Telecom Expense Management — Old Term, New Technology

By: Richard “Zippy” Grigonis

Today’s floundering world economy has been a boon for the Telecom Expense Management (TEM) industry. The term TEM is hated by just about everybody in the industry, since TEM’s capabilities have in recent years expanded far beyond just checking phone bills for the 15 percent or so of errors that are inevitably found there. Everyone has their own, upgraded version of the term, such as Total Telecom (News - Alert) Cost Management (TTCM).

There are basically five key areas within TEM:

1. Invoice Management — This is original, traditional function of TEM — bill analysis, auditing and chargeback accounting/correction – plus the ability to commonly handle multiple carrier invoice types, as well as international invoices/inventory.
2. Ordering/Procurement Management — For example, a road warrior orders a mobile device that he or she fancies. The order routes to the employee’s manager, then up to a senior vice president. With some systems the VP can approve or reject the order, or even reject the original device and substitute another one in its place, without disrupting the workflow process. This activity is tracked and is part of the reporting and then sent to accounting.
3. Inventory Management — When a user relocates to a new location/department (or is laid off), or an MPLS circuit is cancelled, TEM companies have platforms that handle these types of Moves/Adds/Changes/Deletions (MACDs). Advanced TEM systems create and maintain a dynamic inventory of all the voice, data and mobile assets across an enterprise to a centralized location. It is updated periodically and automatically.
4. Wireless (Mobile) Expense Management. This has become a very hot area within TEM, since the average enterprise supports many different types of mobile devices that run two or three operating systems for wireless devices, and often multiple telecom service providers. Then there are the differing regulations and billing models, qualitatively different than those of wireline carriers. The most advanced TEM systems and services can handle this, having become all-inclusive, covering mobile contract negotiations, mobile policy development and enforcement, invoice processing and allocations, provisioning and fulfillment, inventory management (such as MACD), etc.
5. “Business Intelligence” or “Intelligent Total Communications Management” — Since all business processes are becoming telecom-enabled and many assets relate to voice, data and mobile, TEM ultimately reaches in to “fix” and streamline the corporate infrastructure, which can include everything from vendor contracts to cost center allocations and changes in accounting. Like a tail wagging the dog, communications management can impose logic, order and efficiency on companies that have not only lost control of managing wireline and wireless assets, but suffer from business inefficiencies and confusion as a result.

One great example of a state-of-the-art TEM platform is PAETEC (News - Alert) Software Corporation’s PINNACLE Communication Management Suite, an Enterprise Resource Planning (ERP)-type integrated software application that delivers total Service Lifecycle Management (SLM) for IT resources. (Service Lifecycle Management is a proactive method of managing the internal service delivery and service support processes of a business.) PINNACLE from PAETEC is designed so that large enterprise customers are able to effectively perform communications lifecycle management and consolidate the management and delivery of all technology-related services.

But the 800-pound gorilla in the TEM space is probably Tangoe (News - Alert), whose CommCare suite of managed services provides organizations with the visibility and control needed to manage fixed, mobile, and converged communications, even throughout a global enterprise. CommCare comes in three pre-packaged component layers — Base, Enhanced, and Premium. These deliver increasing amounts of functionality and can rapidly aid the management of an organization’s fixed and mobile communications, from simple invoice capture and processing to a complete range of outsourced services.

First, CommCare Base targets customers seeking a sort of entry-level software-as-a-service (SaaS (News - Alert)) offering. CommCare Base is for organizations needing access to Tangoe’s automated optimization technology but want to manage their communications processes internally.

Next up, CommCare Enhanced incorporates the Base layer, but provides full service outsource management of the invoice and inventory management, assurance testing, and reporting.

At the top, CommCare Premium incorporates both the Base and Enhanced services. CommCare Premium provides enterprises with Tangoe’s most complete outsourced solution for the management of a communications environment, throughout its entire lifecycle.

Moreover, beyond simple visibility and reporting, Tangoe can give you an even more clear, precise view of where your business communications expenses currently stand. You can call upon Tangoe’s experts to interview your voice, data, and mobile communications management teams, followed by a review of your current contract and invoices. After bringing to bear Tangoe’s technologies to evaluate your enterprise-wide communications environment, Tangoe’s experts prepare and deliver a detailed summary report of current state key processes including invoice processing, inventory management, provisioning, and wireless management. Thus, Tangoe can define any “gaps” in your current processes and can make recommendations as you how you can best optimize your fixed and mobile environments. (Obviously nothing beats real hard dollar savings summaries, supported by calculations, and a list of the steps needed to realize savings in a cost-effective manner.)

Rivermine (News - Alert) is another famous provider of automated solutions (both software and managed services) enabling various kinds of organizations to both visualize and control their telecom spend. Rivermine has saved many Fortune 1000 companies and large government organizations millions of dollars per year. These market-leading Telecom Expense Management (TEM) solutions automate the entire telecom lifecycle including contract sourcing, ordering, inventory management, invoice processing/auditing and reporting/analytics.

John Shea, CMO of Rivermine, says, “Interestingly, the economy appears to be helping our business. We closed out a great 2008, with our sales having increased by about 110 percent year over year, which is exciting. We can look at the leading indicator of ‘lead flow’ at this point in time, for example: If you look at the TEM inquiry level in our company about TEM in Q4 versus Q3 2008, there has been an increase by about 50 percent. So interest is increasing, given the economy and the cost-saving nature of TEM.”

“We’ve been engaged in some other interesting activities,” says Shea. “Over last year, we had a new software release, Rivermine 6.0, which had a lot of new functionality in it. IBM (News - Alert) put out a press release about a big partnership they have with us, and so we’re happy to be the selected vendor for their offering. That’s a trend, too. You’re seeing more and more business going to the big BPOs (Business Process Outsourcers) such as IBM. That’s what Gartner (News - Alert) says is the future of the industry, because you have these companies that have broad, global reach, and people in many countries around the world who can provide outsourcing scale around these types of offerings. They’re able to bring to bear some very powerful and unique capabilities such as financing mechanisms and things like that, which smaller companies can’t match. IBM can go to a customer and say, ‘We’ll finance the deal for you, you don’t have to pay us right now, or we can reduce this part of your deal.’ So we’re happy to be the partner selected by IBM.”

“In terms of trends, wireless continues to be hot,” says Shea. “If you look our deals over 2008, nearly 50 percent had some kind of wireless component to them, for example a wireless managed service component. We’re seeing more and more purchasers wanting to have both wireless and wireline TEM solutions unified together. We’re also seeing a lot of international activity, which continues to pick up steam. And of course our partner IBM operates in about 170 countries, which is one reason by Gartner sees the outsourcers such as IBM playing a major role as we go forward. But we continue to see interest in international it terms of the inquiry level and leads around solution sales. In the closing days of 2008, we signed a number of international deals, one of which encompassed about five different companies based overseas, with offices being supported in Europe, Asia for these different customers of ours. We see Canada continue to grow, for example, where we closed a major deal toward the end of 2008. We see interest in companies that are headquartered internationally as well as companies that are headquartered in the U.S. and are trying to support offices overseas or have some kind of spend level overseas.”

“Another trend that we see is that, quite frankly, there are a number of companies in our marketspace that tend to be a bit smaller, that perhaps didn’t take on financial investment from investment houses the way Rivermine did over the years. And some of those folks are really struggling in terms of trying to stay in a good financial situation as their opportunities to get loans or whatever dries up. If you look at the Gartner list of 30 or so companies covered in their most recent MarketScope, our understanding of it is that about eight of those during 2008 have either gone on the block for sale or have been sold. So there’s quite a bit of real and potential merger and acquisition activity going on. Some of the smaller TEM companies are having to deal with the financial challenges that also come along with the present economic situation. The good thing is that we’re on the other side of that divide, because our sales continue to grow and we’ve taken on investment capital. It’s a great time for TEM.” IT

Richard Grigonis is Executive Editor of TMC (News - Alert)’s IP Communications Group.

PAETEC Software Corp. - (www.pinnsoft.com)

Rivermine - (www.rivermine.com)

Tangoe - (www.tangoe.com)

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