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Telecom Expense Management: Come for the Savings, Stay for Long-Term Business Success

Since becoming a part of the Telecom Expense Management (TEM) industry, I’ve operated on the assumption that companies deploy third-party TEM solutions for cost savings. I think you’ve probably thought the same thing too. Whenever I speak with customers, they inevitably steer the conversation to the savings they’ve realized or hope to realize by working with Tangoe. Even when I look at RFPs the questions show that expense reduction is an important requirement of a TEM solution.

Imagine my surprise then when IDC stated that improved organizational efficiency was the top benefit identified by large enterprises. Earlier this year, IDC completed a survey of U.S.-based large multinational organizations. Some of the findings published in the InfoBrief “Telecom Expense Management: Order in a Complex World”[i] were eye-opening for me. As I write this, I wonder how many of you will find the InfoBrief as surprising as I did.

When asked to identify the top benefits they’ve derived from using a 3rd party TEM solution, the number one benefit cited by respondents was improved organizational efficiency.

Why is organizational efficiency the top benefit of working with a TEM provider? Why isn’t expense reduction the top benefit? This is one of those “meaning of life” questions that kept me occupied all weekend (yes, I do take my job a little too seriously). I found myself thinking about it as I shopped for groceries on Saturday and yet again as I folded laundry. By Monday morning, I was still no closer to an answer so, I returned to the full IDC InfoBrief hoping to find that important nugget of insight I was missing.

I took a second look at the graph identifying the top benefits of working with a TEM provider or using a third-party TEM solution with a fresh pair of eyes. Aside from improved organizational efficiency, greater control of telecom spending was identified as the second biggest benefit followed by more optimized telecom services, a more efficient workforce and finally cost containment. Cost containment was lowest on the scale! Curious.

Consider another graph included in the InfoBrief: “Top 5 Most Common Applications of a TEM Solution”. In this case these same survey respondents named optimizing expenses and controlling telecom expenses as their top applications (respectively). Third was the payment of vendor bills. Fourth on the list was the accurate allocation of expenses and last was validating invoice accuracy.

The responses in this graph resonated because they are the same requirements I routinely hear of from our customers and see on RFPs. When most companies seek a TEM solution, these are the problems they wish to solve. And TEM providers almost exclusively focus on these applications when talking to customers. I know I do.

What I find interesting is that the common applications: validating invoices, allocating expenses and paying vendor invoices are very specific in scope. The top benefits: optimizing services and improving organizational efficiency are much broader in scope. My theory is that there is a definite positive correlation between the common applications and top benefits of a TEM solution.

After reviewing the InfoBrief, I came away with two key observations:

  1. Enterprises deploy a third-party telecom expense management solution because they want to optimize and control their telecom expenses.
  2. Enterprises continue to work with a TEM solution provider because they find that their organization becomes much more efficient, productive, and successful as a result of implementing a TEM solution.

It makes sense that once the initial optimization and savings are realized, companies continue to use a third-party TEM solution. This explains why IDC found that 89% of multinational organizations have invested in a Telecom Expense Management (TEM) solution provided by a third party. And this is also why most companies who invest in working with a TEM provider or third-party TEM solution never return to the dark ages of managing their technology assets in-house. It also explains why Gartner has found that most multinational organizations are now in their second and third TEM engagement.[ii]

Knowing this dichotomy between the initial motivation for deploying a TEM solution and the continued partnership with a TEM provider long after annual savings are no longer as dramatic as in the first two years of a TEM engagement challenges me to rethink the way I talk to customers about TEM solutions.

Are we too narrowly focused on specific applications and platform features when we talk to our customers? We should highlight the applications that help our users complete specific job tasks. But should we stop there? Based on the findings in this IDC InfoBrief, I think we need to go a step further and communicate to customers (and prospects) all the benefits they will achieve once they have implemented a TEM solution. I think of this as an annuity. These are benefits that will continue to pay dividends long after the initial cost savings of a TEM overhaul. These long-term benefits deliver even more value to the organization.

To find out how Tangoe can help you boost your organization’s efficiency and drive business success, contact us now.

[i] IDC, Telecom Expense Management: Order in a Complex World, June 2018

[ii] Gartner, Market Guide for Telecom Expense Management, May 2018