Technology-enabled business process outsourcing solutions in recent years have optimized several complex, cost-laden enterprise functions. ERP systems, for instance, now manage supply chain functionality; CRM technology enables better interaction with customers and more holistic relevancy to their data; and eProcurement systems can achieve cost-effective sourcing. But one costly enterprise functional area--the expense side of voice and data communications (which many industry studies reveal is typically the third or fourth largest operating expense for most companies)--has not been managed in a rational way...until now.

Although dozens of software suppliers and niche services providers in the communications space help customers with call accounting, infrastructure management, or expense management, they provided only fragmented solutions until recently. Today, the industry is in the early--yet quickly accelerating--stages of integrating such vertical models into a unified model--Total Communications Management (TCM)--for managing all of the business processes revolving around communications.

"Companies know they have a pain point revolving around communications," states Alan Gold, Senior Vice President of Marketing and Corporate Strategy for AvotusR Corporation, a leading services provider in the communications space. "Auditors doing manual spot checks and subsequently raising red flags have made the problem visible to executives, and they're now getting a strong sense of the order of magnitude associated with the problem."

Gold says an average large enterprise, for instance, can receive up to 15,000 communications invoices annually. Often accounting departments, wrestling with reconciling monthly bills encompassing plans differing in various regions of the world, simply pay on trend and approve invoices if they are within a 10-percent trend margin (thus perpetuating any errors). Putting the magnitude into further perspective, Gold cites one company's discovery that its carrier had continually mischarged the company over the negotiated rate by two-tenths of one cent per call. "Multiply that fraction over the company's nearly 300 million billed calls in the course of a year, and that's a huge amount of money," he points out. Unfortunately, some carriers have restrictive contracts requiring that disputes be identified within 45 days of the invoice.

Another company--handling expenses for its 8,000 mobile phones--discovered it took six months to close the loop on expenses continuing for a terminated employee's phone. "Wireless is usually accounted for in expense reports or other decentralized methods," says Gold. "How can you capture those expenses when people travel a lot and don't get their expense reports in until weeks or even months later? A good-sized company is probably under-reporting to the tune of millions of dollars."

Referencing various industry analyst reports, Gold cites statistics stating 85 percent of businesses do not audit their bills (missing 7-12 percent in over-billed charges and overspending by as much as 45 percent), and 90 percent do not have visibility into their wireless spending. Moreover, toll fraud hacking into corporate telecom networks is estimated to cost more than $1 billion annually.

Gold also refers to industry reports that suggest an enterprise that has moved a data center (and who hasn't these days?) has a 90 percent chance of paying for infrastructure it no longer has. "For many companies, it's nearly impossible to even understand what they have, let alone manage the use of it and then make sure they have actually optimized on the expense side," he states. Having little visibility into communications spend is a real nightmare for CFOs, who are now required by the Sarbanes-Oxley Act of 2002 to attest to the accuracy of enterprise expenses.

The magnitude of the problem has been building up, Gold explains. Globalization initiatives and, more specifically, decentralization of the workforce (and proliferation of mobile devices), as well as merger/acquisition activity and consolidations have all come together and created a situation where companies no longer have good control over their physical infrastructure. But companies' tremendous pressure to cut costs is the primary reason for recent attention drawn to visibility into the problem.