This month we met with Julie Harrelson, co-founder with Tanya Seda, of Ruby Communications. Ruby Communications is a telecommunications management firm that specializes in eliminating unnecessary costs, increasing efficiencies, and strengthening vendor relationships. Ruby receives no compensation from service providers and serves as an unbiased resource for determining what's best for its customers.
According to industry analysts, 7 -12% of telecom charges are incorrect. Harrelson told us, "When I tell people that I own a company that helps organizations solve telecom billing problems and develop technology strategies, they invariably respond with a horror story. It's like having wisdom teeth pulled; everyone knows the pain and it's not pretty."
Q. Tell me about your company.
A. We started the company eight years ago. My business partner, Tanya Seda, and I both worked for a competitive local exchange carrier (CLEC). Tanya was a product manager for one of our products. She reviewed and audited the underlying carriers that we used to offer this product and found US$1 million of annualized potential savings. So we realized there was an application for this in the regular business world.
Essentially, we do two things: strategic planning and cost management in the telecom arena. We started out doing just contingency-based auditing of phone bills, what we call cost management. But as the industry changed, we moved from a contingency-based model -- where we do a one-time audit -- into more of a telecommunications managed services model, where we work with clients on an on-going basis to ensure that their telecom and data services are working as efficiently and as cost-effectively as possible.
Q: Can you give us an example of what that looks like for a client?
A: Sure. One client that we've worked with for four years now started out having us do a contingency-based audit. This means we collected their bills and compared them against their contracts, against existing tariffs, and we validated that the services were actually in use. We found more than $150,000 in savings. It's huge, and pretty much 100 % of the time we find something, some savings.
Q: Why is that? Are the telecom companies 'cramming' businesses?
A: On the provider side, billing errors can result for a number of reasons: billing system conversions, mergers and acquisitions, poorly written business rules that introduce errors into the bills. The regulatory issues are also at play. There are various state and federal tariffs that govern how things are priced. Often, the contracts are not in alignment with the tariffs or the tariffs are misapplied to the bills. And there are taxes and surcharges that are governed by various jurisdictions.
On the business side of it, there are simply too many bills that are too large and too complex for people to track and understand. Then you add to that a continuous number of moves, adds, and changes to the service, and it makes following the bill very difficult. Having staff who have the time and the knowledge base to work effectively in all those different arenas is almost impossible to find.
So we tell our clients, let us do that. And in our example from above, they hired us to clean up their billing errors and once we got all that cleaned up, the client said that their network services contracts were getting ready to expire. So we did a review of the client's business practices, how they deliver service, then we wrote an RFP (Request For Proposal) for data services that the client sent out to providers. We facilitated that process and helped the client make the final selection.
Next, the client wanted to replace their old phone system with an enterprise solution. We wrote the RFP for that and managed that process for the client. Now, they're engaged with us on a monthly basis to validate that their bills are correct and that everything is in line. You think that once you fix it, it's fixed, but that's not the case because of all the various factors that I mentioned.
Q: You must have to audit these bills manually?
A: There are two aspects: some of it is automated -- over the years, we've developed tools to streamline our analysis. But part of it is interpretive. It's kind of like going to a medical specialist. You have the tools, say an X-ray, but one physician may be more skilled than another at interpreting the information on the X-ray. That's how we do it. We have the tools to do the analysis but because the billing issues are systemic, there are many variables that we have to interpret. And there are other factors we have to consider. For instance, we may find some aspect of the telecom service that we think could be disconnected and provide a savings, but for some business reason, the client wants to keep this service. So there is cooperative work involved with the client, ensuring that what we find and recommend is effective for the organization.
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