Case 2

Case study: La Quinta With 372 hotels, three corporate sites and more than 1,200 monthly telecom invoices, La Quinta needed to better manage its telecom assets and streamline expenses… With 372 corporate-owned hotels across the United States, three corporate sites and more than 1,200 monthly telecom invoices representing millions in total annual spend, La Quinta corporation needed a solution that would help it better manage its telecom assets and streamline expenses. La Quinta was also facing a move to implement a new wireless strategy that required incorporating expanded wireless assets into its corporate infrastructure. It recognized the value of needing to centralize wireless plans, track traffic patterns and accurately manage hundreds of cell phones and PDAs used by hotel management teams. Finally, with lagging revenue streams based on declining guest use of traditional telecom-based guest services such as long distance telephone calls, La Quinta, like many of its competitors, was seeking new opportunities to maximize revenues based on existing telecom investments. For the hospitality industry, telecom networks are not only internal business tools, but also a valuable source of revenue, particularly as services such as wireless networks become a standard amenity. La Quinta selected Symphony Services’ Spend Management Solutions group to gain control of the telecom expense process, create new efficiencies, improve customer satisfaction and automate business processes to reduce the overall costs associated with its telecom spend. Needs Assessment A key component of La Quinta’s enterprise telecom expense management (TEM) strategy took shape in 2005 when it decided to outsource day-to-day expense

management responsibilities to Symphony. This meant the Symphony team would be responsible for the managing and consolidation of vendor contracts for wireless, wireline and PBX support; coordinating provisioning and maintenance of voice cabling; and moves, adds, changes and deletes (MACD) processing to maintain an accurate inventory and to provide dynamic management reports. In addition, Symphony was asked to provide technical telecommunication support which included 24x7 technical support and telecommunication MACD support for all properties, virtual offices and corporate offices. Symphony also needed to handle the outsourcing of all back office and administrative support around telecommunication asset management and providing budgetary management and support for telecom assets; financial management including the electronic cost allocation feeds by department and cost center into La Quinta’s Peoplesoft ERP system and invoice management with daily processing of telecom invoices and reconciliation of inventory against those invoices. Approach Symphony’s approach was to put in place a dedicated account management team to define client requirements and service level agreements (SLAs), provide clear and concise direction, and to be the direct interface to the client throughout the lifecycle of the contracts. Immediately, Symphony’s team of subject matter experts began analyzing La Quinta’s manual workflow processes and implemented an automated workflow solution, built around Symphony’s Expense Management System (EMS) 11 software, to provide management support, technical telecommunications support, and back office and administrative support. Symphony then leveraged its scalable, Six Sigma Quality trained operations staff to provide the processing and quality assurance of all La Quinta’s telecom invoices. The approach automated all manual steps and leveraged the workflow capabilities of EMS. This includes automated invoice adjudication by vendor, routed to the designated approver via table defined

invoice approval amounts. Upon invoice approval, specific accounts payable detail is automatically uploaded to Peoplesoft via a secure (SSL) bidirectional URL to complete the A/P transaction and transaction information is provided back to EMS. Symphony has defined SLAs and monitors performance around invoice processing, ERP implementation timeframes, MACD response and resolution, problem ticket response and resolution, break/fix resolution, inventory accuracy measured at the USOC (Uniform Service Order Code) level and customer satisfaction levels. The approach is to provide meaningful SLA commitment with associated penalties. Symphony excels at business process outsourcing by coupling telecommunication and business process outsourcing subject matter experts. These subject matter experts become a true extension of La Quinta’s team. Leveraging Symphony’s expense management software, the Symphony team quickly added value in terms of providing inventory control capabilities, invoice and billing review and contract negotiation support. The team was not only able to detect issues with La Quinta invoices, but went a step further to work with carriers to correct billing discrepancies and followed through to ensure proper credit. Another valuable aspect of Symphony’s outsourced spend management service is the team’s ability to analyze and track usage patterns, and identify areas of discrepancy. For example, the Symphony team was able to raise a red flag as it identified long distance phone charges accumulating in “unoccupied” guest rooms, high telecom usage during periods of low occupancy, or cases where hotels were still be charged for decommissioned lines. Symphony actually identified several cases where La Quinta was being billed for services at hotels that hadn’t yet opened, or for properties that had been recently sold. By simply eliminating billing errors, La Quinta was able to recognize significant cost savings. It is estimated that Fortune

500 companies spend about $100 million annually on telecommunications, and up to 12 percent of that expense can result from billing errors. Results Today, Symphony’s onsite account management team manages wireless and wireline processes for La Quinta’s 372 corporate-owned hotels across the nation and three corporate sites. The outsourcing team processes more than 1,200 monthly telecom invoices, approximately 70 percent of which are now processed electronically. Since partnering with Symphony, La Quinta has consolidated its vendors by half. By consolidating La Quinta’s telecom systems, Symphony enhanced its negotiating leverage and was able to secure better rates and terms with remaining vendors. As a result, in 2005, La Quinta was able to reduce its annual telecom expenses by 17 percent. La Quinta’s customer satisfaction rate for the telecom department increased immediately based upon survey feedback from their clients. Quality metrics identified in the SLAs have steadily improved from a 3.4 Sigma to a current 3.94 Sigma.

“To be successful, La Quinta must ensure a positive guest experience at its hotels in order to attract and retain guests. Equally important is our ability to effectively manage our costs to run the business. We prefer dedicating resources to driving customer satisfaction and improving efficiencies versus vendor management and IT help desk activities for telecommunications support,” said Jim Mitchell, executive vice president – information technology for LQ Management L.L.C. “Symphony Spend Management Solutions and its enhanced EMS 11 offering provide us with value-added services in inventory control, invoice and billing review and contract negotiations support. Symphony enables La Quinta to maintain tight control over

telecom expense management processes, improve accounts payable performance to our vendors and maximize related cost savings opportunities.”