Benefits of contract management in procurement

Thinking Machine resources for Spend Analytics in Procurement, Contract lifecycle management and Automated contract management software

What is the role of Contract Value Intelligence in Spending Analysis?

What is the role of Contract Value Intelligence in Spending Analysis?

Understanding what truly constitutes contract value intelligence (CVI) is a crucial starting point for strategic cost management, expense management and enterprise spending analysis.

Telecom or technology contract value can be determined by the quality of the service in relation to your overall technology and telecoms spend, which you must be aware of to determine whether you are using the best plans for your business and if the value of your spend is fully optimized.

For example, if you pay for 100GB of data and unlimited calls but only use a fraction of it, there may well be a cheaper option available.

Failure to identify spend optimization opportunities across thousands of plans routinely results in massive overspending, which impacts enterprises globally by more than $800bn per year.

Category Management - Six Ways to Reduce Telecom Costs & Complexity

Category Management - Six Ways to Reduce Telecom Costs & Complexity

Factors such as bundling services and keeping copies of contracts have their roles to play in reducing telecommunications costs, but many organisations are still failing to investigate a range of unnecessary hidden expenses, and the complexity of telecom category management for enterprise procurement teams continues to increase.

Whether your organisation is paying for disconnected services or suffering from internal usage abuses, the six cost reduction methods listed in this article will help to reduce telecoms costs, improve total contract lifecycle value and optimise technology spend.

Despite the difficulties associated with telecom cost management, we will also look at the practical solutions to unlocking significant savings on your technology and telecom spend.

To truly optimise this process and maximise reductions, working with Thinking Machine Systems automates the investigation and visualisation of data as well as simplifying strategic recommendations which are quickly actionable.

Category Management Analytics drives Business Digital Transformation.

Category Management Analytics drives Business Digital Transformation.

Imagine this: your team has found itself over budget after a challenging year of technology migrations and changing suppliers. You and your team need to find where the problems lie but no-one has enough spending analytics associated to your contract lifecycle management to fully understand the actual services being delivered within your technology and telecom supplier contracts in order to decipher the mess of documents and clearly articulate what your additional value and future cost reduction recommendation could be extracted from your suppliers. 

You might have experienced this exact scenario yourself recently. It’s a common experience that has plenty of advice, from contract lifecycle management tips of how to find the most useful information through to hiring an outside cost optimisation consultant to do the work for you. 

The thing is, manual approaches to this problem are prone to human-error, and even for the perfect human investigator, there’s a high chance that not every issue is found. 

Technology and telecom contracts cover a huge number of different services, which can be configured in different ways, and for every different configuration carries different contractual terms and pricing considerations. 

We explore the challenges to accurately deciphering technology contracts against their invoices, and how category management analytic solutions can handle all of the contractual landscape for that category and simplify the process for your procurement teams.

Digital Transformation: How to optimise telecom cost recovery

Digital Transformation: How to optimise telecom cost recovery

Many businesses are turned away from undertaking a telecom audit and seeking cost savings in their more difficult and complex contracts due to the costs and prohibitive factors involved associated to traditional audit processes. Complex contracts, like those in the telecom industry, cover hundreds of different products that can be configured in multiple ways.

With telecom services being an essential utility for businesses, they have a long history of use and many changes have occurred over the years and this has given rise to the telecom expense management industry.

Because of growing enterprise technology and telecom complexity, conducting a full analysis of telecom contracts requires specialist capabilities, cost benchmarking and real-time business intelligence analytics. According to a recent report by Aruba Networks and Microsoft "In 2018, 57% of businesses adopted IoT in some way. By 2022, the figure could rise to 94%"

This makes having a deep domain knowledge of how complex technology telecom contracts are structured and an understanding of how to track their value implementation across all business operations is critical.

Specialists tasked with this analysis are often not a part of the business itself and are not aware of historical changes and supplier relationships, Typically due to the high level of invoice inaccuracies, predictive modelling and predictive analytics is near on impossible for many companies in relation to technology and telecoms spend.

Optimising Enterprise Telecom in Digital Transformation

Optimising Enterprise Telecom in Digital Transformation

Enterprise telecom expenditure and strategic cost management is still quite a niche subject once you get into the detail of it, but the rise of Digital Transformation and Digital Procurement means it is quickly becoming a focus area for many enterprises.
 
From a data perspective, it overlaps all the services that make up the essential communication network within companies, the onion-like layers of supplier terms & conditions, and vast complexity that goes into the supplier-end operations to supply a service.
 
It’s very common today to focus on the top-line issues, i.e. what’s your overall service requirements, and what’s the best deal I can negotiate from a supplier. Once these top-line issues are agreed and a Telecom contract is implemented, there is a hidden gold mine of efficiency opportunities that can alter how company departments operate while providing large improvements to the bottom-line expenditure.

Why is this hidden? Because finding the efficiency opportunities, and executing them, are found through rigorous data & business analytics that extend past the capabilities most organisations have today.
 
This marks part of the Digital Finance Transformation, recognised as a key driving force for companies in the coming years. It’s also been found that most CFOs aren’t sure where to start on such a mammoth objective, evidenced by the level of funds still weighted towards traditional ways of working.

Telecom Expense management software helps beat bad data.

Telecom Expense management software helps beat bad data.

In modern times, the shift from Telecom Expense Management Software to Technology Contract Value Intelligence continues to gain momentum as the complexity of enterprises Landline, Mobile, Cloud and IoT inventory increases.

Every time you send an email or make a call, that is a service being delivered. When organisations use the cloud or machine to machine communications, more services are delivered as part of technology contracts. Capabilities like these have become so tightly woven into the fabric of enterprise operations, that today they account for 70% of the average total spend. In 2018 alone there were 21 trillion dollars of global business purchases related to services, and this trend is growing fast.

As organisations strive to innovate, the technology contracts and invoices linked to these services have become even more complex, causing them to be tainted by inaccurate information. We call this bad data, and it is stripping value from organisations across the industries at an alarming rate.

Why is Technology Expense Management complex?

Why is Technology Expense Management complex?

Enterprise organisations have been striving to adopt wide ranging emerging technologies including technology expense management providers and telecom expense management software throughout recent history, meanwhile contract value management, contract value intelligence and enterprise spend analysis practices have also been gaining momentum.

However, a growing problem exists, the complexity for enterprises to efficiently manage technology expenses and gain insights on all technology spend increases every day.

Mobile networks have evolved, the internet has become part of our every day life, and IoT technology has become increasingly prominent among businesses. The widespread arrival of 5G is now imminent, which alongside cloud computing will enable the sophisticated IoT networks of the future.

All of this amounts to an even more complex technology service landscape than we currently have, and most enterprises are already failing to achieve optimal value from their technology expense management software and the expensive services they pay for.

Digital transformation with spend analysis software

Digital transformation with spend analysis software

Enterprise digital transformation occurs when digital technology enables businesses to function better than before, improving efficiencies and business processes. At the core of this process is the transition of analog information to digital formats, with significant value available to organizations that adopt the right cost reduction strategies, spend management strategy, spend analysis process, and expense management software while doing so.

The ability to decipher detailed data about complex services can unlock immediate and long-term value, both in terms of savings and overall efficiency. Tackling the right pain points with the right technology results in an enhanced approach to transformation.

To achieve these outcomes, organizations require a spend analysis solution that can improve supplier management and performance. Charging inconsistencies can commonly be traced back to the supplier, due to factors such as inaccurate data and methodologies.

A subset of improved supplier performance is cost savings, and the right technology can enable you to optimize existing service plans without having to renegotiate deals. These improvements can be taken a step further when service data is aggregated across multiple suppliers, resulting in better deals.

Strategic cost management for complex services: CTO Insights

Strategic cost management for complex services: CTO Insights

The increasing complexity of telecoms and technology contracts, invoices, strategic cost management and value intelligence.

The focus for enterprises on strategic cost management and contract value intelligence has never been more important.

From mobile contracts and packages for your teams, through to the M2M communications between your machines, your organisation is consuming technology services in one form or another.

You are well aware of your growing need for these services, but are you analysing and optimising the value they deliver?

Some organisations try to fill this gap with accounting teams, billing teams and value managers to keep track of contracts and the value they deliver, but these siloed groups using outdated processes cannot maintain clean data and optimise service value.

This scenario is already highly imperfect and expensive, but the reality is that in many cases this function is missing altogether.

This capability gap is shared widely by large organisations and is adding 15 to 30 per cent of unnecessary costs to an already dominant spend area.

Thinking Machine Systems has developed an innovative solution to this challenge that has an immediate and ongoing impact on your technology service value, while also empowering your teams to collaborate more effectively.

Contract Value Intelligence: Optimise your Telecom contract savings

Contract Value Intelligence: Optimise your Telecom contract savings

As a buyer, how do you prevent Value Leakage in your complex Telecom contracts? Simple, Spend Analytics! 

Telecom is increasingly a prominent feature in enterprise budgets. Annual spend on Telecom equates to an average 1-2% of enterprise revenue. Therefore, significant savings and efficiencies found in Telecom will make a significant impact on the bottom line. To beat bad data, information silos and increasing value leakage, enterprises must focus on spend analytics.

Today, a fragmented information environment characterises Telecom category management for buyers:

  • Contracts and invoices hold tens of thousands of line items containing references to different definitions.
  • Definitions made up of implied rules defined somewhere else across the contract or standard supplier T&Cs.
  • Implied rules are tangled in an undefined web to other sets of definitions.
  • ‘Shifting sands’ of contract variations and regular updates of standard supplier T&Cs.

As a result, Telecom Category Management has no standardisation and will mean something different depending on who you ask. Eliminating value leakage is not seen as a routine operational activity today because there has been no feasible way to systemise operations. When enterprises perform related activities, they are performed manually and only done at significantly timed events due to the high time, effort, and specialisation required to complete the work. These significantly timed events typically are: 

  • During the RFQ / negotiation stage, when price benchmarking is completed to give the buyer an indication of what they should be paying.
  •  Resolving a longstanding commercial issue, when billing issues have compounded to the point that extraordinary intervention is required to get things under control.