10 Technology Expense Management Terms You Need to Know 

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Businesses can’t afford to not invest in new technology, but increased IT spending opens the door to a vast and interconnected world of information technology expense management lingo. There are many terms, and a lot of them overlap or have different interpretations. The natural synergies among these elements can create confusion between each acronym, and many are used interchangeably in the real world. We’re here to help clear the fog! 

Here are 10 key terms related to technology expense management that you need to know, as well as a look at how leading analyst firms view their hierarchy and how Tangoe explains their interconnected relationships.      

Understanding IT Financial Management and IT Business Management 

Two umbrella terms are commonly used to summarize IT expense management at a broad, strategic level: IT Financial Management and IT Business Management.  

  • ITFM – IT Financial Management: IT Financial Management is the process of standardizing the financial information necessary for IT teams to manage and optimize technology investments to deliver the best value. Gartner establishes key concepts within IT financial management as budgeting, transparency, allocation, and funding. CIOs should review these concepts and use the recommendations to increase the maturity of their IT financial management practices and produce better outcomes for the enterprise.  
    Also referred to as Technology Financial Management (TFM) 
  • ITBM – IT Business Management: Gartner defines the Business Management of IT as “effectively selecting, acquiring, developing, integrating, deploying and managing information technology assets.” Others define it by putting more emphasis on defining IT’s value to the business and how IT investments drive business outcomes. For instance, the TBM council describes it as a discipline that improves business outcomes by giving organizations a consistent way to translate technology investments to business value. ITBM is sometimes considered a framework for more strategically and intentionally positioning IT in the organization.  
    Also referred to as Technology Business Management (TBM). 

The Relationship between ITFM & ITBM

It’s important to note that our diagram shows ITFM and ITBM as equals, because that’s how Tangoe views them – as the “left and right hands” of IT management. But our view is not always shared. Forrester’s perspective is that one term is superior to the other. Gartner says they’re just different terms for the same thing. This is where it’s all in the eyes of the beholder. 

Forrester’s View: IT Business Management versus IT Financial Management

Forrester, for example, sees the dividing line between ITFM and ITBM as maturity. The overarching (highest-level) term is ITBM with ITFM nested under it — representing those who are less mature in their practice. Forrester characterizes ITBM maturity as those having grown from:

  1. understanding IT costs
  2. to managing those costs
  3. to adhering to models and best practices for managing costs.

For example, using activity-based costing and fully integrated process models for providing an advanced level of chargebacks.  

Meanwhile, ITFM represents those who have room to further grow in cost management practices. For example, the IT organization can provide transparency around costs through basic integrations with financial and operational systems but has yet to achieve more difficult goals.  

Gartner’s Take: There’s No Hierarchy

Gartner, however, doesn’t identify these maturity levels with a particular nomenclature. It looks at all these stages of maturity as part of the ITFM umbrella with no “right” or “wrong” way of distinguishing between ITFM and ITBM — so long as you have the right solution and support to meet your needs and mature your processes.  

IT Expense & Asset Management: Components of ITFM and ITBM 

Working down from strategy into tactics, you arrive at IT expense management and IT asset management. These terms represent the plans and practices companies put into play when executing ITFM and ITBM strategies. They are the approaches necessary in upholding effective IT management. 

ITEM – IT Expense Management  

Also referred to as Technology Expense Management (TEM), IT Cost Management, IT Cost Optimization 

ITEM is the process of effectively managing expenses and services to minimize costs, fully utilize resources, and drive process efficiencies in financial management. Technology Expense Management is considered both a practice and a software or service offering in which a centralized platform tracks, monitors, manages, and optimizes costs. It’s also helpful in optimizing service usage particularly for cloud, telecom, and mobile technologies. Solutions typically serve IT, finance, and procurement teams.  

As more tactical than strategic, ITEM encompasses the management of budgeting and forecasting, invoices and payments, vendors and contracts, cost optimization, technology return on investment (ROI), and technology debt.  

Tangoe views IT expense management as the primary activity supporting IT financial management but also a critical part of IT business management. After all, how well expenses are managed directly impacts assets and the ability to increase purchases, invest more, and innovate more aggressively.  

What is Technology Expense Management? Get the guide. 

ITAM – IT Asset Management  

ITAM encompasses the management responsibilities associated with IT hardware, software, and services. ITAM includes inventory and auditing, orders and provisioning, tech support and help desk, and end-of-life support (updates, repairs, and replacements) with the goal of providing an ecosystem of services as well as an accurate account of technology assets and costs across the lifecycle of each asset.  

Tangoe views ITAM as the primary activity supporting IT business management and also a critical part of IT financial management. After all, how well assets are managed directly impacts expenses and the amount of unallocated funds that can be re-invested. 

Managing Expenses and Assets across Cloud, Mobile, and Telecom Environments 

Expense management and asset management are activities applied to each IT asset or service, which are commonly segmented into three groups: cloud, mobile, and telecom. Here’s a look at each. 

TEM – Telecom Expense Management  

Also referred to as Telecom Cost Management, Telecom Spend Management, Telecom Optimization, Telecom Financial Management 

Telecom Expense Management is the process of effectively managing fixed wireline telecom services and their expenses using a range of tasks, processes, technologies, and providers. Telecom optimization efforts typically include reducing costs and waste by making more efficient use of existing communications services. 

Learn more with this guide “What is Telecom Expense Management?” 

TAM – Telecom Asset Management  

Telecom asset management involves the maintenance and management of telecom circuits and services throughout their entire lifecycle. This includes auditing circuits, maintaining an inventory of all circuits, managing and controlling orders, change (MACD) management, usage monitoring and optimization, and maintaining contracts and vendor relationships. It can also include the management of telecom equipment and devices across remote sites. 

MEM – Mobile Expense Management 

Also referred to as Mobile Spend Management (MSM), Device Expense Management  

Mobile expense management is a system for optimizing the amount of money you spend on your mobile devices and services (i.e., lowering the cost you spend on mobile phone data and calling services and device hardware) while governing spending and improving the efficiency of financial processes.  

MAM – Mobile Asset Management  

Also referred to as Mobile Device Management (MDM), Managed Mobility Services or Mobility Management Solutions (MMS), Device Lifecycle Management, among others  

Mobile asset management is an umbrella term covering an extensive range of technologies and activities related to managing mobile devices in a corporate or public sector setting. For example: device management, security management, and usage monitoring and optimization. Examples of devices include smartphones, laptops, tablets, point-of-sale systems, and other IoT devices. 

Learn more with Tangoe’s guide “What is Managed Mobility Services?” 

CEM – Cloud Expense Management & FinOps  

Also referred to as FinOps, Cloud Cost Management and Optimization, Cloud Financial Management, among others 

Cloud Expense Management is the process of effectively controlling costs and resource usage in Infrastructure as a Service (IaaS), Software as a Service (SaaS), and Unified Communications as a Service (UCaaS) cloud computing environments. CEM solutions offer companies a centralized technology platform for achieving this, both for their cloud software and their cloud infrastructure services. CEM solutions are widely touted as the machine behind the FinOps strategy for cloud cost control (see more on FinOps below). 

FinOps, a closely related term, is a strategic framework that enables organizations to confidently manage cloud costs and generate ROI without wasting resources or adding unnecessary complexity. 

See how FinOps offers a new way to manage cloud costs. 

Learn more about operationalizing your FinOps strategy using CEM solutions. 

What is a Cloud Expense Management solution? Get the guide. 

CAM – Cloud Asset Management  

Cloud asset management focuses on the activities involved in managing the physical and virtual cloud environment, including infrastructure resource management, SaaS license management, and usage monitoring and optimization. The goal of cloud asset management is to provide better visibility and utilization of all assets in an organization’s cloud infrastructure.  

Ready to Get Started? 

As enterprise innovation accelerates, Technology Expense Management gives CIOs, CFOs, and procurement leaders a modern and more effective way to manage their portfolio of technologies, ensuring innovation is financially controlled and sustainable for the future.  

Learn how Tangoe’s AI-powered Technology Expense Management platform can help you simplify, manage, and optimize your IT spending across telecom, mobile, and cloud.