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The Evolving TEM Market in Europe


My recent observations of the European telecom expense management (TEM) market paints a picture that sits in stark contrast to what I see in the more mature US market. Surprisingly, many clients in Europe are unable to see the value of TEM because online portal reporting has greatly improved, and with ubiquitous unlimited voice/data plans, these clients see TEM purely as an unnecessary cost and not a value added service. I suspect this will change once clients realise they need to manage their usage to keep their costs low.

In the last 12 months we’ve seen the calculated average revenue per user (ARPU) the vendor offers drop significantly. In the UK, a decent corporate ARPU should now be somewhere between £14 and £24. Two years ago it was £35+! We’re seeing the same in countries like Germany and France, where ARPUs have suddenly dropped as the operators have begun offering more streamlined packages and programs. Another factor is that the EU has driven down roaming costs.

Because ARPUs appear so low, any monthly fee that a TEM vendor charges begins to look like a disproportionately larger percentage of a client’s monthly costs. However, with ARPUs dropping as they are, clients could spend a little to help manage and further reduce their low ARPU.

Procurement departments are now accountable for tracking savings through the business and confirming they have been delivered. This is the biggest opportunity for TEM that I can see right now. Though it has improved considerably in the past few years, vendor reporting is still not delivering everything clients expect—especially the ability to track savings.

Companies understand that they need to manage usage, but are being tempted by the new vendor offerings from Vodafone, EE, and others. Therefore they internally struggle to obtain the budget to purchase TEM services even when there is a set of willing participants internally to assist in the process. Essentially these clients have to experience a painful cycle of poor billing and reports before a larger portion of the enterprise accepts that they need an independent third party to handle their TEM.

In essence, TEM industry leaders like Tangoe need to proactively monitor and manage the procurement of airtime to show clients the clear benefits of the solutions available.  Once enterprises taste the improvements in cost savings and control, we can then introduce our more comprehensive solution suite.