Telecom service outages often occur when an organization divest a part of its business, whether a subsidiary or a group of physical locations. This case study shows how the disruptive event occurs, and how it was remedied. A lack of clarity in the management of telecom lines and asset inventory is often the root cause for these service outages.
Challenge
An international aviation company decided to divest 100+ locations and committed contractually to continue supporting the locations divested for six months while the services (incl. telecom services) were transitioned to the new ownership. The 6-month process turned into a multi-year headache as no strict ground rules had been set for tasks to be completed.
Issues to resolve:
- Telecom services attached to the divested locations were consolidated in the vendors’ invoices issued to the parent company.
- The parent company had no telecom asset inventory that clearly identified the account numbers, and the phone and circuit numbers that were part of the divestiture.
- The telecom vendors were never notified that a portion of the services and dollar volume were being moved off of the existing contracts.
Opportunity
RadiusPoint was notified by our client that 100+ locations would be divested, and the telecom and utility services would be taken over by the acquirer of that specific division. Our client provided the acquirer with a file of all services to be moved under their name with a transfer of liability (TOL) which would allow the latter to take control of the accounts.
Though our client did commit to supporting the company acquiring the locations, this support could not extend to assisting with the transition — i.e., contacting the vendor to get the services moved to the acquirer’s name and under their tax identification number.
After the 6-month transition support elapsed, our client notified us to start cancelling the telecom services that had not been moved off of the account. Since the new ownership’s teams did not take the required transition work diligently enough, the cancellation process created disruptive telecom service outages at the acquired locations.
Solution
RadiusPoint was able to assist with the transition of multiple services and avoided cancellations. Some telecom service outages did occur however as the new ownership’s teams did not act in a timely manner.
The most effective way to eliminate work for both sides and prevent service cancellations is to complete an Inventory & Audit of all telecom and utility services. This specialized mission allows both parties to view in granular detail what telecom and utility services were being billed for each location, and to be aware of the contractual obligations governing all services.
As organizations buy and sell other entities, it is important that their M&A teams understand what services come with an acquisition or leave with a divestiture, especially when those services are tied into contractual obligations.
In the course of the work, the acquirer determined it would be in their best interest to hire RadiusPoint as their TEM and UEM (utility expense management) service provider. Our mission was to assist with the transition already in progress, and to deal with all invoices and service providers on a monthly basis once the Transfer of Liability (TOL) services had been completed.
Avoiding Telecom Service Outages is Mission-Critical
As a part of our TEM service offer in the framework of an acquisition or divestiture, RadiusPoint ensures that:
- Costs and contractual obligations are identified vendor by vendor, enabling us to identify economies of scale to reduce costs.
- Overspending is put under control, as RadiusPoint benchmarks costs against other clients of like-size and like-spend.
- Restructuring of services and contracts is carried out as necessary to eliminate redundancies.
- Processes are integrated in a Procurement Policy Framework to control purchases of telecom assets.
Telecom service outages are operationally disruptive, and the inevitable loss of business is compounded when a business is subject to the stress of an acquisition/divestiture. The Inventory & Audit procedure conducted by the TEM service provider brings to both the seller and the acquirer the clarity they need to complete the transition process faster, and it relieves operational stress at the divested location.
Contact us to discuss how RadiusPoint can help your organization manage its telecom expenses efficiently. RadiusPoint is featured in the Gartner Telecom Expense Management Services 2021 Guide.