A "special edition" follow-up article to the May 2004 newsletter article "Telecom Audits Are Dead. Mostly."

A number of readers wrote or called to respond to our May newsletter where we wrote that "Audits were dead. Mostly." Several of those customers were ours, others had been thinking about audits for their business. Most wondered if we felt as strongly as the article appeared to indicate. Yes, we did. Mostly. But we've spent some time reading the well-thought out comments we received so we'd like to add a little more to the story. And here is our focus and bias, right up front:

We provide services to companies that want to control their own telecom destiny. We are not an outsourcer that takes on the tasks you don't want to do. Rather we are a consultancy and tools provider to better equip you to do the job yourself. We assist our clients to operate superior telecom networks, under superior vendor agreements, and with the most accurate billing possible.

That said, we'll repeat for the record that we can, and do, perform telecom audits. We have a large number of very satisfied clients for our audit service who have recovered and/or saved millions of dollars. We believe that in some cases audits could well be the best treatment available for resolving their current telecom billing issues. But truth be told, audits are "reactive", coming into play after the damage has already been done.

Managing telecom is not the same in 2004 as it was in the 1980's when audits first gained prominence. Amazingly, vendor billing is still just about as bad as it was then (some say worse), but companies have more and better ways to manage their telecom today. Companies that are leading the fight to drive telecom costs down to their lowest possible levels are moving well beyond audits as their primary tool. Rather than being reactive, they are being proactive.

Those of you who monitor telecom vendor practices know that the noose is slowly tightening on issues such as the duration that vendor billing errors are recoverable. We don't like it, and we fight it constantly when helping clients with their contracts, but the fact remains that companies such as AT&T are trying to impose 6-month limits on billing error recoveries. If they succeed, others will follow, and companies who depend on retroactive audits will be forced into ever more frequent audit intervals, with smaller payouts for all.

Rising telecom demands within companies, and emerging technologies present other issues. As networks become more complex, keeping a managed inventory is tougher. We always provide a thorough circuit and service inventory with our audits as an added value, and for many companies, that data set greatly improves their telemanagement efforts going forward. But it's not a "state-of-the-art" tool, and unless it gets used faithfully, it will soon fall by the wayside like a fad diet. The larger a company is, and the more dynamic their environment, the sooner its value passes.

Along the way, some companies gave up on telecom invoice management altogether, and chose to outsource their problems. This trend to outsourcing has been driven by the call to offload "non-core" activities. We believe that while telecom may not be a "core" competency for an insurance company, it is a "critical" competency. As a result, the move to outsourcing can intrude on the ability to manage the network to its highest level of performance.

The biggest change in the past few years, and the one that calls into question the wisdom of outsourcing a critical function like telecom, is the availability of telemanagement software applications. Companies now have at their disposal incredibly powerful software applications, such as the TeleStraight™ TeleManagement Tool, that can handle all the functions of telecom management. And that includes auditing, the focus of this article.

As a result, companies can get the benefits of auditing in a whole new way. No more "stare and compare". No more "page turning" through stacks of bills. No more incorrect charges going unnoticed for so long that a third party has to be brought in to resolve the mess, with a hefty fee attached. In fact, the audit recovery savings alone will typically pay for the application, allowing companies to reap the additional management functionality (and there is a lot of it) at zero cost.

When we said that audits were dead, this is what we meant. It's not that audits don't provide value, they do. After all, who wouldn't want to reclaim overpayments that were erroneously collected by vendors?

But even if an audit is the right course of action this time around, it's not a forward-looking option that serves your overall long-term interests. That's why we tell our clients that we hope this is the last audit they ever have to perform. And that audits are dead. Mostly.

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