Getting the 411 on Telecom Costs, Plus…

Internet billing, presentation, and payment gains ground; does employee web surfing harm productivity?
Alix Stuart and Scott LeibsFebruary 1, 2001

Getting the 411 on Telecom Costs

CFOs, telecom managers, and others forced to confront the nightmare of corporate phone bills can be forgiven for believing that the number of cell phones is rivaled only by the number of rate plans. Even before cell phones came along, telecom costs were a big-ticket item: so big, in fact, that dozens of specialized auditing firms made a nice living by wading through a company’s phone bills, looking for ways to save a client money.

Now, with cell phones and wireless communication booming, telecom threatens to become a budget-buster. “In some firms, it can be second only to payroll,” claims Paul Reidy, CEO of Traq- wireless, in Austin, Texas. Other estimates put telecom among a company’s three or four leading expenses.

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As his company’s name implies, Reidy has a vested interest in the wireless world. His firm provides a Web-based management system to companies anxious to control wireless costs. Using Traq’s service, companies feed their cell phone bills into a software engine that will study usage patterns, analyze different rate plans, and make recommendations for changes that can save the companies money. Sometimes those recommendations entail switching from one carrier to another, but not always. “Often employees sign up for the wrong plan,” says Reidy. “They don’t know their own usage patterns, and, frankly, if they know they’re going to be reimbursed by their company anyway, they don’t have a lot of incentive to shop wisely.”

Traq will also look for other ways to save money. For example, many employees burn up precious minutes by dialing into their voice mail accounts only to find that they have no new messages. Traq can provide software that will alert users when a new message comes in. One client was paying a premium so that it could have free long-distance as part of its service, but Traq found that employees were using their calling cards to place long- distance calls, thus wasting the premium. “We look across a company’s total usage and uncover things that clients miss,” says Reidy.

Traq limits its service to wireless costs, but another firm, QuantumShift, based in Novato, Calif., addresses the entire telecom expense, again through a Web-based management system. Deborah Mings, CFO of Nelson Staffing Solutions, a professional services firm in Sonoma, Calif., says she uses QuantumShift because “I simply don’t have good information on spending.”

Even as independent vendors hawk their wares, however, the carriers themselves are beginning to offer corporate customers better management tools. AT&T, for example, has begun to provide clients such as Mings with usage information on CD-ROM. “It may backfire on them,” she laughs. “I may be so shocked by what I see that I demand lower rates.”

In fact, one selling point for Traq, QuantumShift, and others is the ability to generate enough detail about usage so that corporate clients can negotiate better rates. Carriers have long been open to haggling, and as they work harder to serve corporate customers, there is plenty of room to maneuver. “We’re perceived as a consumer-oriented company,” admits Shane Johnston, a marketing manager at Sprint PCS, “but we’re working hard to meet the needs of business.” Price per minute is dropping, and distinctions between night and day calling, and between voice and data transmission, are being abandoned. With wireless communications expected to account for 30 to 50 percent of a company’s telecom budget by 2010, getting a grip on costs now is essential.


Internet Billing Gets Its Due

You may doubt whether the check is in the mail, but you can be certain the bill is. Every year in the United States, more than 26 billion bills are generated, processed, and paid. The cost and complexity of producing, mailing, and tracking those bills–not to mention arguing over them–has made some sort of Internet solution seem inevitable, yet Internet billing, presentation, and payment (IBPP, also called E[lectronic]BPP) has been slow to take hold. There are dozens of companies hawking products and services, but to date less than 1 percent of that aforementioned billing activity has taken place over the Web.

But this year, analysts say, IBPP may gain real momentum as vendors increase the functionality of their products and get a better sense of what the market wants. According to Terri Ambrose, a vice president at KeyCorp’s global treasury management E-commerce team in Cleveland, what the market wants, at least in the B2B space, is “round-trip” capability. That allows companies to both present bills to their customers and pay bills from their suppliers online. Some vendors concentrate on only one part of the equation–selling software that facilitates the E-mailing of invoices, for example, without addressing payment. That can force companies to cobble together a complete solution from several products, an approach that hasn’t exactly caught fire.

Ambrose spent the better part of 2000 evaluating the many IBPP options on the market so that her firm could, in a sense, be on the market itself. KeyCorp believes that offering IBPP to its corporate clients is, as Ambrose says, “a natural extension of cash management, the existing payment stream, and the move toward E-business.” But, she admits, it’s an “infant space” that takes time to learn.

KeyCorp ultimately partnered with BillingZone LLC, a Web-based service that provides the round-trip capabilities Ambrose wanted. KeyCorp will build some additional functionality around the BillingZone core services and offer the resulting package to its corporate clients. Banks may thus play a valuable role in
driving the adoption of IBPP, although BillingZone has also landed a number of large companies, including Xerox Corp. and H.J. Heinz Co., as clients. Eric Smith, CEO of BillingZone, says that regardless of which party in the payment stream makes the first move, one critical element for the success of IBPP is that it focus more on the needs of payers than on billers.

“Much of the market has ignored this,” he says, “but you have to give payers flexibility and control. That is a key driver.” Sitting down with a pile of invoices may be a chore, but at least you decide which to pay when, and how much. But IBPP has always suffered from a chicken-or-egg problem, and Smith admits that “payers can’t pay if there isn’t a bill there.” So, in its early days, BillingZone will target billers and banks most heavily. “Billers are the ones who actually pay for the service,” says Andrei Arkhipov, an analyst at Aberdeen Group, in Boston. “So naturally, vendors concentrate on their needs.” Part of BillingZone’s strategy is to assign a “payer advocate” to each biller, someone who will help develop a marketing strategy to convince payers that IBPP makes sense.

That strategy will highlight the many widely agreed-upon benefits of IBPP: an invoice can be produced more quickly and inexpensively, and can be designed to take advantage of the “drill-down” capabilities of the Web; disputes can be resolved faster through clear audit trails accessible by both parties; overall customer service can be enhanced; and days sales outstanding can often be reduced.

Large companies using EDI (electronic data interchange) already enjoy some of these advantages, but analysts say IBPP is much cheaper and easier to learn, and that it offers certain features EDI can’t match. Its greater accessibility and appeal should make IBPP an accepted part of the E-business food chain.

That’s the hope at Saint-Gobain, the French giant that owns CertainTeed, Norton, and hundreds of other companies. Jim Harkins, vice president and treasurer for its U.S. operation, says the firm turned to IBPP because it wanted to give some of its smaller customers an alternative way to pay electronically. “With our largest customers, EDI predominates,” he says. “But it’s expensive to build and maintain. We would never dictate how firms should do business with us, but IBPP is something we encourage our customers to consider.” Saint-Gobain offers discounts to customers based on how quickly they pay. “To get the biggest discount,” Harkins says, “you have to pay electronically. That’s an incentive we think will make more companies look at IBPP.”

Saint-Gobain approached its bank, PNC, more than two years ago, and helped push it into IBPP. But more often, it may be the banks that do the pushing. “Banks are rushing toward it, and they have to, in order to stay competitive,” says Ian Rubin, director of online financial services research at IDC, in Framingham, Mass. “But as for billers and payers, no one knows who will embrace it first.” IBPP may be that rarest of things: a viable technology in need of a strong marketing message. — S.L.

Big Brother Looks, and Shrugs

If you believe the hysteria, every employee’s mouse click should be suspect these days. In a recent survey, more than 50 percent of employees admitted to receiving personal E-mails and surfing non-work-related sites at work on a daily basis. Online trading, shopping, and porn sites report that most of their traffic occurs during work hours. And John Conlin, COO of network monitoring device maker eSniff, says of the hundred or so networks on which his company has installed a device: “I’ve never found a clean one–and 70 percent of those had filtering software in place.”

All told, says consulting firm Computer Economics Inc., U.S. companies lost $5.3 billion during 1999 due to recreational Web surfing. Reports of employees being fired for various abuses have become commonplace. Could the Web-enabled desktop be the death knell of productivity?

Unlikely. While time spent online during work hours did increase 32 percent between November 1999 and November 2000, according to Media Metrix, it’s hard to sort out how many of those minutes were for legitimate business purposes and how many were for purely recreational use. Employers, in fact, seem evenly split on whether or not non-work-related surfing compromises productivity. And those who allow employees some personal use don’t seem overly concerned.

“We try not to give people a hard time for conducting personal business during office hours, provided they are producing and getting their work done,” says Michael J. Provenzano, CFO and vice president of Davox Corp., a customer-interaction software solutions provider in Westford, Mass. He knows from periodic reviews of network activity that there is “a fair amount” of nonbusiness use, such as visits to online brokerages. At Ford Motor Co., where about 150,000 employees use the Internet and E-mail daily, filtering software hasn’t shown “any big patterns of abuse,” says Edward Miller, manager of corporate news.


But that doesn’t mean companies are turning a blind eye. According to an American Management Association survey, in 2000, 54.1 percent of employers monitored Internet activity, while 38.1 percent stored and reviewed E-mail messages. And Brian Burke, a research analyst at IDC, in Framingham, Mass., is forecasting that the $62 million corporate market for blocking and filtering software will grow at an eye-opening 55 percent compound annual rate, to $562 million by 2004.

About 30 companies, including top players Websense, Surfcontrol, and Elron, provide software that allows a company to analyze both Internet usage and E-mail through a customizable set of criteria, according to Burke. ESniff doesn’t block access, but provides detailed management reports based on user-defined specifications. “The focus on many of these products,” says Burke, “is increasing employee productivity, not being Big Brother.”

One practical reason for using filtering devices is to protect network performance. Employee downloads of large music and video files often clog precious pipelines. “We don’t want employees wasting network bandwidth–that affects everybody’s response time,” says Pat Dillon, systems support manager for Chanel.

Dillon installed Elron blocking and filtering software more than two years ago. The company combines the technology with an old-fashioned, paper-based management technique: it asks employees to sign an electronic usage policy covering voice mail, faxes, and E-mail, and lets them know that they will be monitored.

In the few cases of “blatant abuse” he’s found so far, says Dillon, he’s been able to stop the behavior by simply E-mailing the employee with a reminder of the agreement. “We haven’t had to take any disciplinary action, even though the policy says [an employee] could be terminated for such an abuse,” he notes.

Productivity issues aside, monitoring software and related devices may also reduce a company’s risk of lawsuits. An automated scan of all traffic can help eliminate employee complaints about being unfairly targeted, says Minjoo Lee, an attorney at Brobeck, Phleger & Harrison LLP, in New York. And it could be viewed as a good-faith attempt to keep the workplace free of harassment and discrimination (an issue that has prompted multi-million-dollar lawsuits against Microsoft and Chevron, among others).

While technology may facilitate the monitoring of Web surfing and E-mail activity, Lee and others say that having a clear and well-communicated policy regarding Internet usage in place is the single most important step a company can take. — Alix Nyberg

Click Here To Stay Employed

Don’t blame Lycos for slumping retail sales this past Christmas. The company introduced a “panic button” in late November to help employees cover up online shopping expeditions during work hours. “Boss Coming? Click Here Quick!” read a tiny banner in the upper- right-hand corner of the screen. The link, when clicked, instantly brought up a no-nonsense page replete with dummy links and buttons such as “doesn’t get quotes” and “news you don’t need.”

“We gave [shoppers] a fun way to disguise the process without losing their place,” says Lycos vice president of E-commerce Kim Boucher. “They could get right back to their shopping once the danger had passed.”

Score one for productivity. — A.N.