Broadmargin Curtails Telecom Costs
At U.S. Bancorp, the monthly bill from one telecommunications supplier is so large that it typically arrives in 12 boxes. That supplier is just one of more than 300 telecom providers serving the bank.
Spending roughly $13 million on telecom services each month, the eighth-largest bank in the country found it could no longer manage the expense efficiently on its own, so about 10 months ago it turned to Broadmargin Inc. for help.
This week, Broadmargin is unveiling three telecom management packages on a hosted or outsourced basis. The company started in 1999 to help several carriersQwest Communications International Inc., SBC Communications Inc., BellSouth Corp., WorldCom Inc. and Cingular Wireless LLC, to name a fewmanage their payments to one another. Now it is putting its technology to work weeding out unnecessary and bogus costs from the enterprise network.
Enterprise networks, particularly in the financial, health care and education sectors, grew considerably in size and complexity over the past decade, and in recent years most enterprises have been looking for ways to trim costs. Broadmargin aims its technology at companies that spend at least $1 million per month on telecoma figure at which significant billing errors are apt to occur.
"Inherently, in a carriers bill, 5 to 10 percent is going to be incorrect every month," said Glen Kazerman, senior vice president at Broadmargin, in Fairfax, Va. "We basically recalculate the bill for you. This is the last controllable expense that you can really take cost out of without affecting your business."
Large carriers issue as many as a dozen different billing formats, and a single bill can be 60,000 pages. Whats more, telecom spending tends to be widely decentralized at large enterprises, making it difficult to arrive at a close estimate of total cost.
U.S. Bancorp, based in Minneapolis, used to handle its telecom bills with a homegrown access system that was several years old, said Leon Roder, network support services manager at the bank. The system could average costs over a period of months, but it was not capable of auditing, Roder said. Also, it did not account for an estimated additional $5 million in telecom spending at other bank departments, which could have been aggregated and used as leverage in negotiating higher-volume contracts with carriers, he said.
Roder said he considered rewriting his management system in-house, buying auditing software from a third party or outsourcing the job entirely before turning to Broadmargin. Outsourcing looked expensive, and third-party software packages seemed limited. From a cost perspective, he said, rebuilding the in-house system would probably have been best, but because of competing bank priorities, the project would have taken years to complete.
Roder chose Broadmargins Process Management package offered on an ASP (application service provider) basis, which allows him to run the management software and conduct his own audits. The package automates such processes as invoice, payment, audit, dispute, ordering and inventory management. Higher-end packages, which include cost and financial management expertise, are offered only as outsourced services. The services are based on Broadmargins proprietary software, called BillTamer.
"The ASP model got us out of the data entry business," Roder said. "We wanted a way to free up the people we have here from their data entry responsibilities so they could analyze bills."
At this stage, Roder said he prefers to do the analysis in-house and believes he does not need an outside vendor to tell him there are problems with the bills. "I already know my data is messed up," he said.
The bank is in the process of converting its telecom accounts to an electronic feed wherever possible, and where it is not possible, Broadmargin comes in. In addition to entering data, Broadmargin loads electronic files from the telecom providers, a task that the bank cannot do on its own because it would be too expensive to write the programs needed to read the files, Roder said.
Broadmargin uses myriad industry data, both private and public, along with the customers contract and inventory data, to compare with invoices. If there is a dispute, Broadmargin helps manage it and can also renegotiate contracts.
The bottom line for U.S. Bancorp, according to Roder: "Once everything is up and running, I expect to save $2 million a year."