The Top 4 Reasons Your TEM Provider Shouldn’t Manage Your Wireless Expenses
In the last decade, companies of all sizes have successfully increased their workforce’s mobile productivity by implementing wireless communication programs – but often at a staggering cost. With different rate plans, devices, data usage, and other variable costs, many organizations realized a significant need to manage these new (and expensive) costs. As with any new market, the initial barriers to entry were relatively low. Seeing an opportunity for additional revenue, many traditional telecom expense management companies began offering wireless expense management solutions.
The problem is, Wireless Expense Management (WEM) and Telecom (wireline) Expense Management (TEM) are not the same, nor should they be managed as such. A recent definition of telecom expense management defines the business method as:
“…a specialty financial discipline involving the application of systematic analysis to telecom service orders, inventory, bills and disputes so that the enterprise gets only the telecom services they paid for and pays for only the telecom services they get.”
Note that there is no mention of wireless optimization ongoing rate plan optimization or renegotiating carrier contracts based on specific business needs. All of which are critical elements for any wireless management program. This is because the vast majority of TEM providers have morphed into the WEM business because it is the overwhelming within the industry, not because they have the experience or technology required to effectively manage the complex billings.
Reason #1 – Wireless Expense Management and Telecom Expense Management are Mutually Exclusive
Wireless issues are very different from wireline; billing and device issues alone make this a different field of expertise, and industry expertise is an important criterion for solutions partner (see Figure 1). Because the nature of wireline services is staid and consistent, in most cases, wireline contract negotiation takes place only once; therefore there is very little ongoing optimization or opportunities for cost avoidance. Also, because the billing data is only available in aggregate, transparent cost allocation based on individual usage is unattainable.
Wireline key performance factors:
- Contract renegotiation (a one-time occurrence – little margin for error)
- Audit
- Savings taken over projected contract life
Wireless key performance factors:
- Contract renegotiation (multiple times)
- Audit and re-audit
- Optimize and re-optimize
- Billed to a device or user
- Billed by minute and by kilobyte
- Aggregate and de-aggregate value
“I have become convinced that cellular phone services bring unique challenges to the world of telecom expense management …to me, there was an applicable wireline TEM product component for every wireless challenge out there. But I was overlooking the unique issues associated with the management of mobile devices and with the cost management of cellular.”
– Mr. Lee Harris, President of Communications Advantage, Inc. (Telecomm Consultancy)
Think about it, would you want your realtor negotiating the utility bill?
Comparing WEM and TEM is like comparing your business’s office lease bill or your utility bill each month.
Wireline services are like your lease and wireless your monthly utilities:
- The lease is negotiated once, and it needs to be paid regardless if you have 2 or 200 employees working in the office. There is little opportunity for optimization and the bill is consistent.
- The utility bill has many billing elements. Time of usage, amount of usage, equipment used, and more. Being a variable cost with many moving parts, these expenses must be managed and optimized on a frequent basis to avoid excessive and unnecessary costs.
- Optimization occurs
- at least
monthly by user. This is unique to WEM, because it is simply not cost-effective to frequently change wireline contract on a frequent basis.
- Enterprises who want to achieve the best possible wireless rates require a combination of well-managed plans that include: pooled minutes, individual plans for specific users, and flat rates where applicable.
Reason #2 – Proactive Rate Plan Management is Extremely Important
Baseline optimization and ongoing optimization are significant factors in WEM (see Figure 2).
Reason #3 – Bundling of Services Doesn’t Always Mean Cost-Effectiveness
Business models that have been historically based around TEM or wireline often have difficulty truly integrating a comprehensive WEM program into their business profile. They have been set up to negotiate contracts and audit them once – which is the polar opposite of the granular monthly optimization and auditing required for effective wireless management.
Aberdeen Research Group states in their online statistics it costs nearly
- 10 times more to manage wireless services and devices compared to wireline
. With roughly 80% of respondents planning increases in PDAs with wireless access, these costs are expected to rise.
Therefore, if enterprises are paying for bundled TEM and WEM services, they are likely paying more on the wireless side than necessary. Bundling is a marketing tool, not an expertise marker.
AOTMP research reveals enterprises that dedicated efforts to reduce fixed telecom expenses have resulted in 9% annual savings. Conversely, enterprises dedicating focus on reducing wireless cost are achieving 12% annual savings.
“A number of older, established players have been growing their wireline business, but have not yet developed the capability to capture the faster-growing wireless business,” explains analyst Phillip Redman in the Gartner report.
“Because comprehensive wireless lifecycle management has unique requirements, it makes sense for [enterprises] to look at the plethora of good platforms already available from these wireless companies rather than trying to develop their own capabilities.”
Reason #4 – Bundling of Services Doesn’t Always Mean Cost-Effectiveness or Ethical Transparency
When choosing an expense management solution, the organization must align their unique expense management needs with core competencies of their chosen provider(s). It is not uncommon for large organizations to use separate providers for both their wireless and wireline expenses.
In a recent publication, BearingPoint, a leading technology and management consulting authority, suggests that enterprises can benefit from independent wireless expense management firms. They suggest this partner be “free of vendor bias [e.g. not be paid commissions or partner with a carrier] organizational bind or historical constraints.”
During a mobile technology summit this past October, Phillip Redmon from Gartner Research stated that TEM isn’t about running an application anymore. It’s about managed services and outsourcing. Therefore, decision makers must be extremely careful of the process of a SAAS model if that is not what the Enterprise needs.
The Bottom Line: Align Your Business Objectives With the Expense Management Vendor that Makes Sense
As you’ve seen, WEM and TEM are two very different disciplines. A one size fits all strategy is not the best tactic to effectively achieve profitable levels of cost avoidance for both wireless and wireline programs. To manage each properly, the organization should seek out separate and independent expertise in both areas and exploit the talents and core competencies of each expense management provider.