Case Studies

Airsoft article in Hindustan Times

Fullerton India enlisted Airsoft's services to bring down its ballooning telecommunications bill.

By Prashant L. Rao

Bills cutDespite falling telecommunications rates, telecom expenditure had ballooned to become one of the top five expenses at Fullerton India and this was having a severe impact on profitability. The upshot was that the company decided that enough was enough and, realizing that it lacked the expertise to understand the complex charging mechanisms and sophisticated tools that were required to neutralize the metrics that were loaded in the carrier’s favor, Fullerton India decided to engage the services of Airsoft, a specialist in the domain.

The first phase, a limited ‘audit’ type assignment, covering telecom products and charges, resulted in savings and refunds to the tune of crores of rupees. It was obvious at this point that there was tremendous scope to improve the management of telecom services. Soon, an initiative that started as a limited ‘audit’ type assignment, progressed to the second phase wherein robust processes to managing the entire telecom life cycle from cradle to grave (procurement to payment) were envisioned.

The company engaged with Airsoft in July 2009 and initiated the following initiatives:

  • Mobiles: Optimization started in Sept 2009 and the company managed to get the revised tariffs implemented from Dec 2009 onwards. This has concluded and is ongoing translating into close to 28% savings from the monthly bill.
  • Billing verification: This began in July 2009 and it continues (since billing errors continue). The first refund was raised in September 2009. It took the company about three months to get concurrence and reconciliation from the service provider.
  • LL - Optimization: This started in Dec 2009. The first refund invoice raised in March 2010.

Phase 1: a limited scope audit

At this point, the telecom billing environment had significant room for error and the goal was to verify if charging was correct and as per agreed tariffs. Billing verification by manual spot-checks on a best effort basis did sometimes discover discrepancies, however, the methods were slow, expensive and unreliable. Airsoft’s computerized solution answered the goal of detecting billing discrepancies which result in overpayment. The result was the realization of millions of rupees by way of refunds, which had a direct impact on the company's bottom line.

The second issue was with regard to realizing an optimal cost-per-unit ratio. During optimization or negotiations, the metrics were loaded in favor of the carriers as they use sophisticated tools and business intelligence to analyze and simulate an increase in their ARPU and use this to create a clutter of confusing and heavily bundled or opaque options that make the selection (or alignment) of the right plan to actual usage difficult. The wrong tariff choice can create an overpaying subscriber and, in turn, results in a rapid change in consumption, tariff, technology or competition. It gets worse as organizations depend more on telecom with the rollout of 3G services.

Airsoft’s Pricing Analysis services, combined with its knowledge of carrier practices and database of current market prices helped FICC go after the best deals. It demonstrated various scenarios and simulations using a fact-based method of determining the most beneficial negotiating strategy. By dispelling the confusion and clutter from the most heavily bundled, opaque or confusing tariff plans and offering high quality analysis, Fullerton India was able to correlate its usage to gain a clear view while demonstrating various scenarios and simulations. This resulted in hard cash savings running into crores of rupees.

Phase 2: From cradle to grave

Ajay Vernaker"Airsoft gets a percentage share of the cash saved by FICC thanks to its efforts. All the software installation and usage etc. is done by Airsoft and managed by the consultant"
Ajay Vernekar,

Director - Technology Infrastructure,
Fullerton India Credit Co. Ltd.
As the first phase gained momentum, it became clear to Ajay Vernekar, Director - Technology Infrastructure, Fullerton India Credit Co. Ltd., that the principles for the management of telecom services and infrastructure and the principles of managing any other recurring vendor services were the same across fields. Both required the same process and techniques. However, because of lack of visibility, controls couldn't be established. Enterprises had treated telecommunications in the same way that they treated IT—as a necessary expense that no one outside really understood. The management of these costs was mostly limited to paying the phone bills, with some grumbling about the ever increasing costs. What was needed was expertise and special tools.

FICC's goal was to transform a paying phone bills kind of activity into a multiple business support function giving command and control and enterprise-wide visibility and bringing greater certainty into telecom expenditure, while mitigating risks.

While significant sums of hard cash were gained from the audit; additional savings accrued from managing costs or life cycle (automation, visibility, controls etc) and aligning them with the business and the marketplace.

In phase 2, the company improved the financial gains that it had achieved in the audit phase and further efficiencies were earned through automation resulting in control and visibility. An automated solution to solve these challenges through a number of procedures, including business process reforms was deployed. This was a unified, enterprise-wide effort to control the telecom lifecycle and customize it to the company's unique needs. As it goes about this, step-by-step (or module-by-module), it opens up new revenue streams in the context of its needs or priorities.

Control over telecom costs requires control over all of the components and all the moving parts that contribute to telecom costs (involving finance, HR, business, and administration) It includes:

  • Inventory: You can control the costs of assets only if you know what assets you own, where they reside and how much they cost. “We are aiming for a stable ecosystem where end-of-life practices all work together to maintain an ongoing and accurate inventory,” said Vernekar.
  • Competitive Sourcing: Even the financial evaluation of tenders requires special expertise and tools. With Airsoft, the differentiator is that FICC now has the same armory of tools that carriers employ to lower its expenditure.
  • Provisioning Workflow: Activation, deactivation, controls on Move, Add, Change, Delete (MACD) activity etc. facilitate efforts to maintain a more accurate and up to date inventory of telecom services and improved billing accuracy. MACD service order activity creates a moving target that carriers must reconcile with billing. Vernekar explained, “This is primarily the adoption of the standard used in regular IT asset management; we have adapted it to telecom assets (normally ignored in any large corporate).”
    e.g. if any business or office or department or branch wants an additional telephone line/data card or any other telecom service then they will 'request' for one and this progresses from stage to stage (approval, budget check, commission, allocation to a cost center, regular reporting of incurred expenses) in a structured manner until the commissioning of the line (A); regular processing of bills, change of tariff plans, activation of specialized services (C) and disconnection of the line (D).
  • Accounts payable with expense allocation is a software-backed procedure for invoice management & accounts payables that provides an accurate and detailed account of telecom expense data, including appropriate allocations of all expenses to their internal cost centers. It can prepare electronic ECF eliminating the labor for manual re-entering of invoice information and can integrate with the accounts payable or financial system. A quicker turnaround ensures payment on time and eliminates late payment penalties. The A/P integration also ensures accuracy in bill data transfer to eliminate costly mistakes.
  • Budgeting or corralling budget management with variance reporting gives the company the ability to proactively manage variables to meet its operational and budgetary objectives. This pivots around three variables namely cost, usage and services.
  • Each of these variables is closely interlinked and they seamlessly blend into each other. Any budget management initiative must fully understand the interplay between them as they determine the cost of telecom and why it costs that much. As more or less usage sensitive telecom services are used, overall costs change. As services change, fixed costs become variable with the addition or deletion of services.
  • Policy, governance and security: Clear guidelines have been framed in order to manage and control an expenditure of tens of crores of rupees. It covers discretionary powers with line managers on matters with large financial impact (provisioning, budget, personal usage, entitlements, tariff selection etc.) that lead to weak business processes. Exceptions made for top performers soon shape the expectations of other employees and encourage ad hocism. Misuse detection refers to outages from the acceptable usage policy. Cultural issues refers to employee sensibilities, which can be overcome by better communication.
  • Business Intelligence & reporting: FICC requires dedicated reporting that enables it to view bill amounts and detailed information among multiple dimensions. These dimensions may include departments, offices, locations, levels, types of products or services and, for top users, main destinations and routes and most popular services. FICC may also want the ability to have reports automatically sent to specific recipients.

FICC has commissioned Airsoft to provide turnkey solutions to handle the entirety of this effort - without re-allocating or re-training current employees and resources. While phase 1 is already implemented, phase 2 is a work in progress.

The results are in.

This initiative has achieved a financial impact directly on the bottom line of the balance sheet. Savings to the tune of Rs. 15 million have been achieved. “The monthly expenditure has been reduced to the tune of 25%. Earlier, it was over a crore and now it is about Rs. 80 lakhs,” said Vernekar.

This is an inward facing initiative where the IT department is serving accounts, HR and administration. A central data warehouse feeds all stakeholders with a single version of the truth. The operational efficiencies brought in through computerization and business process reforms have surprised internal customers.

Centralization of management of telecom assets; standardization of business processes across hundreds of FICC locations; and computerization for enterprise-wide uniformity has brought in significant operational efficiencies and enhancement of employee productivity. For e.g. Thousands of bills for land lines, mobiles, ADSL etc. (from hundreds of locations) are collected in a central server and read into a central data warehouse. ECF generation is automatic and integrated with accounts payable. There are no hard copies of telecom invoices and yet there is full control and automation without manual data entry.

“This is a success-based model. Airsoft gets a percentage share of the cash saved by FICC thanks to its efforts. All the software installation and usage etc. is done by Airsoft and managed by it. The account payable system and expense claim module is fully integrated with the Airsoft solution,” concluded Vernekar.