Finance News & Insights

Why the office of the CFO suddenly cares about communication data

With communications services becoming such a critical expense for Finance, many CFOs find themselves in uncharted territory. In this guest post, Larry Foster, the EVP of strategy and vision at Calero, outlines the new approaches and best practices in the communications data category.


Most finance practitioners would agree that the role of the CFO has expanded to face a broad array of challenges in the areas of technology and IT cost management. In fact it’s clear that the CFO is deeply intertwined with the CIO/VP of IT roles as they address how the organization manages technology demands – balancing the exploding costs, complexity and risks.

In the top five expenses

As part of the technology stack at most companies, communication services rank among the top five expenses. That’s a significant slice of the overall pie. Combine that with the reality that communication services are historically among the most difficult types of IT spend to accurately track, and there is a compelling reason to apply detailed financial management practices to this complex spend category.

To accomplish this, leaders in the finance world have sought ways to gain greater access and control of communications spend with a focus on the following goals:

  • improving budgeting and forecasting
  • using fact-based justification for increases or decreases in spend
  • simplifying usage-based costs allocation and chargebacks
  • reducing organizational risk and maintaining compliance, and
  • demonstrating ROI and effectiveness to the organization

Using existing communications data to achieve this level of detail hasn’t always been easy. Rather, it’s been fairly difficult using any sort of standard or automated mechanisms. The data has always been there, but like many “big data” sets, it’s been locked in a myriad of siloed source systems.

Insights within communications data sets

Fortunately, over the past few years, new approaches to analyzing other forms of big-data have been applied to the communications data category. Forward-thinking finance and IT executives have come to recognize the immense value of the insights that reside within these siloed communications data sets that include fixed-line telecom, mobile, cloud, IoT and other unified communications data. This shift is being driven largely by tapping into data that’s already managed by the telecom expense management (TEM) industry.

For historical context, enterprises have primarily used a TEM solution to help manage invoices, assets and improve processes, with the ultimate goal of reducing costs.  As demand for greater insights into big “communications” data has increased, best-in-class TEM vendors have responded by adding a new level of transparency by embedding business intelligence solutions directly within their platforms.

There are many types of business intelligence tools leveraged within these evolved TEM solution.  However, the four that are often used in the enterprise space are:

  • Reporting – Standard custom reports to tell you the “what,” as it relates to providing specific answers to specific questions.
  • Dashboards – Consolidated information for near real-time visibility and drill-through capability designed to illustrate high-level visual summaries around specific measurements.
  • Ad-hoc Analysis – Specific database queries, that support drilling into data sets to find answers to questions that you already have. This form of BI typically requires help from a database associate (DBA).
  • Guided Analytics – A pre-developed and interactive “guided” way to organize the stories within the data, ultimately allowing you to explore the “why.” This form of data discovery and exploration doesn’t require report writers or DBAs and is designed to help enterprises find answers to questions they didn’t know they even had.

While TEM has historically been controlled by the IT side of the enterprise, this evolution in embedded business intelligence capabilities has created a renewed interest from the office of the CFO. After all, increased data visibility, and the ability to visually explore a combined communications data set has enabled finance execs to accomplish their above-mentioned goals.

Best practices in Business Intelligence

Let’s explore some of the best-practices that should be considered when adding a Business Intelligence layer:

  • Fact-Based Alignment of Finance and IT: Play from the same data-driven song sheet when making joint decisions. Develop a unified mindset where Finance and IT work together to align, define and create a common set of clear goals. This will allow fact-based analysis of increases or decreases in IT spend. While these types of decisions can be tense, the data won’t lie about where the organization needs to head.
  • Integrate with Existing Financial Systems: Using common practices inherent in TEM, communication expenses should be integrated with ERP, IT Financial Management, budgeting and potentially other finance systems. TEM should be viewed as the source for IT cost data, and this integration will align all systems with highly accurate and granular data for improved exploration, root-cause analysis, control and accountability.
  • Reduce Risk and Maintain Compliance: Remember, TEM with embedded analytics is for more than finding cost savings.  Keep your organization in check as it relates to fraud or unnecessary charges.  Be sure to leverage reports, alerts and drill-down capabilities to help identify and enforce adherence to enterprise regulations and corporate policy.

‘Communications’ data goldmine

To summarize, the convergence of TEM and business intelligence has helped the office of the CFO to leverage this “communications” data goldmine. By doing so, they have a mechanism to help manage growth in new service costs, mitigate risk, reduce complexity and create transparency with their IT peers. This has supported better decision making and created a whole new way to optimize usage, spend and overall financial management processes.

Larry Foster, is the the EVP of strategy and vision at Calero, a leading provider of Communications Lifecycle Management (CLM) solutions.

 

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