The Cost of Complexity
As a global leader in IT and provider of managed network services, this client depends on myriad data and voice communications networks, equipment and services – and so do its customers. But these systems come at a cost beyond the carriers’ monthly bills. Most companies lack a precise, detailed view of their communications inventory – the laundry list of data and voice circuits, routers, data switches, SONET rings, and firewalls that support their communications needs – and the carriers’ contracts that overlay them.
This opacity translates into millions of dollars in waste, as much as 10-30% of a company’s overall communications spend, in the form of billing errors – spending more on services than originally agreed upon, such as paying $700/month for a router that should be billed at $500, or paying monthly fees for equipment and services that have long been terminated – and lost opportunity to optimize and upgrade the network.
This was the case at this particular client. Not that it hadn’t tried to fix the problem: The IT leader had engaged numerous telecom expense management (TEM) vendors, recruited numerous consultants, and marshalled its own inhouse teams to tame the telco beast, but prior to 2011, no one had succeeded.
That all changed with Sakon.
Let the Savings Begin
Drawing on the intuition and insights of the Sakon team – a group steeped in the intricacies of enterprise network deployments and billing from years working at the major carriers – the teamwork and knowledge sharing among the client’s Network Services and Sakon teams, and the data-gathering prowess of the Sakon Platform, Sakon conducted an exhaustive audit of the client’s communications network.
Key to this effort was capturing all the network inventory, contracts, and bills in one system and bringing them into meaningful alignment, a Herculean task – the client’s network inventory alone is comprised of more than 200,000 line items – made simple by Synkronize™, the enterprise-scale, data-synchronizing engine of the Sakon Platform. (See Synkronize diagram.) With the network and its billing dependencies now captured in the system, Sakon synthesized the data to find savings, including:
1. Services Billed at Wrong Rates
Large-scale consumers of network services like this client and its customers negotiate discounted rates with carriers. While these rates are clearly spelled out in the resulting contracts, they often are not reflected accurately in the resulting bills, something the Sakon Platform flags automatically.
2. Waived Services Mistakenly Charged
In the world of custom contracts, a promised “free” service is often charged anyway as the result of flaws in carrier billing systems.
3. Double Billing
Enterprise clients often are billed more than once for the same service as a result of miscommunications between the carriers’ various billing departments.
4. Charges Applied to Decommissioned Services or Devices
When complexity keeps companies from tracking the status of individual devices, circuits, and services, it’s easy to keep paying for a service or piece of equipment long since terminated.
5. Right Rate, Wrong Year
Enterprise communications contracts are full of long-term incentives – in this client’s case a 5 percent discount year over year, which was not always reflected in the invoices generated by the carrier’s legacy billing system.
These and other billing errors uncovered by the audit, and subsequently acted upon by the team, resulted in $10M in savings the first year alone, providing the client quick payback on its Sakon investment and a data-driven foundation for finding further savings. These early successes landed Sakon an esteemed position in the client’s Global Partner program, where the Sakon Platform is a featured solution in its outsourced network management offering.
To date, Sakon has uncovered more than $80M in total savings for the client and its customers, with projections to find an additional $15M in savings in the coming year.
Know Your Network: The Benefits of Global Inventory Visibility
Over time, the Sakon Platform has become the system of record for the client’s communications network, affording Network Services, Sourcing, and IT a comprehensive global view of the network never before attainable.
Armed with this data, the client has dramatically cut network operating costs by identifying billing errors as they occur and more nimbly “right-sizing” communications needs on a per-facility basis. The single version of the truth afforded by Sakon also has armed Sourcing with the precise billing and services data it needs to manage its RFP process and negotiate more advantageous contracts.
Gaining a 20:20 view of global network inventory is also playing a pivotal role at the strategic planning level, helping the client map out its future communications-infrastructure needs – and those of its clients – as it assesses and plans where best to implement new network technologies, such as SDWAN, that promise major performance improvements at significantly less cost than legacy circuits.