A small business had agreed to a solicited contract option offered by the
local telecommunications carrier in 2005. Three years from the inception date
of the agreement, the manager resigned at the business. A few months later,
the owner found a new manager for the business.
The new manager asked that we look at their telecommunications invoice,
because he did not understand why the service cost was so high. Upon scrutiny
of the programming, it was evident that the previous three-year contract
included seven add-on services, cost-free, per line. These additional features
were on all of the business lines, whether they made logical sense or not.
The business had four active lines. When the initial contract expired, the
additional "package" add-on services remained active, billing at the
un-contracted tariff rates, as did the four telephone lines.
After determining which lines required some add-on services, with the
remainder removed, the account was placed under an obscure, rarely offered,
twenty-four month contract with the local vendor. As a result, the account
expense reduction was over sixty percent per month.
Over a timespan of years, large corporations make many changes to their
telecommunications infrastructure. Some of these changes are the result of
direct and indirect activities, this includes the opening and closing of
locations, as well as the implementation of technology upgrades (e.g. better
services, newer hardware, etc.).
One of the most common problems we
encounter with "large footprint" clients,
having many locations spread over large geographic areas, is the retention of
services that are no longer used. Cursory review of a client's active database
of services (when available) often shows an incomplete or outdated inventory
system. It is very common to find existing services still active at old, closed
While auditing a Fortune 500 national chain, we conducted an asset discovery
effort with all of the main national service providers. This is part of a normal
auditing process. After several months' of data mining efforts, we compiled an
inventory of assets the company's Accounts Payable Department had been paying
Using a combination of the company's
own real estate list and company website,
we were able to identify a large number of accounts that were active at
addresses that no longer existed.
Additionally, client profiling determined the expected number and types of
services each location would possess and use. Once the inventory of services
was complete, we identified that a large number of locations did not conform
to the expected configuration. Upon further analysis, it was determined that
the locations, with the anomalous configurations, were locations less than
ten years old. The list of "potentially
extraneous services" was delivered
to the Telecommunications Department liaison sorted by address, account number
and service types. Over one hundred locations possessed the same identical
anomaly. This was more than coincidental.
Upon further scrutiny by the client liaison, it became evident that the
additional services originally served the construction companies' trailers
during the build out of new locations. When the construction of the new
locations was finished, the Real Estate Department never communicated to
the Telecommunications Department that the services for the trailers were
no longer necessary. Hence, the services remained in place (metaphorically,
under eight inches of asphalt) for years after the locations were constructed
For this error, the client was paying nearly $180,000 per month for services
that were no longer in use. The problem had been growing for many years.