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© 2008 Network Trends Now www.networktrendsnow.com

Planning for Your 2009 Budget: Doing More with Lesspresented by Joe Basili

President & Research Director

Network Trends Now

Thursday, November 20, 2008

2 www.networktrendsnow.com© 2008 Network Trends Now

Joe Basili is President & Research Director of Network Trends Now and a recognized thought leader with more than ten years of experience in TEM, telecommunications networks and IT asset management. Through research reports, public speaking, and advisory meetings he has provided best practices on how organizations can optimize their information technology (IT) systems, telecommunications network costs, operations, and procurement.

The Network Trends Now motto from Dr W. Edwards Deming states: In God we trust, all others bring data. The customer insight model is simple: gain insights into enterprise needs, best practices, benchmarks, and market conditions by interviewing customers and developing surveys that collect hundreds of enterprise customers data. The research is compelling because industry knowledge is matched with statistical analysis and a real passion for the business.

Joe has conducted research and written extensively on a wide range of topics that include wireless mobility management, IT and telecommunications environment management, network performance, and unified communications. He has been a keynote speaker and contributor to publications for IT, finance and procurement professionals .

Joe holds a B.A. with a double major in Economics and Political Science from Vanderbilt University. Contact information: (973) 763-6265 [email protected]

mailto:[email protected]


Agenda

• Market trends• Determining your baseline requirements• Self-funding strategies

• Inventory • Strategic sourcing• Wireless spend

• Establishing Predictive Reporting


Expected Bandwidth Requirements

Grow68%

Remain the same28%

Decline0%Don’t know

4%

Source: AOTMP


Top Areas for Network Bandwidth Consumption

28%

43%

48%

56%

57%

60%

65%

Video conferencing

Enterprise telephony/VoIP

Data back-up

ERP, CRM, etc.

File Transfer

Web browsing

E-mail

Source: AOTMP


First Polling Question

Next year will your budget for spending on voice, data, wireless, and conferencing…? (select one)

a) remain the sameb) decrease by 1% to 10%c) decrease by more than 10%d) increase by 1% to 10%e) increase by more than 10%f) Don’t know


3 Steps to Survive the Downturn

1. Budget season is a great time to reassess everything and re-evaluate all expenses

2. Learn from your business partners: internal users and external customers• Find out what is working and what is not

working3. Change the dynamic from cost (or you will

be stuck cutting costs) to business strategy and investments


Zero Based Budgeting

Every expense must be justified from a "zero base" regardless of prior year’s spending

Positives to Zero Based Budgeting Negatives to Zero Based Budgeting

• Reduces entitlement mentality• Requires more time to prepare

budget

• Increases spending restraint• Favors smaller short-term projects

over long-term investments

• Makes the budget review process more meaningful

• May fall behind competitors willing to take on riskier investments


Current State of Telecom & IT

67%

51%

21%

14%

12%

35%

Agree Disagree Not Applicable

Our IT Department serves as an agent of change

Our telecom network is a resource for competitive differentiation

Source: AOTMP


Building a Budget

• What are your baseline requirements?• To understand where your company is

going, it's important to know its history• Do you plan to deploy new

communications technology?• Is there a clear link of business value from

IT and network communications?


Organizational Considerations

• Mergers & acquisitions• Right-sizing

• What portion of the staff are contractors that can be cut without announcements of layoffs?

• What controls are in place for on-demand applications and services?


Strategies: 1 - Start with Your Inventory

• Build the inventory• Validate it• All circuits installed prior to…• Orphaned wireless devices, locations• Most expensive…

• Circuits…• Longest calls


Second Polling Question

What strategies do you expect to use to meet your budget in the upcoming year? (select all that apply) a. Aggressive renegotiation of contractsb. Centralizing control of IT & telecom spendingc. Aggressive expense auditingd. Usage charge-back reportinge. Formal TEM programf. Deployment of new (VoIP, MPLS, Green IT, Virtualization) technology to dramatically reduce costs


Strategies: 2 - MACD Reconciliation to Billing

• Which sites will have closing or openings?• How do you validate

• contracts are applied properly for new services?

• service disconnects are removed from billing?


Strategies: 3 – Control Wireless Expenses

• Confirm all users are current employees and eligible for wireless services

• Focus on peak minutes, SMS messages • Directory assistance… the cost of dialing

411 can cost $1.25 to $3.00 per call!• To use Google’s directory assistance, dial 1-

800-GOOG-411 (1-800-466-4411)• The costs for spares and replacement

devices can be negotiated for cost savings


Strategies: 3 – Control Wireless Expenses (continued)

• Evaluate data consumption• How do variable costs change if more data is

sent than the allocated amount?• Are there suspension charges?• Can termination penalties be waived?


Strategies: 4 - Control Your Entire Expense Lifecycle• Do you have mavericks that procure

services on their own?• Do you manage all telecom spend?


Strategies: 5 – Which Vendors Are Flexible?• Are vendors willing to make concessions

today for the potential to do more business in the future?• Minimum Annual Revenue Commitments• Technology migration clauses• Economic downturn

• When the economy improves will you be able to reward cooperative vendors?


Strategies: 6 Establishing Predictive Reporting

• Create reporting on run rates vs. budget• Track variances for course corrections

• Monthly spend vs. budget• Percentage deviation from budget

• Provide company-wide usage and expense visibility to drive accountability• Spend by business unit, GL, location, or

individual• “Keep it simple, provide an incentive, and track

results”


Concluding Thoughts

• Work to change the dynamic from cost (or you will be stuck cutting costs) to business strategy and investments

• Failure to make sound investments in IT and network infrastructure during tough times will leave companies behind


Final Thoughts

“While 2009 will be tough, managers must shift from talking solely about costs to focusing on business strategy and investments. Failure to do so will lead organizations to get stuck cutting costs and falling behind competitors. The key is to develop a clear link between spending and the business value from IT and network communications investments.” –

Network Trends Now November, 2008

TnT Expense Management bridging the gap between Technology and Finance

Expense Management Services

Budget Planning for 2009: Spend Less, Do More

Tony Bodetti, TnT Expense Management

23


Agenda

I. Budgeting Process – Today’s Unique Challenges

II. What is Telecom Expense ManagementIII. How TEM Affects Your Bottom LineIV. Case StudiesV. Dealing With ResistanceVI. Questions

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Budgeting Through Uncertainty

• Expenditures are difficult to forecast accurately– Use zero based budgeting methodology– Use business intelligence reports and analytics

• Companies have reluctance to incur new expenses– Do more with less when revenues are down– Focus on cost reduction and cost avoidance programs

• Enterprise’s expectations don’t match internal abilities– Internal staff may not have the proper skills– Outsourcing will allow them to focus on their core competency

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Business Intelligence Reporting

Inventory Management Tool

(Telebase®)

Carrier

Contracts

CarrierProvisioning

Carrier Optimization

CarrierDevice & Network

Management and Security

CarrierBilling & Auditing

Sourcing/ContractNegotiations

Audit & BillProcessing

InventoryManagement

NetworkProvisioning

Call AccountingChargeback

PhysicalAudit

ProjectManagement

Full Spectrum of TEM Services

Benefits of Outsourcing Telecom

• Economies of scale• Seamless integration• Allows you to focus on your business• Centralizes information for strategic

planning

Benefits of Outsourcing Telecom

• Increases optimization opportunities • Reduces overall costs and causes

significant impact to bottom line• Implements best practices

What is Telecom Expense Management?

WirelessManagement

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How Will TEM Affect Your Bottom Line?

• Business Intelligence – – negotiate better carrier agreements– optimize your networks– create efficiencies in your processes– realize significant cost savings in billing errors– better forecast future needs and trends

• TEM Budget - Action Plan

• Self Funding Program - ROI

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Polling Question

What form of TEM solution do you currently have in place?

a) In-house using our systemsb) In-house using licensed TEM softwarec) Using TEM SaaS providerd) Outsourced to a TEM BPOe) No solution currently in place

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Type of Client % Save of Client’s First Year Spend

Large Global Financial Services Client** 31% 1st year save (Landline & Wireless)

Large Global Financial Services Client** 33% 1st year save (Landline & Wireless)

Large Financial Stock Exchange Client 24% 1st year save (Landline)

Large Global Reinsurance Client** 80% 1st year save (Wireless)

Hedge Fund Client 33% 1st year save (Landline)

Large Pharmaceutical Client 30% 1st year save (Contract Savings)

Large Online Travel Client 27% 1st year save (Landline)

Manufacturing Client 28% 1st year save (Wireless)

Examples of TnT Case Studies

**TnT Savings achieved following a previous TEM provider

TnT specific case studiesIndustry shows on average 12% - 18% savings from a TEM solution

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Telecom Run Rate Analysis

Case Study – Bill Processing/Audit

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

2006/03 2006/06 2006/09 2006/12 2007/03 2007/06 2007/09 2007/12 2008/03

$6,310,468 $5,680,063 $5,095,648 $5,073,398 $5,201,979 $5,046,752 $4,816,181 $4,441,455 $3,705,595Spend

This graph represents a 41% reduction over a two year TEM engagement

$6.3 MM

$3.7 MM

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Gains• Audit Credits• Optimizations• Reconciliation and Clean Up• FTE Resources• TCO Factors

Costs• Implementation Fees• Processing Fees• Commissions, if any

ROI – Things to Consider

ROI = (Gain from Investment – Cost of Investment) Cost of Investment

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Bill Processing and Auditing 1139%

Contract Negotiations 2043%

Wireless Management 691%

Network Provisioning 3015%

Market Data 1273%

Client Case Study - ROI since 2000

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Mitigating Resistance

Getting your TEM budget approved…

We’ve done without this in the past, why do we need this now?

Why shouldn’t we do this ourselves?

Will there be any direct impact to the bottom line?

How difficult will it be to implement?

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For additional information, contact us at:TnT Expense Management

12 Turnberry LaneSandy Hook, CT 06482

(203) [email protected]

www.tntem.com