Telecom Expense Management: Developing a TEM Strategy
TEM processes, services and software provide significant value, but the solutions are still far from perfect.
Late last year, a new client called me for assistance in identifying a large TEM (Telecom Expense Management) solution. He elaborately described his vision, which went something like this: "We need software that will automatically identify every type of error on each phone bill. I want it to match up against our list of circuits and services and reject any and all discrepancies. It needs to track all third party charges, any variation in monthly rates and all deviations from contract rates for both recurring service charges and usage. It needs to automatically create error disputes, communicate these disputes to predefined telephone company contacts, then generate automatic escalation memos if the issue is not resolved after 30 days. It needs to..."
The rest is kind of a blur, but I remember it was even more elaborate! This level of expectation is not as rare as you might think. Five years ago, most C-level folks were skeptical about TEM services. TEM was perceived as a new spin on utility audits. Now there is this overoptimistic expectation that TEM software and solutions, still a niche industry in its early years, has become a cure-all for the IT department’s budget crisis. The level of artificial intelligence expected from a TEM solution would surpass the most sophisticated automated business processes on the market today.
In reality, TEM processes, services and software provide significant value, but the solutions are still far from perfect. TEM is suddenly hot, primarily because most enterprises are currently so focused on cost savings. This is where a lot of the hype comes from. With enterprises cutting staff while trying to audit and consolidate services, a TEM solution seller is tempted to present their product as a telecom-spend fix all, requiring no client hours (or expertise) and doing everything better, cheaper and faster. Add to the mix analysts and consultants that are rightfully excited about the potential of these new solutions, and it leads to misguided expectations and disappointing project implementations.
Over the last couple of years I have participated in several TEM conferences. Two years ago, during a break, I heard a lot of stories from enterprise customers about failed TEM implementation attempts; many were already shopping for a new solution provider. Last year, a few of these stories became presentations with stories of second and even third attempts to implement a solution that met the customer’s requirements.
Don't get me wrong; despite all of these challenges, enterprises really are saving money with TEM systems and processes. Recently I made reference calls for multiple TEM vendors and the responses I encountered illustrate the paradoxical state of the TEM industry right now. As expected there was negative feedback about delays and missed expectations, but there was one encouraging consistency: in every case (regardless of the vendor) the client was saving real money since implementing the solution.
So what is going on? Is TEM a good idea yet or not? More importantly, how can your business be one of the success stories without risking your reputation (or your career) with a disappointing implementation?
A good place to start is by being very clear about what is meant by a TEM solution. Personally I find it ironic that in the early VoIP/convergence days (long ago in about 2001), everyone avoided the term "telecom" like a plague. It was considered such an archaic term, and consequently it was extremely rare to find a reference to "Telecom Expense Management." Now every solution associated with telecom spend latches on to the term and claims they have been "doing TEM" since 1985 (all the while with a disclaimer that "TEM" is a misnomer and understatement for all the things their product really does). No wonder we are all so confused!
So, subject to the criticism of a few vendors that do not fit into my definition, TEM is a solution that tracks telecom (voice and data) assets and their related expenses. Currently there are three main delivery options for a TEM solution; Business Process Outsourcing, SaaS/Hosted Solutions, and Licensed software products managed on customer hardware.
Business Process Outsourcing (BPO) companies will manage the entire process of ordering services and auditing expenses. Many BPOs now offer enhanced visibility into telecom spend via online reporting and ordering tools where in the past a BPO could only offer scheduled batch reporting.
Software as a Service (SaaS) and hosted solutions offer customers a web-based TEM tool to manage all or part of the telecom lifecycle process. The software itself is not owned or managed by the customer. Some SaaS services interface with external HR and A/P systems and also directly accept and process electronic invoice data from carriers.
Many of the same features available from a SaaS solution can also be purchased via a licensed software product. This solution may require more capital upfront, but in some cases may be a better fit due to the integration and security requirements of a customer’s enterprise.