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Telecom Expense Management

September 4, 2009 Leave a comment Go to comments

Telecom Expense Management (TEM) is a term used to define a business approach to managing telecommunication service expenses (voice, data, and wireless) with a combination of software tools and manual auditing. Typical software leverages a telecom carrier’s electronic invoice feeds to gain detailed information. Human agents use a combination of software and personal information about the telecommunications industry to compare the available pricing and service options.
Businesses can assign telecom expense management duties internally or outsource them.
Internal TEM: One or more employees are responsible for monitoring telecommunications costs. This may be a dedicated task or folded into general budgeting and accounting. Small businesses are more likely to use this approach.
Outsourced TEM: The business outsources telecom expense management duties. Some companies offer a “no risk” service where they guarantee net savings for the client, though the TEM firm takes payment from the margin of savings. Providers typically provide a wide range of additional services, including invoice processing and payment, invoice auditing for contract compliance, validation of an approved inventory, reconciliation of orders (Move, Adds, Changes and Disconnects – MACDs) to invoice charges, order provisioning and escalation, physical inventory validation, sourcing and negotiation of contracts against databases of industry best-in-class rates, help desk, and other services.
The basic telecom expense management activity is a cost audit that determines possible savings. TEM auditing methods can be divided into two broad categories:
Manual Auditing: The auditor performs research and comparisons himself, with the help of less specialized data applications like a spreadsheet or database.
Software Auditing: Auditors use specialized software tools designed to aggregate usage and billing data.
In-cycle Analysis: ERP-class analytic tools automatically reconcile detailed billing elements to service inventories and contracts/tariffs prior to payment processing.
Specialized TEM software applications have become more common in recent years, though they have not replaced manual auditing. Many firms use a combination of manual auditing and TEM software. With TEM software electronic invoice feeds from a carrier can be automatically downloaded directly into the TEM software, which immediately conducts an audit of each single line item charge down to the USOC level. The provisioning software captures each circuit number provided by all of the carriers and if there are bills outside of the contracted rate, an exception rule triggers a red flag and notifies the pre-established staff member to review the billing error.
The telecom expense management industry can be categorized as emerging but has gained wide adoption in recent years. Gartner tracks over 100 TEM vendors and provides an annual TEM Marketscope which rates each vendor and their capabilities.Forrester, Aberdeen, Aotmp and TelecomExpenseManagement.Org also provide research and vendor reviews.

Picking a telecom expense management vendor isn’t easy. After all, there are a 100 or more of them in North America alone, and none is public, making it difficult to peer into their financials.
Not only is the market crowded, but there are multiple delivery models for TEM offerings. You can license software, buy it as a service or outsource your processes. No one model fits all customers, but analysts say you really need to know what you want before issuing an RFP.
(See suggested Web Resource for a list)

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Categories: Business & Strategy
  1. Dan
    September 5, 2009 at 10:36 PM

    I think you forgot an important category of TEM called Real-time Telecom Expense Management. These solutions allow you to predict costs before they occur so that you can act to prevent them. Bell Mobility in Canada just launched a Real-time TEM, see the following link:
    http://mobilebusiness.bell.ca/en/Common/Wireless-solutions/Your-business-needs/IT-service-management/Anomalous-Networks_Page_869.aspx

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