Telecom Budget Survival Guide

Presenter: Leo Berz, Director Professional Services, Telecom - Ecova Date: 06/19/2013

Agenda
Todays Telecom Environment Budgeting Tools Variance Tracking and Analysis

Challenges
Best Practice Summing It Up Q&A

Telecom Is Under The Microscope

Total telecom expenses are on the rise

Typically .25 to 1.5% of revenue

No longer accepted as is Telecom industry rapidly changing Not necessarily under your control

Monday Morning Blues

Your telecom expenses are way over budget

You spent the entire weekend frantically trying to figure out why
Its now 9 AM, and the CFO is waiting for your explanation What will you do; what will you do?

Survey Question
Are telecom expenses and budgets getting more scrutiny in your organization than before?
A. Yes B. No C. Dont know

Budget Tools
Initial budget
Spend history

Planned changes

Accrual files Variance reports and analysis Budget update

Minor modifications

Budget reforecast
Larger impacting

History Is The Window To The Future

Spend by Service Data Services Local Long Distance Other Telecom Wireless Totals 2012/Jul $617,259.02 $669,472.48 $108,960.87 $69,816.78 $84,362.14 $1,549,871.29 2012/Aug $595,660.02 $672,875.91 $107,393.68 $69,913.40 $87,611.70 $1,533,454.71 2012/Sep $585,578.00 $674,681.27 $110,064.34 $69,813.79 $85,873.80 $1,526,011.20 2012/Oct $656,245.26 $698,567.86 $115,952.74 $69,999.27 $91,589.17 $1,632,354.30 2012/Nov $715,870.29 $690,026.71 $40,854.81 $69,830.79 $156,196.34 $1,672,778.94 2012/Dec $682,310.81 $711,645.28 ($29,857.88) $70,476.08 $141,224.16 $1,575,798.45 Totals $3,852,923.40 $4,117,269.51 $453,368.56 $419,850.11 $646,857.31 $9,490,268.89

Budget should start with previous years spend by service type (GL) and location Cost center owners need to provide input on future needs Pending business and network changes need to be factored in All stakeholders and cost center owners need to have visibility and buy-in of the final budget

Know What To Expect

Vendor
Arkadin, Inc. AT&T CenturyLink Eatel Granite HickoryTech Mobil Fone

Account
XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX

GL/Service
17545400/Conference 17545200/LD 17545100/Local 17545100/Local 17545100/Local 17545100/Local 17545600/Conference

Months
1 1 1 2 1 1 1

Average
$235,146 $78,653 $ 1,568 $1,343 $156,238 $ 118 $ 51

Accrual
$235,146 $ 78,653 $ 1,568 $ 2,686 $156,238 $ 118.91 $ 51.82

Last Bill
4/30/2013 4/29/2013 4/28/2013 3/15/2013 4/30/2013 4/27/2013 4/28/2013

Verizon Wireless
TW Telecom

XXXXX
XXXXX

17545600/Wireless
17545300/Data

1
1

$ 52
$16,930

$52.82
$16,930

4/30/2013
4/30/2013

Use historical average to estimate invoices yet to be received Accrued amounts should be backed out of financial systems once actual invoice is processed or new accrual file is available

Over-Budget is Not The Problem; Not Being Able To Explain It Is!

Sum of Site Total
SiteName Site 1926 ServiceGroup Data Services Local Long Distance Other Telecom $ $ Actuals by Bill Month 201301 510 407 $ $ 201302 510 407 $ 296 YTD Budget $ $ $ $ 592 817 46 $ 592 Out of budget % Of budget $ $ $ $ 428 (3) (46) 72% 0% -100% 0%

Wireless
Site 2019 Data Services Local Long Distance Other Telecom Wireless Grand Total $ 375,628 $ 364,952 $ $ $ 510 1,246 318 $ $ $ 510 1,246 221

$
$ $ $ $ $ $

592 2,478 550 535,472

$
$ $ $ $ $ $

428 14 (11) 204,808

0%
72% 1% -2% 0% 0% 38%

Data expense spike caused by a network migration

Survey Question
What is your biggest budget challenge?
A. Lack of resources B. Lack of visibility C. Lack of control D. Other E. Dont know

Budget Challenges
Telecom is a very dynamic environment Lack of visibility Wireless and conferencing services Rogue service orders Budget shuffle Expiring contracts Shortfall penalties or missed achievement credits Network migrations Executive mandated cuts Regulatory charges

Best Practices
Push responsibility, accountability and visibility down as low in the organization as possible Budgets should initially be developed from the bottom up Take planned business and network changes into consideration Variance analysis should be preformed quarterly at a minimum Ensure centralized control of both wireline and wireless service orders Actively track contract expirations and MARCs Services should be reviewed every 1 to 3 years Reforecast budget when necessary Use lessons learned to improve the process Consider budgeting an integral part of your TLM program

 Formula For Success

S=(D+B+T)*P where
S=success D=data B=business knowledge locations contracts Activities T =telecom knowledge networks regulatory Procedures P=process budget tracking variance analysis All aspects of Telecom Lifecycle Management

Upcoming Ecova Webinars

INSIDE ENERGY & SUSTAINABILITY

Energy Market Intelligence: Whats Happening Today? June 20th Discovering Exceptional Value with Rebate Management Solutions June 27th

DIAL IN THE SAVINGS

Telecom Strategic Sourcing Secrets - September 25th

Questions, comments, suggestions? webinars@ecova.com

Q&A

Thank You for Attending