Telecom expense management services enable enterprises’ IT, procurement, and finance departments to order, provision, support, and manage the costs of corporate telecommunications, associated IT services, and their inventories. (These may include fixed and mobile telephony and data, cloud licenses, unified communications as a service licenses, and Internet of Things connectivity.) TEM services also include business intelligence (BI) and reporting suitable for supporting C-level strategic decision-making. Gartner’s TEM coverage focuses on SaaS-based applications and platforms, managed services, and associated professional services.

TEM providers are evolving their offerings as enterprises’ consumption (especially of fixed and mobile data services) grows, and providers now incorporate expense management of other adjacent services and communications-related asset tracking. These offerings include inventory tracking of cloud/consumption-based services; other IT-related services, such as UCaaS; and IoT expense management.

To cut and control costs and unproductive duplication of feature availability to end users, enterprises want to effectively manage this complexity and its associated costs. Third-party TEM providers are becoming a cost-effective way to secure needed program management capabilities. Therefore, enterprises look to TEM providers with the capability areas illustrated in Figure 1. 

Figure 1. The TEM Stack

Market Direction

The use of enterprise communications and IT services continues to grow, driven by the accelerated video usage spurred by the COVID-19 pandemic. This has created new consumption patterns (where voice channels such as Microsoft Teams are increasingly used over mobile voice in addition to traditional fixed voice), which are marked by increased use of cloud-based services and growing deployments of IoT services. These and other technology services support and enable enterprises on their journey toward digitization, and increasingly extending to transformation. Enterprises use TEM services to optimize and manage the costs for these services.

Some enterprises are looking to TEM providers to manage a broader set of communications-related IT and cloud-based services. Other enterprises seek TEM providers that provide full life cycle management, particularly of mobile assets (see Figure 2). The impact of data analytics for more effective cost control, cost management, and cost avoidance will continue to increase in importance, along with the quality of service delivery.

Figure 2. Telecom Expense Management Evolution

Key trends in TEM:

• The most common engagement model is a fully managed and outsourced TEM service delivered based on cloud-based TEM applications. The driver remains the pressure placed on enterprise resources and governance to control budgets and services associated with managing communications, cloud-based applications, and infrastructure, and now the fast-growing deployments of IoT services. The many organizations that previously managed such technology expenses internally find there are now even more frequent changes to an increasingly complex environment (underpinned by software-defined networking and “post-COVID-19” hybrid working) while costs remain under scrutiny. The consequence is that internal enterprise entities are challenged to manage costs efficiently, leading to the use of TEM services.
• Enterprises continue to show exploratory interest in vendors’ ability to build and maintain inventories, and track service consumption and costs, ideally from a single platform for a more consistent service experience. Those costs may be associated with UCaaS, infrastructure as a service (IaaS), platform as a service (PaaS), contact center as a service (CCaaS), communications platform as a service (CPaaS), storage, IoT and other IT assets, in addition to fixed and mobile. Nearly all vendors in this report now also offer the ability to manage cloud-related expenses.
• The opportunity to manage communication spend is also growing into new segments. By 2025, to enhance agility and support for cloud applications, 65% of enterprises will have implemented software-defined wide-area networks (SD-WANs), compared with about 40% in 2021. This leads to increased monitoring and management requirements for enterprises, adding to an ever-more complex environment to manage.
• Advanced data analytics and intelligence from TEM systems are being used to make top-down and bottom-up decisions by context (for example, by sites, location, or business units) for spending, inventory, and usage in easy, single-view, and multidimensional formats. Deeper analytical capabilities, including cost predictability, forecasting, and technology simulations, are expected from platforms to generate more detailed analytics. The data is used for tactical and strategic business decisions for communications and associated IT investments, budgets, inventory, future service provider contract negotiations, and to enhance processes within different contexts.
• TEM providers have pursued further investments in platform automation to strengthen their platforms’ performance in complex environments in the form of robotic process automation (RPA). Enhancements continue for automated invoices, workflow links, vendor integration, inventory count and data processing in cases where standardized APIs or other methods aren’t available and manual efforts are too slow and can’t be scaled. More cognitive artificial intelligence (AI) abilities are added as AI and advanced data requirements evolve.
• Some enterprises have begun to expect integrated capabilities with leading IT service management (ITSM), general ledger (GL), accounts payable (AP), ERP and unified endpoint management (UEM) systems. This will enable seamless workflows and data flow, internal chargeback allocations, and inventory classification by user, person, estate or even individual.

Enterprise Requirements Vary by Size and Scope

Procurement Practices and Pricing Models — Managed Services and Proportionate Fees Dominate telecom expense management guide

Service Capabilities Evolve to Life Cycle Services, Technology Simulations and Digital Transformations

Factors Influencing TEM Vendor Selection telecom expense management guide

• Price/contracts — Cost is important. Recent intensified competitiveness has resulted in some very aggressively priced offers. However, due to bundling of activities, it can be difficult to compare like for like, and pricing is, of course, not a reflection of the quality of service.
• Savings guarantees — These are being requested occasionally from new TEM clients (those that have not had TEM engagements in the past). In new TEM engagements, clauses in the contract have been negotiated to guarantee that the minimum amount of savings should equal or exceed the cost of the service. These contracts include exit conditions if those savings are not achieved each year, ensuring that the difference does not go back to the client. Not all vendors support this requirement.
• Operational quality, including account management, outcomes, SLAs and delivery capabilities — More RFPs include requirements to meet defined SLAs. SLAs are an important part of TEM engagements, especially to support improvement over time. A strong RFP will include requirements for SLAs that need to be adhered to. The quality of the RFP response and flexibility in negotiation are important, and the contract should include performance-related exits if SLAs aren’t met.
• Relevant reach and scalability — This is necessary to meet technical and geographical requirements. It is important to rightsize and be able to obtain the services required (and any additional services that may be put under management within the contract duration). Note and consider the validity of any partnerships that facilitate reach.
• Prior experience — Whether it has been positive or not, consider prior experience with telecom expense management vendors during vendor selection. This should include experience not only in a particular country, but also with particular partners in that country to meet geographic and technical requirements.
• Strategic direction — This is becoming more relevant as TEM vendors pursue different directions of travel, either toward more technology spend, or to corporate expenditures generally (such as utilities) or toward managed life cycle services.
• Service delivery — It is crucial to examine the availability of the vendor’s local resources and professional service delivery teams to determine the vendor’s ability to serve and scale according to enterprise requirements. For this reason, we see shifts toward managed services with professional service capabilities, despite many core TEM functions being automated through the platform.
• Continued platform evolution — This, combined with conformity to technical standards, data privacy compliance (such as the General Data Protection Regulation ) and cybersecurity, must be considered.
• Merger and acquisition (M&A) activity impact — There is some uncertainty regarding roadmaps and long-term plans associated with platforms’ integration through M&A activity and whether vendor consolidations will impact day-to-day services. Long-term ownership has also become a consideration as many providers are now owned by private equity firms.