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Best Practices for Choosing a TEM Vendor

In order to get a handle on telecom, one of the most challenging sourcing and procurement categories to manage, multilocation businesses are increasingly looking to outsource management of telecom expenses. Recently, a national restaurant chain did just that, selecting a telecom expense management (TEM) solution that supports its fast-growing store footprint while offering greater visibility and simplicity to its processes. Its nuanced decision-making and due diligence in choosing the most appropriate technical and service-based solution for its needs gained Blue Hill's attention.

This restaurant chain, which has more than 1,000 locations, had to quickly set up and manage store infrastructures and services (including phone lines, network circuits, and other telecom and network services) as it rapidly expanded. Like many companies of its kind, the responsibilities for telecom expenses were split among multiple departments. The accounts payable department processed the invoices, mostly submitted on paper, and then sent them to the IT department. After IT reviewed the invoices and set codes and cross-billing designations, it passed them on to accounting. Lastly, the accounting department managed accruals associated with these services, then sent invoices back to accounts payable for processing.

Not surprisingly, the IT department identified telecom sourcing and procurement as an area where the company could gain efficiencies. So, by the end of 2013, the company began to seek vendors for managing its telecom expense environment. Initially, it sought a solution that could -- more than anything -- provide a centralized view of telecom services. However, within that purview, it took several key priorities into account.

Critical Priorities
This company sought a TEM solution that would integrate with its Oracle ERP application seamlessly. It also required a variety of references that could provide an accurate view of the TEM implementation process. This would ensure that it could use real-world experience to validate the vendor's technical claims, subject matter expertise, and service capabilities. In addition, this company sought a partner that could solve multiple operational expense roles; it wanted to include gas, water, and electric expenses in its TEM deployment, as well.

Because the TEM market includes stand-alone managed services providers, software providers, and consulting services from larger outsourcers -- among others -- it is important to decide on an approach before beginning the vendor selection process. Otherwise, companies can quickly get into a situation where prices, services, and tradeoffs make a direct comparison nearly impossible. This restaurant chain focused its selection decision on three top vendors in the TEM industry: Cass Information Systems, Dimension Data, and Tangoe. After a thorough analysis, the company chose Cass, due in large part to its software design and user experience, along with positive customer references and its ability to handle utility expense management.

In these early stages, the Cass customer references verified the company's ability to implement within a 60-day period and to integrate with an Oracle ERP implementation. And, since the restaurant chain started using Cass in a production environment, it has gained much greater visibility in areas such as inventory, pricing, and contract alignment alerts.

Ultimately, though, the firm's decision-making process highlights a variety of traits that are critical to enterprise technology evaluations, and it provides key lessons for similarly situated companies. First, the company had multiple stakeholders associated with its telecom expenses, ranging from accounting to accounts payable to IT. In today's enterprise technology world, it is important to tie together the relevant financial, technical, and operational stakeholders associated with each technology, and then ensure that these stakeholders work together.

Best Practice Recommendations
Based on its experience using this decision-making process, Blue Hill offers the following recommendations for organizations considering a TEM solution:

Through these best practices, companies can improve their telecom inventory and contract visibility in a timely manner and traverse the nuanced TEM marketplace more easily.