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December 2010

An Automated Self-Audit Approach to Telecom Cost Assurance

An Automated Self-Audit Approach to Telecom Cost Assurance

You can lead a horse to water, but you can’t make him drink.  Software vendors have been offering automated solutions for telecom cost assurance for several years now, yet many telecoms are still working from Excel spreadsheets and paperbound processes.

When you look at the hundreds of wholesale invoices a typical service provider receives each month, I’ll admit that the audit task looks daunting.  You’ve got thousands, sometimes millions of line-items to verify across dozens of bill formats.  But automation is the answer.  When a telecom gets its invoices into a database, it can produce standard reports, see the big picture of where it’s spending money, and start disputing bad charges in a methodical and efficient way.

One company that specializes in cost-assurance automation is Contact Telecom in Manchester, N.H., a company I visited last week.  Founded in 1998, Contact operates out of a fully restored 19th Century textile mill along the Merrimack River.  The company provides Billing Data Analyzer (BDA), a SaaS solution that now serves several small to mid-sized carrier clients.

I got a chance to interview Jim Buttafuoco, founder and chief programmer.  Here’s the edited transcript of our conversation:

Dan Baker: Jim, you run a very lean operation.  I’ve been in your offices for 10 minutes and have met most of your employees and toured your data center.  How do you do it?

James Buttafuoco: What you see here, Dan, is the result of automation and the user self-service philosophy that we embody in our solution.

First of all, I’m an automation fanatic.  Ninety-nine percent of our data retrieval, processing, reporting is automated.  We have automated routines for taking in the monthly bills, confirming the data integrity and presenting accurate reporting to the client within minutes of file receipt.  Over the years we’ve also built up a library of parsing algorithms and we now support invoices from more than 450 vendors nationwide.  This includes invoices from many different types of service providers, to include LECS, RLECS, IXC, wireless, CABs and others.

In our SaaS model, we look to the customer to be the business expert and to apply their knowledge of their own business processes and cost drivers.  We bring the data-processing expertise and guide the client in understanding the data, but we don’t apply our opinion, and this is where we differ from the other cost-assurance vendors in the market.  We enable our clients to be analysts, not data processors.  The final output is a payment record for transcription to the Accounts Payable process, and even this can be automated.

What is the biggest challenge you face when implementing with a new client?

Our biggest challenge is managing the rollout where the client’s manager may want to implement BDA, but the staff is resistant to change.  The staff is comfortable with old habits and current processes.  They’ve always managed their costs in Excel and they’re unwilling to move up to something better.

Senior management buy-in is critical.  If senior managers are using BDA themselves, pretty soon the rest of the staff figures, “I need to be using this system too.“ Managers love the accountability they get with BDA.  Often for the first time, they can retrieve an answer to their question at the push of a button, or see an audit trail to follow what’s happened to an invoice, so they can ask the question: “What’s this charge for?  You approved it.”

Companies who don’t embrace change will sooner or later go out of business.  Because there’s a competitor out there who has embraced change and is improving their systems.  Coherent business processes, supported by automation, will enable that competitor to make informed decisions and that agility will allow them to leapfrog operators who don’t understand their business costs.

There’s a trend toward leasing network facilities from second-tier carriers instead of the large incumbents who charge higher fees.  So is this trend toward tier-2 carriers going to make the cost assurance game any easier?

It really depends on how good the invoices are.  The Bells of the world are the old pros at the wholesale game and produce a readable bill to the BOS/BDT standard.  And you can partly thank the government for that because they were the ones who forced the ILECs to provide invoices in electronic form.  The inter-change carriers (IXCs), on the other hand, are not regulated, so they were not “forced“ to provide comprehensive billing.

Mergers and acquisitions have contributed to the challenge.  XYZ Telco may have bought 15 companies in the past few years, and 14 of them produce acceptable invoices, but the 15th company’s invoices may be missing fundamental data necessary to verify a charge and this makes the task of cost assurance difficult.

When we work with a client to convert their paper invoices to electronic format, we have conversations with the wholesale vendor to understand their invoice formats, and devise the best strategy to automate.  Along the way, the wholesale vendor gains insight on how to make their invoice better and be a better provider to our mutual client.

What should a carrier look for in a SaaS solution for Cost Assurance?

One of the first things you need is near-real-time reporting.  With some other vendors, once the user uploads their data, they might not see the results for three to six weeks.  Unbelievable.  The system should support cost management on an individual invoice level, near real time.

Each invoice needs to be loaded and presented individually, in the workflow, based on the invoice bill period.  The invoice is fully loaded with all the supporting detail, and augmented with detail from outer reference sources, to support comprehensive auditing.  In this way, the analyst can file claims on disputes at that time, allowing them to pay the invoice on time and short pay the claim as warranted.  This makes the invoice management very clean and efficient.

SaaS allows you to get a best-in-class solution without having any IT shop to deal with nor any database expertise.  But SaaS doesn’t magically solve your problems.  You still need to take the initiative and work the system to find gaps in your costs.

This article first appeared in Billing and OSS World.

Copyright 2010 Black Swan Telecom Journal

 

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  • Special Report: Wholesale Systems for Advanced Services by Dan Baker — Plenty of technology and market changes are disrupting the telecom wholesale market: advanced services, new kinds of partners,,and the need to monitor relationships and services more closely than was ever required in the circuit voice world.  This article introduces a TRI special report discussing the kind of Wholesale Systems needed in this challenging marketplace.
  • Data Integrity Issues Go Global in the Telecom Wholesale Exchange interview with Vic Bozzo — Wholesale systems enable operators to expand their global reach and work efficiently with partners in an increasingly interdependent telco business.  In this article, you’ll learn about: how many subsystems work together in support of the global trading exchange, why data integrity has become critical, and how wholesale business trends are affecting wholesale systems at Tier 1 and mobile operators.
  • Carrier Usage Audits: Why Regular Checkups Are the Key to a CSP’s Bottom-Line Health by Brian Silvestri — Many telecoms are wholly unaware of the risks of not having a solid usage auditing program for interconnect bills.  Rather than a once-a-year or once-a-quarter audit, this article makes the case for regular monthly audits.  Also discussed are: the different types of audits and organizations involved; the dangers of not auditing often; and factors to consider when selecting a cost-management vendor.
  • Invoice Audit Productivity: From 19th Century Textile Mill to SaaS by Peter Yelle — When it comes to invoice reconciliation, are your processes and tools modern and efficient, or is your company stuck in a 19th century time warp?  This article show how operators can vastly reduce their manual audit steps by automating via a SaaS solution.  The  detailed case study and diagram show which tasks were automated to achieve an 80%+ productivity gain.
  • An Automated Self-Audit Approach to Telecom Cost Assurance interview with — What’s the value of an automated approach to invoice validation?  This article explains the power of the SaaS model where the vendor supplies the data-processing expertise, relieves the operator of tedious manual work and boosts auditor productivity so more money is saved.
  • Cost Assurance: Dealing with Rating Variety in Wholesale Bills by David West — Validation of intercarrier wholesale invoices seems like a fairly straight forward process.  But regulatory rules and a variety of bill rating methods have made it very complex.  This article details the challenge by walking through a wireless carrier case, then laying out the argument why operators should opt for a custom solution based on a core reporting engine.

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