BerlinPacific.com Blog

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.

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.

A lot of people are using FreeConference.com and other services where you can make free conference calls - if participants are willing to pay for the long distance. The services really work - so what’s the catch?

It isn’t clear if Free Conferencing Services are viable long term. They make their money by charging the long distance carriers a lot of money per minute. They can do this because there is a regulatory loophole whereby local carriers in rural areas can charge long distance carriers high fees for terminating call to rural areas. Someone realized they’d make themselves and the rural carriers a lot of money, if they could drive traffic to them. They then set up equipment at the carriers facilities and started advertising free local calls and at one point free international calls and sex lines. At some point though loopholes do get shut down, and this might be seen as a clear case of abuse. On the other hand it isn’t clear how they’ll be able to shut down the loop holes without uprooting regulations.

It is possible that someone will set up VoIP conferencing and use free conferencing as a loss leader to upsell better services. Certainly the Free Conferencing Services overcharge for toll free conferencing. VoIP conferencing is a business model that could last.

For a reprint of a Wall St. Journal article - go here.
http://publicutilities.utah.gov/news/how2guysiowaconnectiontookbigtelecomsforaride.pdf

Apparently MagicJack blocks calls for FreeConference.com - more evidence that FreeConference.com feeds off of high call termination rates.
http://rickyspears.com/blog/2009/08/magicjack-hijacks-my-free-conference-calls-to-218-339-2500/

Update 1
Apparently one large hosted voip provider we know is now blocking calls to free conferencing providers from their customers. They have to pay an order of magnitude more to terminate calls to these providers. They surely won’t be the only ones blocking calls.

Many companies get a flood of invoices for recurring vendor services, invoices that have to be sent to a busy decision maker for approval. There is no internal documentation explaining to accounting what the bill should look like and when to flag it for review. Documentation for bills or purchase orders can save time and catch billing errors.

For most companies as long as the bill looks similar other last months they don’t question it. This can be dangerous if the bill is for:

A service they no longer need
Multiple services, some of which were recently canceled
An amount that varies every month

Let’s use telecom as an example.

We’ve seen clients who pay bills that they think are for expensive voice or data lines they currently use, but they don’t have any documentation so they don’t realize the bills are for unused lines.

We’ve also seen clients who get bills from Verizon for thousands of dollars, but there is no breakdown on the bill listing the services. The clients have no document listing the current services needed and how much they cost individually or in total. Later when they do get a breakdown they realize that they’re paying for stuff they don’t need or canceled already.

Another client’s long distance phone bill had been seeing a steady climb in traffic. When we reviewed the bill we realized that recently included in the bills was thousands of dollar in charges that weren’t for calls, but were new charges for every line the client had. Since the client had no document indicating which section could vary and which could not, they didn’t notice the unnecessary increase in costs.

While nothing is as good as a complete “inventory” of all your services, documentation of what a bill should look like, what it is for, and when to flag it, can catch many expensive errors.

One way to document bills is to create Purchase Orders for those recurring monthly contract charges, instead of just receiving monthly invoices that require authorizing signatures. The purchase order can document what you’re buying and how many and what the total should be. If the bill is different, the bill can be flagged. If the bill matches the PO it can be paid instead of being sent outside accounting for review. For this to work Purchase Orders have to be updated every time there’s a new contract or services are moved added or changed. Periodic review of Purchase Orders that haven’t been updated is advisable as well.

Good article about how and why Telcos do a good job of driving away customers. While in English it is focused on the consumer market in Germany. Apparently they deal with the same stuff there that we deal with in the US business market.

http://www.thewavingcat.com/2009/03/24/why-the-telcos-are-doomed/

“Since this post is somewhat lengthy, here’s the summary upfront:

* Telcos don’t act in their customers’ interest
* Customers don’t trust their service providers (from bad experiences)
* Lock-in will backfire on a massive scale and drive customers away
* As soon as a new provider comes along and offers decent plans, fair & transparent conditions, and no lock-in, they’ll easily win the market ”

Lots of people need wireless internet on their computer for business and personal use - but not all the time. Rovair is an established company that can rent you wireless internet with or without a card.
(People wanting to rent their unused wireless internet to Rovair should contact us. 212-247-2502)

RovAir OnDemand allows a user with their own equipment to activate it for only the time that they need it. The largest benefit is cost, you can prepay 30 days in advance, and then use the card for any 30 days throughout the year. It’s simple, just reserve a time 24 hours in advance, and we will activate for the time that you need it.

This can save companies a lot of money who don’t want to needlessly enter into long term contracts. Companies who were forced to enter long term contracts for cards they rarely use now have an option to save money. They can join a pilot program to rent back wireless internet access to Rovair on the days they aren’t using it.

They’re also working with Alamo and hotels to have their services available to travelers at their destination. They also help people putting together trade shows.

We’ve met several of the founders and would be happy to put you in touch with Rovair.

http://www.rovair.com/?referringid=176