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ITFMA Journal

Assessing Your Current Telecom Expense Management (TEM) Implementation

Gary Eckert, President/CEO, Telytics, Inc.

"Best in Class companies are achieving a 40% reduction in telecom related expenses with robust TEM solutions...”
     – Aberdeen

Is your company achieving results of this magnitude? If not, then this white paper will help identify the causes and remedies for improving the performance of your TEM implementation.

The value of a comprehensive, well conceived, and properly implemented TEM solution can be significant to any enterprise. Unfortunately, while the 20% of companies who fall into the "best of class” category have enjoyed often spectacular reductions in ongoing costs, the other 80% of enterprises have experienced much more modest results. Industry surveys have shown that the middle 50% of companies are seeing cost reductions in the area of 10–12%, with the bottom 30% of all enterprises deploying TEM solutions having seen little or no savings at all. These figures would appear to indicate a fairly wide disparity in achieved results and appear to reflect a current majority view that their TEM solutions are not fully meeting expectations.

This perceived failure to achieve the "Promise of TEM” has been reflected in both general dissatisfaction with current TEM solution implementations and a high degree of churn amongst TEM service providers and technology solutions. What is the true culprit in these scenarios? In all fairness, both the TEM solution providers and their customers are part of the problem. But the good news is that both can also be a significant part of the solution.

Any well conceived TEM solution should share some fundamental goals and objectives, including:

  • • Enhancing visibility into current spend.
  • • Automation of analysis tasks.
  • • Providing data sharing with other applications.
  • • Providing accounting and strategic budget management support.
  • • Tracking telecom contract performance in terms of both rate validation and contractual commitment attainment.
  • • Providing inventory management.
  • • Allowing customized reporting.
  • • Providing process efficiencies.
  • • Delivering cost savings.

While most TEM applications and TEM service providers profess to address these issues, actual customer experience in achieving these objectives can vary significantly.

The reasons for the quality variance amongst current TEM implementations stems from a number of causes. These causes can be grouped into the various stages of the TEM implementation life cycle. These primary stages include:

  • • Procurement
  • • Implementation
  • • On going data processing and report generation
  • • Process maintenance

Common mistakes made during the initial procurement process include:

  • • Not doing the necessary homework to identify the best possible solution candidates.
  • • Failure to use a Request for Proposal (RFP) process to access competitive alternatives.
  • • Failure to clearly define and understand the requirements for most effective TEM results.
  • • Falling prey to initially impressive TEM application demos without fully understanding the underlying processes and "the missing data”.
  • • Assuming the biggest and best known TEM providers have the best solutions, when in reality their "success” is often more reflective of their ability to raise venture capital and to gain market visibility through substantial marketing budgets.
  • • Failure to understand the nuances of TEM service contracts which have become as customer unfriendly as major carrier contracts.
  • • Not taking advantage of available third party expertise to assist with the evaluation and procurement process.

Once the initial procurement effort is finished, the next phase, implementation, is undoubtedly the one phase of any TEM process that causes the most discontent amongst both the customer and the TEM solution provider. It is during this phase that the lack of clearly defined set up requirements and solid implementation plan, combined with a customer that is unprepared to properly support the initial baseline database creation, often combine to undermine the future success of the entire TEM project.

Typical errors and mistakes made during the implementation phase include:

  • • Customer is not prepared to provide needed account, inventory, and charge back allocation data.
  • • The TEM service provider shortcuts the implementation process to avoid implementation SLA penalties.
  • • Customer requires/asks for custom data fields that causes implementation delays or it is determined the TEM provider’s application does not support the customer desired data entry format.
  • • Implementation of desired accounting documentation requirements such as charge backs and cost allocation between departments/business units can actually result in reduced spend visibility relative to rate verification.
  • • The TEM service providers’ attempts to consolidate current telecom invoicing spend hierarchies to facilitate invoice processing causes reduction in ability to assess costs by actual location.
  • • Place holder data is put into data fields to meet application requirements but results in useless data reports until corrected.
  • • TEM software applications relying on EDI data feeds may be rendered useless by routine vendor format changes to their EDI feeds.

Because of these issues it is not uncommon for the implementation phase to take up to a year to complete even though there may have been a promise (contractual obligation) by the TEM vendor to have this completed in 60–120 days. These implementation process delays often result in finger pointing and even threats of lawsuits over perceived contractual breaches. Not a good way to start a new business relationship.

Once the TEM solution is implemented and fully operational additional challenges can arise, including:

  • • A failure to implement a checks and balances process to verify data and report integrity and accuracy.
  • • Failure of management to understand the difference between accounting based spend reports generated by TEM application versus actual telecom services usage resulting in strategic budgeting and planning mistakes.
  • • Realization that current contractual performance SLAs do not provide adequate monitoring or compliance incentives to ensure expected TEM service provider performance.
  • • Automated rate validation processes, based solely on invoice data, provide misleading or incomplete analysis resulting in missed opportunities to optimize current spends.
  • • Standard reports provided by TEM software application fail to answer basic fundamental questions relative to contractual rate validation and spend to commitment attainment.
  • • Manual processing of paper invoice data resulting in data entry errors (new billing errors) that may not have previous existed.
  • • Introduction of new or changed electronic billing data may result in data corruption of existing database formats.

To avoid the above issues, it is imperative that the customer protect themselves by identifying and correcting these potential pitfalls as early in the process as possible. This again emphasizes the need for a thorough TEM process assessment.

This assessment task is also critical whenever an "upgrade” to the TEM solution is contemplated. The TEM service providers and TEM software application developers are always making changes to their applications and processes. Some of these changes are to address specific customer requirements, but more often are related to creating operational efficiencies on their side to facilitate service delivery at a lower cost to them. Therefore, these "upgrades” while touting new features and functionality, often result in changes or even elimination of previous functions, many of which the customer actually found most useful. There is also an industry trend to try and incorporate a wider variety of built in functionality (e.g., wireless management, professional services support, etc.) into existing TEM services and applications. But much like the customer experience with Windows XP and Vista, newer and more features do not always translate to an enhanced customer experience.

TEM done right can provide outstanding benefits, but experience has shown it often fails to deliver on its promise. The secret to success in this endeavor is to understand that common approaches to address this issue often continue to mask the problem and that it takes a particular expertise to formulate an effective strategic plan and to implement it in a manner that provides the desired results.

© 2010 Telytics, Inc.

For more information about Telytics, Inc., go to or contact Gary Eckert at or (760) 918-5568


Copyright © 2011 by the IT Financial Management Association.

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