The first generation of telecom management, often called cost management, was focused on telecom carrier cost. Manual invoice-to-contract compliance audits were performed to identify billing errors so that overcharges could be recouped. It was labor-intensive and primarily provided value by reacting to ever-present carrier billing errors. While potentially effective as a cost recovery practice, the first generation of telecom management was tactical and financial benefits had a short half-life.
The second generation of telecom management introduced automation to reduce stare-and-compare labor and to reduce the time required to complete audits. This was achieved using specialized software and electronic invoice media from carriers for the same cost management objectives as the first generation. This generation also introduced invoice processing and payment activities to collectively establish telecom expense management as an industry category. Speed to identify billing errors and financial anomalies was the benefit gained in this generation of telecom management. Its effect was hindered by primarily focusing on invoices to identify exceptions, while the underlying activities that drove invoice inaccuracies were largely unaddressed.
The third generation of telecom management introduced lifecycle management principles that incorporated work streams associated with expense and invoice management into the equation. Inventory management, contract management, service ordering, incident management and dispute management have a direct influence on telecom expenses; and by incorporating these activities into the scope of the TEM practice, the lifecycle of telecom services, assets and costs can be managed. An overlay of policy and business rules governs the lifecycle management approach for this generation. Cause-and-effect drivers for financial exceptions were addressed by the lifecycle approach and preventative measures that yielded more effective outcomes in the quest to drive optimal service-to-cost benefit were gained with this generation of telecom management.
While third generation telecom management benefits are greater than its predecessors, the opportunity to establish exponential value exists in the fourth generation of telecom management. In this evolution, telecom management quantifies the business value of the telecom estate. All attributes of the third generation are essential to this objective. The technical, financial and operational aspects of a telecom environment must be understood, controlled and optimized to ensure that service-to-cost value is delivered; however, the fourth generation transcends cost control as the end-state goal of telecom management and establishes strategic contribution to business results as the primary objective.
The fourth generation of telecom management recognizes that a telecom management practice is a business within the business. The goals and objectives outlined in a telecom management strategy should target outcomes that directly support business strategy. A high degree of alignment between the two strategies supports the case for leveraging the telecom environment as a strategic asset used to drive business growth, while misalignment of the two strategies creates distance between the business of telecom management and the business the telecom environment supports, which diminishes the perceived value of the telecom asset.
A business strategy focuses on financial growth, which is achieved by increasing sales, market share and profit margin; profit margin is improved when the cost of goods is reduced and/or the price for goods is increased. Operating expense is a negative margin driver, so reducing it creates a positive financial impact for the business. In this context, alignment between telecom management strategy and business strategy is familiar – reduce telecom environment expense and improve profit margins for the business.
By aligning telecom management strategy with business strategy, the position of telecom management is elevated from ordinary service delivery to extraordinary business steward dedicated to driving strategic business results. Controlling the cost of the telecom environment illustrates good business sense, which measures the business value generated by its strategic business vision. Welcome to the fourth generation of the telecom management industry.
Timothy C. Colwell is a telecom management industry thought leader exploring the impact of technology as a business accelerator and social capital enabler. AOTMP is an information services company that helps organizations take their fixed and mobile environment to a greater level of performance and helps telecom vendors achieve excellence in creating value for their clients. Using information and analytics to drive efficiencies, performance and productivity, business solutions are based on their patented Efficiency First Framework. For more information, visit aotmp.com.
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