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CHIPS Articles: Optimizing Telecom Usage While Cutting Costs

Optimizing Telecom Usage While Cutting Costs
Telecommunications Expense Management in the DON
By Mike Hernon, Ken Brennan and Shirley Dolengo - July-September 2009
The year was 1978 – the Bee Gees' "Night Fever" ruled the charts; "Mork and Mindy" first hit the airwaves; and it cost 15 cents to mail a letter, which people did a lot then because almost no one had e-mail.

That year also witnessed the drafting of a Department of the Navy (DON) telecommunications (telecom) policy that remains in effect today.

As you may imagine, policies from the 1970s regarding a technology as fast moving as telecommunications have lost their relevance over the intervening years. This disconnect between standing policy and reality is perhaps the best indicator that the telecommunications environment, which includes telephone and cellular services, as well as short haul data circuits, is ripe for improvement.

The environment serving the DON's Sailors and Marines, and those who support them, is a critical factor in mission success. As technology has continually advanced, the capabilities of the telecommunications devices and services used throughout the DON have dramatically improved as well; for example, compare today's mobile devices with those of just five years ago. As a result, the environment has become more diverse, more complex and more difficult to manage.

In response, the DON has developed a telecommunications optimization effort to ensure that these key assets meet mission requirements while being purchased, managed and utilized in a costeffective and responsible manner.

Gaining Insight Through Automated Tools

Due to the complexity and volume of transactions that typify the DON's telecommunications environment, the use of automated telecommunications management tools is required for proper oversight and control.

Even with the existing tools in limited use, they are not consistently implemented, and they do not provide the end-toend visibility, control and business intelligence required to support decision making, save money and deliver an optimized capability.

There are a wide variety of such tools available. Some provide day-to-day operational support by interfacing directly with telephone switches. Others are dedicated to expense management functions such as invoice reconciliation. Still others deliver management information systems that provide analytical capabilities across multiple data sources to support a strategic analysis of the environment.

These tools are provided by a fairly large number of vendors and are available as single modules or in integrated suites. Unfortunately, there is not universal agreement among either the vendors or the users as to the precise definitions or desired capabilities of these tools.

From an enterprise standpoint, this lack of clarity raised the potential of multiple, uncoordinated tools being implemented that would not readily share information; would be expensive to support; and would still not provide the necessary insight into the telecom environment.

To avoid that scenario and best position the DON for the right suite of tools, the DON Chief Information Officer (CIO), in coordination with the Office of the Assistant Secretary of the Navy for Research, Development and Acquisition (ASN RDA), released guidance titled "Implementing Telecommunications Expense Management Tools in the Department of the Navy" on Jan. 28, 2009.

This guidance, in effect, instituted a strategic pause on the procurement of any automated tools until an enterprise strategy could be developed. While this guidance is in effect, the DON Telecommunications Working Group (DTWG) is developing a common set of definitions and capabilities for the DON.

The DTWG's work will provide input for updated guidance expected later this year. Thus the DON as an enterprise will be best positioned to gain the maximum benefits of these tools and make progress on its optimization goals.

Identifying Cost Savings

One of the primary benefits of implementing automated tracking tools is cost savings — money that can be freed up to provide more direct warfighter support.

Major cost drivers in the current environment are, in decreasing order, purchased equipment, personnel, connectivity charges and leased equipment.

The use of automated tools and the business intelligence they bring is expected to deliver savings across all these cost centers. Telecom industry studies show potential savings in the range of 12 to 30 percent for organizations that implement commercial off-the-shelf telecommunications management tools.

One good example of how an automated tool may identify opportunities to cut costs is with cellular phones and portable electronic devices such as BlackBerrys. A recent analysis conducted by ASN RDA showed that significant short-term cost savings could be garnered by optimizing the use of the available service plan options.

One indicator of this is the extremely low overage charges the DON incurs — less than 0.5 percent on average. Because the cost per minute for overages is relatively high, it is a common misperception that low overage charges represent effective cost control. In fact, the opposite is often the case due to overbuying minutes that are not used.

As shown in Figure 1, with a large surfeit of unused minutes there are no overage charges, but the funds expended are still twice as much as necessary. With more than 100,000 cellular lines billed every month across the DON, it is nearly impossible to recognize optimization opportunities like this without the support of automated tracking tools.

The DTWG Agenda

The DTWG's work will facilitate the availability of the right capabilities for the warfighter and the support structure while ensuring proper stewardship of public funds.

In addition to developing updated guidance on implementing automated management tools, the DTWG is evaluating the entire set of telecom polices — there are a number of policies 10 years old or more that are still in effect and have become outdated due to industry advances.

Other actions, such as drafting an updated governance framework; developing a Voice over Internet Protocol (VoIP) strategy; and aligning the enterprise with future Defense Department directions, among others, will support the delivery of an optimized and cost-effective telecom environment for the DON.

For the latest DON telecommunications news and policy updates visit: www.doncio.navy.mil/telecommunications.

Mike Hernon is the former chief information officer for the City of Boston and currently serves as an independent consultant to the DON CIO on a variety of telecommunications topics.

Ken Brennan is an acquisition professional currently working Acquisition Program Assessment and Strategic Sourcing in the office of the Deputy Assistant Secretary of the Navy for Acquisition and Logistics Management (A&LM).

Shirley Dolengo is a retired Navy senior chief and the assistant program manager for the Navy's Shore Telephony Program.

Figure 1-Case for Cellular Optimization
Figure 1
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