BerlinPacific.com Blog

Rockefeller and Standard Oil gave the world inexpensive refined oil by continual improvement –decreasing the cost of even the humble stopper in a barrel of oil while maintaining quality. Japanese called this process Kaizen and using it gave consumers cars renowned for not breaking down.
Many firms see telecom expense management (TEM) as a process of bill processing and auditing, along with periodic contract negotiation. They do not see the opportunity for continuous improvement through lowered costs and better service year after year.
Continual savings do not come from periodic contract negotiations every few years or looking for billing errors that shouldn’t be there in the first place. Best practices require looking for continual improvements as prices decline, superior solutions come to market, and business needs diverge from current services. Firms that put in place these best practices realize savings of 20-50% compared with firms that do not implement these best practices.

Three Approaches
There are three primary ways to cut costs, all of which require a firm understanding of the company’s current infrastructure and bill detail. The three approaches are bill validation, infrastructure optimization, and contract management. This means that every single service must be individually scrutinized to ensure that the service is being billed for correctly, the service still serves a business need, and the service is billed for at market rate.

In order for any of this to work, the organization requires granular detailed visibility into their telecom expenses. They must know every single service they’re billed for, how much it is being used, what it costs, where it is, etc. Without some sort of database system the organization is flying blind.

Contract Management
Contract Management is a continual process, not just a one-off revolving around signing a new contract. There are two primary intertwined approaches, exactly meeting commitment levels and data on lowest market rates.
When a firm signs a new contract the price on a contract stays fixed. Over time market prices tend to fall for many services. As the gap continually widens the total lost opportunity over the life of the contracts increases.

Unfortunately market rates aren’t published online. In order to understand the best market rates currently available, firms needs access to an objective third party that know what other firms pay and what other vendors are offering.
Many firms sign annual revenue commitments with their vendors. Over time there will develop a gap between what the vendor bills the firm and the firm’s commitment. If the firm is billed less than the commitment the vendor sends an invoice for the difference. If the firm is billed more, the vendor makes more money than anticipated. It is a win-win for the vendor. Often vendors won’t even disclose this gap without prompting from the firm – even though this gap requires continual monitoring.
To optimize the contract, the firm should look for opportunities to close the gap and have its annual billing meet its commitment. If the firm’s billing is under the commitment the firm should move services off contract and place them under the vendor’s so they count towards commitment. If the firm is paying above its commitment it should demand that the vendor reduce prices on services towards new low market rates. If the vendor fails to cooperate the firm can move services to another vendor offering current market rates.
Similarly, the middle of a contract is also a good time to negotiate. If the contract is going well the vendor would like to maintain its incumbent position. If the vendor has to acknowledge that it’s pricing is above current rates, the vendor will be more than likely to addend the contract or sign a new one with favorable terms. All of this requires current market data, which can be hard to obtain without expertise and broad contacts across firms for benchmarking. Vendors do not want current clients leaving for other vendors as soon as the contract is up.

Bill Validation
The importance of this is fairly well known. Each bill must be checked against the contract and the list of the services the firm has requested. For many firms this is as far as they will go with Telecom Expense Management. Once they’ve harvested the low hanging fruit they won’t dig deeper in to the details of their telecom expenses. Each month they’ll simply resolve variances between the current bill and last month’s.
This is certainly a key component. 10-15% of the savings from TEM typically come from billing errors. A faulty bill validation process will also quickly undermine savings from the other two approaches. In order to do this correctly it is important to have a tracking system for each issue until it is resolved. Vendors are notorious for failing to correct billing errors or remove unused services. Without a consistent process these issues routinely fall through the gaps and are discovered years later. Vendors will even proclaim there was never a request in the first place, and refuse to pay for more than a few months of errors. Solid documentation and follow through are critical.
Similarly, firms should be able to predict from their own database system what their bills should look like. Relying on variances between one bill and another assumes that the old bill doesn’t have problems or bills for current business needs.

Infrastructure Alignment
Over time the services a firm is purchasing are no longer aligned with the needs of a business. Every firm has offices that move, close, shrink or expand. Firms that once sent and received plentiful faxes need to remove unused fax lines. New technologies can offer superior service and capacity for the same price as old technologies. Old services must be removed as new are added.
This requires the services purchased to regularly scrutinized, which in turn requires visibility into costs. The firm needs a database of every service, especially voice and data lines. The firm should be able to determine the number of lines at each location and at least roughly the utilization on each line. Often firms will discover lines at old locations, or that are no longer plugged in to anything. Similarly without a good tracking system, vendors will often fail to honor requests to remove unused service.
This is also critical when considering new telecom solutions. Without an understanding of all the current costs, and assurance that the firm is only buying what it needs, there is no baseline for a firm to compare the cost of new telecom solutions against. This calls in to question the accuracy of any potential savings.

Summary
These three approaches of bill validation, infrastructure optimization, and contract management are the keys to continual improvement in costs. It is not just a one time or triennial event. However, in order to be truly effective they also require visibility into costs, understanding of services and how they fill business needs, and data on current market prices.
Firms that put in to place these best practices can realize savings of 20-50% versus firms without these best practices. Savings as a percentage increase with the size and complexity of each location’s infrastructure. For example, a manufacturing firm with few office employees per location may typically see 20-30% savings, while a travel agency with many office employees at each location typically sees 50% savings.
For more information on our approach to telecom savings e-mail us at sales@berlinpacific.com or call us at 212-247-2502

There is nothing better when you have a web site than having powerful pages that speaks directly to their target audiences and are easy to find. A page that makes the customer want to take action - to click and buy or ask a sales rep for a meeting so they can buy.

We saw such a page today.

The page was great. It showed another way for people to save money and time and lots of it. Exactly the type of thing we care about here. We wanted to learn more and integrate it if possible with our toolkit.

Unfortunately when you try to contact them you run into multiple sales roadblocks.

One of if not the top rule of web marketing is - make it easy for the person to buy. This was not easy - and it wasn’t even simply the fault of the web page’s design.

There was an image that looks like a button. Nothing happens when you click on it. Still it might make you think contacting someone is as easy a clicking a button. You would be wrong. You might even feel misled.

The button instructs you to contact your account rep or call the 800#.

1. When you call the 800# you get directed to a phone tree. Problems include
a. You do not get directed straight to sales OR a receptionist. But you’re calling because you want to learn more and speak with an account exec. Ideally they should have a number going straight to sales.
b. There is no option to speak to sales. They should add one.
c. There is no option to speak to the operator/receptionist. They should add one.
d. Pressing 0 did nothing helpful. They should have it direct to a receptionist.
e. By pushing random buttons to search the directory you to can be directed to someone’s mailbox to leave a message. It takes a couple tries
2. The contact form asked for a verification code (presumably for spam prevention,) but the page didn’t have one visible. Therefore there appears to be a high risk that filling it out will lead to the form not working.
3. You can try e-mailing the customer service department, but not sales.

Just by calling the 800# a potential client will get the impression that the firm is either out of business, not a real company, anonymous and unfriendly, an evil bureaucracy like The Phone Company, not interested in clients, or all of the above. However everyone at the firm seems really nice, so they’re giving a misleading impression.

Just as the receptionist is one of the most important people at many firms as he or she makes new people feel at home, the phone tree is also a receptionist. The receptionist and phone tree is your Ambassador to the world. No one likes an unfriendly undiplomatic ambassador. People often complain about big company phone trees, especially when they want support from a company.

It would be interesting to know if they have any statistics in their PBX on how many calls hit the main #? Have they been compared with how many calls are answered by a person or if a VM is left? There could be a big discrepancy.

We got a fascinating piece of spam today from free wifi robin dot com. It brings up interesting security concerns. Their product helps one get on wifi networks, it is unethical and looks very slick. Not the kind of free we recommend.

Basically the $160 solution will crack WEP WiFi networks. Due to the crummy nature of the encryption, capturing enough WEP traffic will allow anyone to crack the WEP encryption in 20 minutes. This means if your network uses WEP it can be cracked, exposing your machines. Apparently this wifi cracker also has a powerful antenna, so it can connect over a wide radius.

The way to solve this is to not use WEP, but WPA.

This bring up the problem of whether WPA can be cracked. It can, but it takes a while. (WPA2 AES is the best encryption - however, and takes the longest, and may not be easily crackable.)

What basically happens is that the cracker will monitor your encrypted connection and force you to re-authenticate. When you re-authenticate, which you probably won’t notice, that data can be saved to the hackers computer and cracked at their leisure. Basically they’ll run a brute force attack - trying every possible combination. It may take a while, but today’s computer are very powerful. One can even use graphics cards to speed up processing. Any password less than ten characters might be easy to crack that way. (Most people use only the 26 lowercase letters and ten numbers to make a password, therefore a password of 6 characters is one of only 2,000,000,000 combination’s. From a computer’s perspective this isn’t very many combinations.)

One is advised to use long passcodes - longer the better.
Passphrases are good -
itwasadarkandstormynight would probably work.

If you want to keep people off your Wi-Fi, don’t use WEP use WPA2 AES, or WPA and create a longer password.

We’re uploading different document to the site Scribd.

Visibility and Vendor Cost Management How to find hidden savings in your services spend. It relates to Telecom Expense Management, but also IT support and maintenance contract costs, Waste and Recycling Costs, Credit Card processing costs, etc

Vendor Cost Management for C Level Officers It uses Telecom Expense Management as an example, but also mentions our practices Private Jet Management and Maintenance Costs, Freight and Shipping Costs, Utility Costs / Power Costs

We also uploaded our simple overview of Visibility and Managing Recurring IT Costs It relates especially to Telecom Expense Management, and IT support and maintenance contract costs but the general principles relates to vendor costs in general.

They’re a pretty amazing repository of documents.

-Anders

We had a previous post on free collaboration tools,
http://berlinpacific.com/blog2/2009/09/23/free-collaboration-tools/

Mikogo is an excellent product.

The one downside was that it was wasn’t compatible with the Mac.

Cross Loop’s product is.
http://www.crossloop.com/

The only down side with cross loop is that it requires an install, but it will help with remote cross platform collaboration. (Mikogo only requires that the host install the program - other people can just run a program.) I’m not a heave user, so I don’t know how reliable it is. But I know people who use it a lot.

Visibility is the key to managing any cost, including network costs.

Surprisingly even smaller firms have network management systems that give visibility in to the network and make tight management possible, yet they aren’t provided with network cost management systems that give them visibility it to their costs. This makes optimal management of the costs impossible and excess spending inevitable.

With networks especially much of the cost is a sunk cost - the capital spent on buying and deploying fiber and equipment. Carriers, whose network is their business, are conscious of the need to maximize dollars of profit per unit of capacity. (Interestingly some accounting practices aren’t congruent with this goal, more on this in a future post.)

Many people might assume that all telecom carriers have only labor costs once the equipment is installed. This would be wrong. In today’s world carriers are constantly interconnecting and have recurring carrier and equipment vendor costs of their own. Wireless firms need a way to backhaul traffic from their cell towers, and use local low cost providers rather than building their own capacity every time. In order for us to make long distance and international calls, many carriers need to be paid. In addition the equipment itself needs support and maintenance from the manufacturer. All this creates recurring costs.

Without Visibility

We know our important services. We usually know what bills pay for services, but little else.
A service can be anything, including a support and maintenance contract, or a voice or data line.
Vendors don’t provide consolidated bill break down with a single pane of glass for all vendors.

Note: Network Management vs. Network Cost Management

Interestingly most firms have a network management system. They know full well what services and device they have and whether they go up and down. Operations has a very clear view in to all their devices and carrier services connecting them.

What the systems don’t do is tell you the recurring monthly or annual cost of the circuit or the support and maintenance contract associated with the device and whether you’re still being billed for something that is off your network.

With Visibility

Bills are consolidated and broken down.
We can see connections, without always having to look at multiple files, or worse yet flip through paper bills.

Note that there was a service the firm was paying for that no one wanted, at least not anymore. This happens more often that one would hope. We regularly find expensive items buried in bills that serve no business purpose.

Given the poor quality of many vendor’s data, creating visibility can be quite a task in any area, not just networks. One of the reasons firms use us to help manage their costs is because they have no one on staff with the time and expertise to take the data they have and put it in a proper database. Often additional data has to be requested from the vendors themselves.

Since nothing can be managed without visibility, it is usually worth the effort to create it even for $100,000 categories.

With Visibility

We can manage each cost by:

1. Eliminating or consolidating unused and underutilized services
2. Fixing billing errors
3. Renegotiating rates

In the above example we assumed there were no billing errors. We were able to remove the unused service saving a significant amount. We routinely find many unused services for our clients, saving a significant portion of their budget. Many costs in the IT and telecom world have also fallen dramatically, including of course voice and data services. It is also possible to get lower costs on many IT Support and Maintenance contracts with OEMs like Cisco. With our connections in the market place we’re able to routinely roll over and re-negotiate contracts for our clients at a much lower price point.

We’ve seen how with visibility one can manage costs. While the 50% savings above may seem like an exaggeration, we routinely find those kinds of saving for clients by giving them visibility and managing their costs for them. Even 20% savings, low for our clients, is a substantial win with a large enough budget.

We’ve recently found clever solutions for wireless, especially people with international roaming.

Most people agree that Verizon Wireless has the best network for the US. But they’re the most expensive and their international network isn’t the best. Plus international roaming is very expensive. AT&T Wireless and T-Mobile are popular for international travelers, but they’re expensive too.

We discovered that international travelers can get an international sim card, allowing them to less expensively make international calls. There are lots of companies like gosim that one can use.

The tricky part is how do you still get calls to your US number while roaming. One solution we’ve found integrates the two and can save up to 50% of one’s wireless costs. The outline is -

We set up your plans (allowing you to pool minutes, get cheaper voice and data plans, make cheap international calls, cut down texting and other usages costs.) We recommend using the Verizon Network in the US.
We enable on demand forwarding to an international sim. When you’re abroad the caller pays US rate, but you don’t pay exorbitant international call forwarding fees. You save money and typically don’t use the Verizon Network but the local network when abroad. (In some case like Mexico the Verizon network is effective and low cost.)

How does it work for the user.

When you go abroad on your phone you turn on call forwarding to your international sim.
When you get there your sim card will put you on the local network.
Now all your US calls come to your phone.
You can spend less money making calls.
You can use your blackberry / get on the internet.

We recently analyzed an oil services company with a $20,000 a month bill and found them 40-45% savings with this solution. Plus they get to keep all their devices, numbers, network, etc.

You want to get to the root cause of your costs. In the case of health care, high claims create high insurance premiums.

Research shows that

• 30% of all medical spending can be attributed to waste
• 22% of patients have been given the wrong diagnosis by their local doctors
• 61% of patients are currently prescribed the wrong treatment regimen

If you reduce claims by reducing the number of wrong treatments, you can reduce costs long term. At the same time you can save your employees money with reduced Co pays and deductibles. As the ultimate bonus, you could possibly saving their lives.

Berlin Pacific, as part of its practice for managing health care costs, has access to a program called Best Doctors that can help make sure your employees get the right care. Best Doctors does this by getting the leading experts in the field to review your employees’ diagnosis and treatment options for serious conditions with potential for large claims. They can do this at no cost to the employee or their family members. Best Doctors acts as the employee’s advocate to make sure he or she gets the correct treatment, and not an incorrect or unnecessarily expensive treatment which doesn’t help.

If you get the wrong treatment, you still have to do the right treatment later. So that is two treatments. Why not just have one correct treatment and get better sooner?

Some benefits include -

• This is supplemental - you can start it now.
• If people have health conditions today, you can get them help now.
• You can get employees healthy faster!
• You can save an average of $20,000 per case in wasted claim expenses.
• Free if you do business with our health care practice. Costs no more than $6 per employee per month if you don’t.

Typically only big companies with a minimum of 5000 employees qualify for this service. Fortunately, we have the ability to give smaller firms access to this service. This is a key part of our practice for helping firms manage health care costs. We believe the problem with Health Insurance is not the carrier you have, but how the employees are utilizing the coverage.

To learn more send me an e-mail at amikkelsen@berlinpacific.com, call me at 212-247-2502, or go here
http://www.youtube.com/watch?v=K7unV366Qr4&feature=player_embedded

Alternatively an overview can be found here:
http://www.berlinpacific.com/docs/Best_Doctors.pdf

Gliider is a free downloadable tool to help you research travel plans. You can

1. Find and gather travel info from all your favorite sites
2. Ask for advice from people you trust.
3. Book and save info on travel deals

http://www.gliider.com/demo/

The demo is great.

We found several free services which really do work. Usually free means it is second rate and unacceptable - but we know professionals using these free and convenient services for collaboration and communication.

1. Free Web Conferencing
2. Free Faxing
3. Free Large File Transfer and Private File Sharing
4. Free Audio Conferencing

Free Web Conferencing with Mikogo
Free Screen Sharing Tool - good for web conferences, remote support, etc.
http://www.mikogo.com/
Benefits include

* Free.
* You need an account to share your screen, but the other people don’t need one, nor do they need to install a program.
* It plays well with firewalls and only requires running a small program (no installs.)

Free Faxing with efax GotFreeFax
Amazingly some companies still insist on sending or receiving faxes - and they refuse to use e-mail. What do you do if you’re on the internet but nowhere near a fax?
To fax for free http://www.gotfreefax.com is a good site. To accept faxes occasionally you can get a free efax account.

Free Large File Transfer and Private File Sharing
What do you do if you have a large file that is over ten megabytes and too big to e-mail? One option is to use
http://www.zshare.net
This free site allows you to upload your file. It gives you a link you can e-mail to anyone to download the file.

Free Audio Conferencing with FreeConference

This last one is controversial - but we’ve noticed people are using it a lot.
You really can do conference calling for free - for now - but only if you’re ok with using a regulatory loophole to get free service. Also participants must not mind paying the long distance charges. If that’s all true then the way to go is -
http://www.freeconference.com/
We’ve noticed many people are using this service in particular. There are similar services if you do a search on the web.
If you want to do inexpensive conferencing where participants call an 800# and there are no ethical grey areas, e-mail us and we’ll get you low rates with national vendors. There’s no free 800# conferencing.
With FreeConference.com you do have to pay high rates for 800# conference calls and there’s a low fee for web conferencing which works.
For a more in depth discussion of why the conferencing is free and why it may not last -
http://berlinpacific.com/blog2/2009/09/23/can-free-conference-calls-last/
Unlike the rest of the services we mention - this one appears to be free because it exploits a regulatory loophole. This may pose an ethical dilemma, and we can’t recommend using the service. In fact if you like your long distance provider, you definitely shouldn’t use the service.