Auditing and Benchmarking your communications costs

You don’t know what you don’t know, and you cannot manage that which you don’t measure.

CommsCloud believe that managing communications expenditure without Business Intelligence [BI] tools and the insight it affords role players could be equated to running a large business without accountants or computers. The opportunities afforded any decision maker are significant when you are making well informed knowledgeable decisions based on fact.

CommsCloud’s point of departure for any new project is twofold;

1. Gain a detailed understanding of the communications costs before offering up any opinion
2. Ensure that all the role players are well informed of the results thereof and obtain buy-in on a way forward

CommsCloud starts by performing an Audit [and benchmarking] of all communications infrastructure for both fixed and variable costs. During this Audit phase we benchmark your communications costs against market trends in SA and CommsCloud’s "Best Practice Standards". We then present the “BI” derived from this process to all the role players in a way that makes sense and allows the role players to relate to the opportunity and play a definitive role in building a communications strategy.

The information we gather and report on in during the “Audit phase” informs the decision making for all the roles players going forward. This process not only highlights opportunities but also savings and ROI on any project.

CommsCloud have found the process will;

• Ensure that all role players are well positioned to make decisions and understand
o their unique business need
o fixed and variable costs
o infrastructure efficiencies and problems
• Highlight problems and opportunities; thus enabling decision makers to
o define a common goal and purpose
o define a strategy
o understand where to start and what to start with
o measure success of the implementation on any project
o hold vendors and service providers accountable after implementation of a solution to the “promised” efficiencies, costs savings and SLA

CommsCloud have a strong track record when it comes to managing organisations with large geographical footprints. We have the requisite resources, project management skills, supplier relationships, product knowledge and “Best Practice Standards” required for a project of this nature. Any business wishing to improve efficiencies, effect savings, upgrade technology and business processes, put together a strategy and managing a large geographical footprint will find it difficult to do so without a partner such as ourselves.

CommsCloud will help your business manage the process from A to Z and ensure a successful implementation of any communications project, be it infrastructure or a solution.

We hope this overview enables you to get a sense of what is possible using our unique methodology and would welcome the opportunity to give your business more detail on the processes, the BI reporting and how we could simplify your project.

For further information see;

• www.commscloud.com
• http://www.linkedin.com/in/peterwalshzar

Cape Town - September 2011

Why do businesses need to benchmark communication costs?

You don’t know what you don’t know, and you cannot manage that which you don’t measure.

We are always amazed at how businesses [big business included] make decisions around vendors and solutions for their communications needs with little or no accurate fact-based information of their own. The reliance on vendors and their sales person[s] is high. And uninformed decision making can lead to poor decision making.

Time and time again businesses we are working with implement solutions based on information received from the sales person who sold the solution to them in the first place. This information is typically neither supplier agnostic nor the full picture due to lack of access to information.    

At CommsCloud we believe that managing telecoms without Business Intelligence [BI] tools is like running a large business without accountants or computers. Your procurement decisions in the communications space can end up being with your business for many years to come and we see the results thereof in our customer base every day.  

Our point of departure for any new client is to gain a detailed understanding of their communications costs before offering up any opinion. We do this by performing a detailed Audit of all their fixed and variable costs; for all their service providers.

During this process we benchmark their communications costs against;

• Market trends in SA 
• Industry Best Practice Standards   

The information we gather and report on in during this audit phase is used to build a documented business case which informs all the decision making for all the roles players going forward. 

And in our experience if decision makers and their project managers are well informed, return on investment and user experience with new solutions and services will be greatly enhanced.

Lastly, with accurate information [benchmarking included] your business is able to measure savings, hold service providers accountable to their SLA's and ensure a successful implementation of any solution or service.  

Peter Walsh

Cape Town

August 2011

Icasa delays publication of unbundling document

— Staff reporter, TechCentral

The Independent Communications Authority of SA (Icasa) has delayed publication of a discussion document on the unbundling of Telkom’s local loop of copper cable infrastructure by up to two weeks.

In a terse statement issued on Friday, the authority says it has decided to postpone publication of the document “for a period of up to two weeks” to allow it to “finalise the finer details in the actual document”.

Icasa had been expected to publish the discussion document in the Government Gazette this week. Communications minister Roy Padayachie has said he wants the local loop unbundled by no later than November this year. Unbundling would give rival operators access to the Telkom-owned copper cables that connect consumers and businesses. It’s seen as a way of reducing broadband prices and stimulating competition.

Icasa councillor Thabo Makhakhe, who is one of the members of the team tasked with dealing with local-loop unbundling, has said the authority would create a document that clarifies what aspects of the local loop other operators will have access to.

The authority has not provided further details as to why it felt the need to postpone publication of the discussion document.

MWEB cuts local transit links: The peering war begins

Staff Writer MyBroadband | 28 October, 2010

MWEB will today sever their local transit to MTN and Vodacom, with Telkom to follow early next week. Expect a few fireworks in the SA Internet space!

MWEB stunned the local ADSL market in March 2010 when they launched their affordable uncapped services, but at the time MWEB CEO Rudi Jansen said that this was only the beginning of their quest to ‘free the web’ in South Africa.

Jansen explained at the time that free and open peering was essential to help increase competition in the telecoms market which would then drive down the price of bandwidth in the country.

Since March MWEB has launched many new services, including uncapped wireless broadband connections and an uncapped bonded ADSL offering, and has started to push the envelope on free and open peering.

Last week Jansen said that they made a conscious decision that as from next month they will not pay for transit traffic. “So if you don’t want to peer with us, that is it! We will not pay you one single cent anymore,” said Jansen.

Actions speak louder than words

MWEB is making good on their promise a little earlier than expected. The company will sever its local transit with all telecoms operators and ISPs which do not peer with them directly this morning, with Telkom/SAIX to follow early next week.

This move has sent shockwaves through the local ISP market, prompting companies like Hetzner to pro-actively warn their clients that they may experience slow speeds to Hetzner’s hosted servers in SA when sitting on an MWEB connection.

These severed transit routes mean that MWEB will have no local links to or from big players like Vodacom and MTN, necessitating international routing to share traffic.

MWEB ISP CEO Derek Hershaw explained that MWEB will not ‘black hole’ any local ISP’s traffic. “We will simply be rerouting traffic away from congested and very expensive local transit links to our international bandwidth, which is significantly cheaper and not congested,” said Hershaw.

The severed transit routes and links will however not only affect outgoing MWEB traffic – hence from MWEB subscribers trying to access content on MTN or Vodacom’s networks – but also traffic from Vodacom and MTN subscribers trying to get onto the MWEB network.

This means that MTN and Vodacom subscribers who want to read News24, visit DStv Online or read the latest financial news on Fin24 will most likely be routed internationally by Vodacom and MTN.

This in turn will force providers to increase their international capacity to ensure good service levels – an exercise which can become very costly.

Peer for free, says MWEB

There is however another simpler and cheaper solution than routing traffic internationally: Peering with MWEB for free.

Hershaw reiterated that MWEB is very keen to peer with all ISPs free of charge at the Johannesburg Internet Exchange (JINX) and/or the Cape Town Internet Exchange (CINX), and this is what he hopes will happen.

“Hopefully we establish a principal where all ISPs peer on an open basis using the ‘hot potato’ principal - i.e. where you hand the traffic over at the closest point to where it is hosted,” said Hershaw.

Many ISPs are already peering with MWEB at JINX/CINX, including Vox Telecom, Neology and Cybersmart, and there will hence be no impact on them when MWEB cuts their transit links.

It is also understood that Internet Solutions is currently peering with MWEB in a proof-of-concept agreement, significantly limiting the impact of MWEB’s ‘no transit payment’ decision for both companies.

Cheaper telecommunications costs do not result in long-term savings | ITWeb

Cheaper telecommunications costs do not result in long-term savings
Unison

Press release issued by Unison

Johannesburg, 8 Jun 2010

Companies continue to spend billions of rands on voice and data communications; however, they are under a common misconception: that they are getting a reduction in cost from service providers who promise cheaper prices.

This is according to Craig Young, Group MD of Unison Communications, who sites a BMI-T SA IT Market Overview Sizing and Forecast report, which states that corporate and Top 350 Market Telecoms service types spend for 2008 for fixed voice, mobile, LCR (leased cost routing) and bulk SMS was believed to reach R34.8 billion.1

"While cost reduction is certainly on the agenda of decision-makers, what companies don't realise is that short-term communications price reductions don't necessarily reflect long-term," says Young. "In fact, costs actually escalate because communications infrastructure is complex with a myriad of technologies, service providers, data services and interoperability required."

"While we would like communications infrastructure to be easier, cheaper and seamless, it's not. A smorgasbord of incompatible technologies and a number of service providers within their communications environment comes at a high administrative cost," explains Young.

On top of this, Young says costly outsourced specialist skills are required to improve, integrate and extend their infrastructure to service and meet customer demands. "The reality is that this expertise costs," he says.

Young recommends companies take control of their communication infrastructure and acknowledge that their existing environment is complex.

He recommends the following:

1. Analysis: Enterprises don't do enough to get the information they need to make decisions. They need the business intelligence which shows them what kind and how much communication is flowing across their network. Unpacking traffic generated and understanding the impact of how users communicate and interact is critical. It is essential that this information is based on the company's own interpretation and not on the value proposition given by service providers. In addition, they must be able to incorporate information from communications into the financial plan; from there empowered decisions based on business/ financial factors can be made.

2. Longevity through interoperability: By knowing the future requirements for further convergence within their networks business can make decisions based on solutions that would yield the best ROI over the long term rather than cheap fixes that produce immediate results but end up costing more in the long run.

3. Planning: Bring in more information to the plan including true financial modeling of infrastructure and scenario planning. Identify key communication priorities based on business outcomes requirements and not technology requirements can be made though accurate planning.

According to Young, key for any corporate communications environment is to remember that interfacing between the users and client communication on an external and internal level needs to be at a standard where the course of business is fully supported and not hampered. Even if companies avoid an expensive upgrade system, integration still has to take place as seamlessly as possible.

By unpacking the traffic flowing across their network enterprises need to interpret this data. There is great potential for cost resolution, however businesses have to take charge of their environment and not simply purchase technology for technology's sake or because it is cheaper.

Telkom warns it may keep rate cuts to itself | TechCentral

Outgoing Telkom CEO Reuben September has warned the group’s customers not to expect an automatic cut in fixed-to-mobile call charges that are directly in line with future reductions in wholesale mobile call termination rates.

In March, Telkom elected to pass on the entire 36c/minute saving when peak-time mobile termination rates were reduced from R1,25/minute to 89c/minute.

Mobile termination rates are the interconnection fees the cellphone operators charge each other and other telecoms companies to carry calls onto their networks.

Parliamentarians and government officials have lobbied hard for the rates to come down, in part because they’re seen as a barrier to new competitors emerging in the mobile industry.

Industry regulator, the Independent Communications Authority of SA (Icasa), wants the rates reduced to 65c/minute next month in both peak and off-peak periods. It wants further reductions to 50c/minute next year and to 40c/minute in 2012.

Icasa is set to hold hearings next week to consider submissions from the operators, some of which have argued for a longer “glide path” down to 40c.

Though Telkom passed on all the benefits of the initial and voluntary cut in mobile termination rates in March, September says there’s no guarantee the same will happen the next time the rates are cut.

“This matter requires further evaluation and we will make our position clear at the appropriate time,” he says.

However, Telkom may not have any choice in the matter. Communications minister Siphiwe Nyanda is keen to force down the cost of telecommunications and, given government’s nearly 40% shareholding in Telkom, there’s a fair chance the company will come under political pressure to pass on all the benefits to its customers.

— Duncan McLeod, TechCentral

Case Study— Sharp Electronics reduces their Monthly telecoms by R 960 000.00 per annum

Description of business need

You do not know what you do not know. Without the correct guidance, monitoring, support, infrastructure and ongoing management, the typical organisation would almost certainly fail to achieve its strategic objectives. The same applies to the cost and infrastructure management of a customer’s telecommunications environment.

Technology in all segments of the market, does and will continue to advance at a rapid rate and as it does, so suppliers attempt to position themselves in such a way that they are most favourably aligned to on sell their solutions to their customers [often with no real business case that clearly and accurately defines the customer need].

The reality is that the majority of suppliers, however competent they may be in the marketing and selling of their products, falls short in the implementation, measurement and ongoing management of the customer’s infrastructure and telecoms expenses once the products are in place.

Sharp Electronics required a business partner who understood their unique business need, could identify the opportunities, would enable the company and its suppliers to manage costs and infrastructure efficiently and report on the objectives and results into the future on a national basis.

DataRoom provided Sharp and their suppliers with -

· An automated set of “Telecoms Report Suites” using a web based reporting engine
· The methodology, best practices and intelligent reporting required to reach their objective of optimal telecoms expenditure

DataRoom empowers its customers with the knowledge to make business decisions.

DataRoom ensures that all the roles players at both the vendor and the customer gain access to accurate reporting that ensures the objective of optimal telecoms costs and infrastructure is achieved.

Situation

In November 2005, Sharp was spending an average of R 220 000.00 per month on voice calls nationally. There were 3 incumbent suppliers of voice in the area of fixed line, Cell phones and LCR [least cost routing of cell phone calls].

Sharp was represented nationally by 14 branches with Johannesburg by far the biggest branch and a Cape Town head office.

Sharp had no single view into their call patterns nationally and apart from understanding that LCR was an option, they were unsure of the best option for their unique business need and wanted complete control of their costs, infrastructure and suppliers.

Furthermore Sharp had a requirement for a single view into their monthly telecoms environs.

Solution

Sharp chose DataRoom to deliver supplier independent telecoms reporting, the methodology and the best practices; to bring down monthly telecoms costs. More importantly the DataRoom offering was seen as a way to reduce time and resources required to deliver optimal telecoms.

Using supplier billing and call detailed records; a thorough analysis of all voice expenditure by supplier, branch and geographical region was undertaken using DataRoom’s Telecom Report Suite was performed. Once management had a thorough understanding of the current call patterns for total voice and infrastructure requirements; with DataRoom input suppliers were chosen who firstly could address their unique business requirement and secondly could deliver quality of service at the right price.

DataRoom recommended per second billing for all suppliers, low cost [free] interbranch calls, cheaper national calls, single supplier for national / GSM and inter-branch calls as a minimum requirement in choosing their supplier.

Benefits

Management at all branches and head office have a single view into their total voice expenditure every month. All regions and branches are held accountable for their own costs.

Expenditure reduced from a November 2005 high of R 223 000.00 to R 143 000.00 in June 2007. This reduction equates to an average reduction of 36% or R 80 000.00 per month less.

This equates to annual savings of 36% or R 960 000.00 per annum. Sharp now makes all their voice calls at the lowest possible rate for their specific business need and can effectively monitor these costs using the DataRoom Effective Rate report. Sharp has also integrated DataRoom's monthly reporting into their monthly business processes and sustained the savings to date [updated June 2008].

Peak and Off Peak rates for local / national / cell phone / national and interbranch calls are all down significantly in June 2007.

Sharp can now expect to reduce monthly costs further through the efficient configuration of infrastructure with service providers in conjunction with the “DataRoom Best Practices for optimal expenditure” guideline.