Email a colleague    

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

 

About the Expert

Jim Buttafuoco

James Buttafuoco is the managing partner of Contact Telecom and has more than 20 years of professional software development and operations experience, with a major expertise gained in systems architecture, management and optimization.

James holds a Bachelor of Science in Electrical Engineering (BSEE) from Widener University in Chester, Penn.

Related Stories

  • 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 Jim Buttafuoco — 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.

Related Articles

  • Webinar: From Wholesale Settlement  to Global Partner Management by Dan Baker — A 40 minute webinar providing a sweeping view of the challenges and opportunities service providers face as they try to manage a far more complex wholesale and partnering scene.
  • 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.
  • Network Asset Choreography: Subex Teaches Analytics to Dance with Discovery & Life Cycle Management interview with John Brooks — Network provisioning and asset life cycle management is a foreign world to most business assurance professionals because it’s a domain that lives outside the order-to-cash stream.  This article explains how new analytics and network discovery techniques are enabling operators to better track assets, plan capacity, and pave the way for strategic network deployments and decommissioning.
  • Atlanta-lytics: New Telecom Conference Features Revenue and Customer Analytics by Dan Baker — A new telecom conference on analytics in Atlanta (January 29 — 31) is shaping up to be a key event for people who want to stay abreast of this fast moving field.  Black Swan is hosting a half-day, pre-conference workshop entitled, “Financial and Revenue Analytics” featuring seven speakers, many of whom are contributors to this magazine.  Detailed program guide is enclosed.
  • Big Data Financial Analytics: Creating Business Value for Tier 1 Telecoms interview with John Devolites & Atul Jain — What exactly is an analytics company?  This interview with executives at TEOCO helps defines this new breed of telecom solution vendor — a cross between software, consulting, and assurance supplier.  Along with a few Tier 1 case studies, the interview discusses: big-data vs. sampling, analytics project management, and the importance of data access.
  • Margin Analysis: Bolting Profit Assurance onto a Revenue Assurance Platform by Efrat Nissimov — Margin analysis is one of the hottest trends in business assurance.  But what’s all the excitement about?  This article explains the benefits, the market forces driving its adoption, and its advantages over Excel and heritage data warehouse approaches in terms of flexibility, data granularity and quicker time to access.  The author also touts major cost savings if margin analysis is deployed as a module within an existing revenue assurance suite.
  • Partner Settlement: The Adaptable Chameleon that Lives Between Wholesale and Retail Billing interview with Arun Kalavath — Partner settlement has been around a long time, but its profile is on the rise because wholesalers are offering new services and content services are bringing settlements into the retail sector.  In this article, you’ll learn about the market forces changing the wholesale business, the expanded portfolio of services that require settlement, and advice on how to pick a settlements solution vendor.
  • 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.
  • Partners in Carrier Management: The Success Story Behind T-Mobile’s Fiber Rollout in Wireless Backhaul interview with Bryan Fleming — Wireless backhaul is the unsung hero of the smartphone’s success.  This interview with T-Mobile’s carrier management architect for backhaul reveals the behind the scenes game plan for one of the most ambitious wireless interconnect programs ever.  You’ll learn about: the reasons for adopting a full-scale fiber strategy; the challenge of finding carrier partners; the clever techniques T-Mobile used to simplify and cut costs; advice on building great relationships with suppliers; and the key role that analytics, assurance, and visualization software played.
  • Will Apple Take a Bite Out of Carrier SMS Revenues?  Likely. by Brian Silvestri — Text messaging generates $20 billion of revenue each year for U.S. carriers alone.  But Apple’s lastest iPhones come with iMessage, a free embedded messaging service.  But while the long term threat to SMS revenue is clear, what strategies should operators be following today?  This article discusses the many factors operators need to consider, offering advice on how mobile operators can keep SMS profits rolling in as long as possible.
  • 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.
  • Least Cost Routing and Rate Audits Not Delivering the Savings You Expected?  Here’s Maybe Why by Brian Silvestri — Least cost routing (LCR) is supposed to be one of telecom’s greatest cost-saving innovations.  Yet Connectiv Solution’s research suggests that the LCR programs at many U.S. carriers are losing millions of dollars.  The story explains the traffic analytics steps service providers must take to ensure profitable LCR and other cost assurance programs.
  • Wireless Backhaul: Preparing for the Cleanup When the Dust Settles by Charlie Thomas — Wireless backhaul represents perhaps the largest telecom build-out in the last decade.  This article lays out a strategy for operators as they sooner or later must groom, optimize and re-engineer their backhaul networks based on actual capacity needs, new pricing and improved supplier agreements.  The article lays out a 6-point plan for ensuring success.
  • Is Offering Free International LD on Your Horizon?  Follow These Checkpoints by Hulya Altinsoy — Free is a magic word for consumers.  So how about adding free international long distance (LD) to your list of services?  While free international LD serivce is fraught with risk, the article presents a  5-point checklist to help get your bearings before you make the leap.  The article also presents an analysis of billions of minutes in international LD calls by U.S. wireless carriers.
  • Real-Time Network Intelligence: The New Way to Read Telecom Tea Leaves by Suren Nathan — Real-time network intelligence is the key to deciding which products to launch, whose facilities to lease, and where to route traffic.  The article explains why telecoms — and especially enhanced service providers --  should ideally be equipped with both a fine-grained margin analysis solution and a SaaS platform, offering an upgrade path that requires no internat IT support.
  • International Call Routing: A Challenging Area to Master, But Payoffs Can Be Big interview with John Fitzpatrick — International call routing offers a completely different set of challenges than the common practices found in North America.  This article explains the many issues faced in international LCR from imprecise routing and number portability headaches to dispute problems and the flood of wholesaler rate sheets that must be rapidly made sense of and implemented in the routing plan.
  • Dynamic Call Routing: The Market Enabler that Allows VoIP to Improve with Age interview with Neal Axelrad — Least cost routing (LCR) has matured greatly in recent years.  Today’s routing is far more dynamic because of new real-time capabilities.  This article explains technology advances that instaneously re-routie calls based on real-time intellgence gathering from the network.  Also discussed are template-driven rate addendums, SaaS delivery, and the economics of LCR.
  • Network Inventory Integrity: Taking Cost Management to a Higher Level interview with Suren Nathan — Recovering stranded assets and capacity is essential for minimizing CAPEX and leasing costs.  This article makes the case for reconciling network inventory through the many ordering, billing, and other systems that interact with that inventory.
  • An Automated Self-Audit Approach to Telecom Cost Assurance interview with Jim Buttafuoco — 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.
  • Meet Your New Cost Management Solution: A Tandem Hub Carrier interview with Surendra Saboo — In the telco interconnect game, frustrations are many: high tolls, jurisdiction scams, and the expense of connecting to a partner.  This article explains how tandem or aggregation carriers are making life easier and saving operators a boatload of money.  Learn the difference between peering and a “tandem hub” and why this trend is becoming increasingly global.
  • 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.