who asked that her name and company not be published, says there has been a sharp increase in third-party billing scams.

She started noticing calls that cost $20 apiece on her telecom invoices from 10 retail locations in the New York region. These calls were made to a company called Jobs Hotline, which operates much like a 900 service. The telecom manager points out that she blocks all outgoing calls to 900-like numbers, but the problem with the phone numbers going to Jobs Hotline was that they used a standard area code and exchange. She also believes the calls were never placed from the 10 stores. In fact, about eight calls were placed back-to-back from the fax numbers at each store.

You could look at the $20 charges as such a small expense it might not be worth the headache of tracking them down and getting refunds, especially when you spend about $30 million a year on telecom services nationwide, like this company does. But the problem quickly escalated as more calls were placed from these fax lines to Jobs Hotline. "It was a $1,500-per-month problem that turned into a $3,000-a-month problem in three to four months," she says. The charges also were hard to spot initially because they were funneled through a legitimate third-party billing company, she says.

TEM products from Asentinel helped the office-supply company get the charges and expenses in check. The tools allowed the company to track the fax calls and charges, which now are grouped together automatically in a separate report. This makes it easier for the company to try to get its credits.

Pentair has been in contact with the FCC, the Federal Trade Commission and the Attorney General's office about the fraud.

Another customer also has seen an increase in third-party billing problems.

"The biggest nuisance we never expected is dealing with bogus companies selling Internet advertising services," says Larry Van Etten, senior manager of Ikon Office Solutions' telecommunications services center in Malvern, Pa.