The cost of Sarbanes-Oxley is a compelling topic for CFOs. While some feel the cost is too high, others contend the cost is small given the substantial returns.
The latter certainly seems to be ringing true. Since companies began scrambling toward compliance, finance managers have been using Sarbanes-Oxley as the reason to implement processes and procedures and deploy tools they have sought for a long time. They are working with engineering and operations for the first time collecting data that previously was unobtainable. The tools needed to collect data from the network and provide the statistics and reports on the traffic traversing the nation’s networks were not available to them. That is, until now. Companies have found that visibility into the network is a crucial tool not only to Sarbanes-Oxley compliance, but also to profitability.
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Imagine being able to see what type of traffic (voice or data) is traversing the various routes in your network. Now imagine being able to quantify the amount of that traffic and its cost based on routing. And, imagine for a moment that you could make real-time decisions based on that visibility, rerouting traffic through more profitable interconnections, offloading data from your voice tandems by routing data directly to ISPs, and managing facilities based on real-time utilization statistics. What if you could manage service-level agreements by monitoring the traffic that traverses your interconnects, and proactively fix routing problems before they cost you in penalties? This is exactly what network visibility is all about — knowing what is happening in the network in real time. Business intelligence platforms that enable rapid return on investment for mobile, fixed and converged network service providers identify revenue leaks before they become significant, and arm companies with the data they need to retain precious revenue.
So how do these tools work? The most important function is data collection, and there is no finer source of data than signaling. Collecting signaling data and storing it in a data warehouse provides operators with a rich source of information that can be applied to many different functions and reports.
But the data should not be limited to signaling. In addition, the warehouse should be collecting information from other sources within the network, such as the Local Exchange Routing Guide. This information can be used to enhance the reports generated from the signaling data.
Once the data is collected, reporting tools provide the details. For example, the matrix above identifies traffic leaving the network, separated by destination, and the carrier used to route the traffic to its destination. This is invaluable data for those managing interconnects, as well as marketing professionals monitoring the profitability of services to specific destinations.
One major U.S. operator decided to create such a tool to better understand the network traffic. The project took considerable time because the operator decided to develop it internally, even though there are vendors who provide this type of application. In the end, the operator saved more than a few thousand dollars. In fact, it saved more than a few million dollars. The operator saved hundreds of millions of dollars by simply rerouting data calls, eliminating tandems, and achieving network efficiencies realized through network utilization studies.
The operator’s case is not rare. Many service providers are retaining substantial amounts of revenue by implementing network visibility tools.
How much revenue? The verdict is still out in many cases because network operators do not often reveal losses. However, at a recent conference on fraud management, several finance managers said they had to substantially understate the ROI in their business cases when purchasing new tools because the returns seemed high.
Companies operated for years without knowing how much money was really lost. Large revenues diluted losses without critical network visibility tools in place, resulting in delayed identification of the problem.
Now enter Sarbanes-Oxley. Understanding and quantifying the traffic in your network is crucial to Sarbanes compliance. It is also crucial to the profitability of the company. If anything, Sarbanes justifies the implementation of tools to increase margins significantly, while giving executives the confidence that reported revenues are accurate. Sounds like the makings of a good business case.
What about the cost? Industry statistics say five to 10 percent of gross annual revenue can be recovered, but we already know these figures are understated. If what network operators are saying behind closed doors is true, you will find that cost becomes a moot point. Your company will be much healthier because of it.
Travis Russell is product marketing manager for Tekelec’s Applications Division. He can be reached at Travis.Russell@tekelec.com.
