By Upland Cimpl Don’t have time to read the blog? Listen to the podcast.
To understand the evolution of TEM, it is necessary to know its history. Until 1984, AT&T owned and operated most of America’s telephone network. It determined the services and equipment customers could use and the prices they would pay. In 1984, the settlement of a federal government anti-trust suit lead to AT&T’s divestiture of its local telephone system and split into seven independent Regional Bell Operating Companies (RBOCs), or Baby Bells. AT&T kept its long-distance network and its business telephone system service. In other countries, internationally-owned telecom carriers were broken-up, privatized, and deregulated.
Over the next ten years, many enterprises hired telecom auditors to review billing and secure refunds for overcharges. In the mid-1990s, three main factors led to the transition from bill auditors to a TEM market:
• Enterprises wanted proactive solutions to identify billing errors in the first month, rather than finding billing errors that accumulated over several months.
• Bill auditors needed a more stable business model with recurring revenue, rather than just providing a one-time audit.
• Dealing with multiple service providers due to increased competition, and the introduction of new technologies, communications services, and hardware made managing telecom expenses more complex and difficult to manage.
From Telecom to Technology Expense Management
The first driver: Matching complex invoices to contracts
Competitive market forces and complex telecom billing make it difficult for carriers to manage the wide variety of discounts, plans, and services they offer. Government regulations such as local and federal taxes, FCC mandates, and constantly changing laws increase the probability of billing errors.
Automated TEM solutions provide the best way for organizations to gain a clear view into their telecom inventory and what they should be paying. TEM solutions consolidate contracts and invoices into one system. They standardize the invoice data and validate charges against contracts and usage.
The continuing need to optimize mobility
In the late ‘90s, with the adoption of mobile devices in the workplace, service charges moved from expense reports to become a mainstream corporate expenditure. Like voice or data networks, mobile billing is likely to have contract discrepancies, unknown charges, and saving opportunities through optimization of consumption with service contracts.
Mobility adds expense management challenges – such as frequent device ordering, service upgrades by users, and difficulty tracking unused devices (when employees upgrade phones or leave the organization).
BYOD is more than telephony
Even before the pandemic, most organizations allowed the use of personal devices at work – including smartphones, tablets, and IoT applications. With the pandemic, 85% of organizations implemented BYOD policies when employees shifted to work-from-home.
In terms of cost, BYOD policies can mask the total cost of ownership across the organization. In some cases, employees may submit charges on expense reports for reimbursement. Organizations may fail to categorize it as a mobile charge and lose visibility into mobile costs and trends. Even if the employee does not submit the expense for reimbursement, there are still costs to support a BYOD user for mobile device management (MDM), security policies, and corporate access. Additionally, there may be incremental software expenses that aren’t always visible. An example of this might be the organization choosing a higher-level Microsoft 365 plan to cover Intune.
CAPEX vs. OPEX
The term CAPEX stands for Capital Expenditure while the term OPEX stands for Operational Expenditure. CAPEX is the money which is used by an organization to buy something new or to upgrade something they already have. OPEX is the money which is utilized in running the routine day-to-day activities within a company or industry.
Cloud computing has shifted where technology costs are headed. Instead of fixed costs for hardware, software, and environment, cloud providers charge based on compute (as needed or reserved), storage (short- or long-term), and applications. This offers little or no fixed costs for serious processing availability. The challenge is that costs are unanticipated and can balloon if application usage takes off.
This is another case where convergence of IT and telecommunications has led to the integration of TEM with IT. The need to manage the cost and usage of cloud services has accelerated the move from telecom expense management to technology expense management for collaboration tools, infrastructure, and applications.
Unified communications, especially cloud-based video and web collaboration tools, have become indispensable to enterprise business. The distributed contact center in the cloud is now the norm.
The pandemic accelerated the technology shift
In March 2020, as offices closed to slow COVID, IT departments scrambled to get workers productive from offices in their homes. Remote access software, web conferencing, and desktop telephony were deployed quickly. Our analysis shows that the average enterprise employee is licensed for at least three web conferencing tools with overlapping functionality – and enterprises are paying for this wasteful spending.
The roles of finance and IT have changed
Strategic management and financial forecasting are more important than ever. We see more interaction between IT service platforms such as ServiceNow for device ordering and alignment between invoiced and logical network monitoring. Chief Information Security Officers (CISOs) have become involved in network permissions and application monitoring, impacting what is being purchased and consumed.
TEM has moved beyond phone lines and networks. The shift to technology expense management is a direct reflection of a shift in how enterprises collaborate internally and with customers. Programs and the enterprise professionals need to evolve to match this new reality.
Convergence of IT and telecommunications has lead to the integration of TEM with IT. TEM helps organizations run their telecom network and all of IT as a business by tracking the ownership and utilization of all their network assets. TEM helps IT organizations analyze and benchmark how their technology investments are contributing to the top line and controlling the bottom line.
As long as network and network-related expenses remain among the top five expense items on the profit and loss statement, and the percentage of revenue coming across the network versus a cash register drawer continues to grow, TEM will remain central to the profitability and success of the enterprise.
Upland Cimpl manages the entire technology expense lifecycle for all technology services – including fixed telecom, mobile, cloud, IoT and UCaaS. Learn more about Cimpl. Listen to the podcast recording.