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Telecom Inventory: So What about Cost Allocation?

Posted by Chris Thierry | June 2, 2011 9:30 AM

Author: Patricia TurchynAllocating Telecom Costs

Now that you’ve chosen a TEM provider, someone will need to get into the nitty-gritty of your telecom inventory. One of the aspects that will have to be looked at, analysed and re-analysed is Cost Allocation. Not only will it have to be analysed from a telecom perspective, but from a finance perspective as well. Do we assign the cell phone (or phone line, or internet line, or circuit) to an employee? Or, do we assign it to a Department? Can an employee become the “owner” of a circuit or fibre optic line?

Allocating services by Departments or locations?

One of the easiest ways to allocate service costs is by Employee/Department or Site Location. Why do we have both, you ask? A mobile number, internet line, air card or fax line are individually-ended services: one end of the service is in the hands of a person or department and the other end is in the hands of a provider. Individually-ended services can be assigned to an employee or department. An MPLS circuit, a fibre optic line or a frame relay cannot be assigned to one person or even a department so it has to be given a location (site) assignment.

Employee/Department cost allocation has its benefits: When an employee leaves the company and his/her name is removed from Human Resources and the information is relayed to the TEM software automatically. All of a sudden the now-ex-employee’s services have no owner! Well, actually, it will have a new owner – shortly. It happens like a bungee-cord effect:  the TEM software brings non-owned service(s) to the attention of the TEM solution manager, who, in turn, brings it to the attention of the head of that particular department who will tell the TEM solution manager what to do with these now “un-owned” services. This is all done via the click of a mouse. So whether the service is cancelled, reassigned or suspended, we know 100 percent that this service will have an action taken against it. We won’t be running up needless costs for months on end until someone realizes that the employee left the company and no one ever cancelled, reassigned or suspended the services.

A Site Location assignment works best when no particular individual owns the service. Take for example, a fibre optic connection between 2 buildings. Does the fibre optic belong to the person or department at building A or to the one at building B? With a Telecom Expense Management Solution, the fibre is assigned to one site and related to another site (on the other end). Tagging the 2 locations has another purpose: if one location moves, all its services will be identified (via the TEM software) and will also be moved, reassigned, or cancelled.

So many companies have live services that they never knew still existed! Just think, how much money is going down the drain? Aren’t you curious to know?

For more information on what to consider when tackling Telecom Cost Allocation, download a copy of our TEM Services Checklist and see exactly where you stand.


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Topics: Telecom Expense Management, Cost Allocation, IT Inventory, tem

Written by Chris Thierry

Christopher is the president, founder, visionary, and driving force behind Cimpl, which first started in 2000 as Etelesolv: his goal is to bring holistic enterprise solutions to companies of all shapes and sizes. Moreover, Christopher’s devotion to the well-being of his employees has made Cimpl one of Canada’s Top 50 Employers. He’s also dedicated to giving back to his community, by serving in multiple industry associations. He’s a mentor for the Canadian Youth Business Foundation and a member of the Young Presidents' Organization, the Entrepreneurs’ Organization, the CIO Association of Canada, and the Telecom Expense Management Industry Association. Christopher holds a Bachelor’s degree in Management Information Systems and Marketing from the John Molson School of Business at Concordia University. He is also a graduate of the Massachusetts Institute of Technology's (MIT) Entrepreneur’s Master’s Program – a program specifically designed to optimize the skillsets of founders of high growth companies.

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