If you have ever considered Telecom Expense Management (TEM) firms for a potential partnership, then you know that it’s not uncommon for some TEM sales folks to oversell their capabilities and inflate savings expectations.
Many TEM firms will shine their Sales light strongly on initial savings that can be obtained via audit and optimization analyses. And many claim that they can achieve upwards of 25% savings for your enterprise expense management spend. This sounds great you say. Where do I sign-up? But what are they not telling you?
To achieve this promised level of initial savings, your TEM partner needs to be strong, leveraging experienced internal talent, best practices & processes, along with a powerful technology platform. Moreover, some things outside of the TEM firm’s control also need to occur to get to this type of savings figure (e.g., poor prior management of the TEM program and/or no prior 3rd Party TEM support).
In this blog, we will examine some of the ways that TEM providers oversell what they can do for your TEM program. The aim here is to bring top-of-mind some key areas for conversation when you are in the process of considering your next TEM provider. And this is especially important if you have never engaged a TEM partner.
4 Reasons for Poor Savings from Your TEM Provider
1. Building a cheaper but inaccurate TEM inventory
We always like to stress the importance of a highly comprehensive service and asset inventory for the enterprise. Simply stated: Your inventory is the bedrock upon which all really accomplished TEM programs are built.
You simply cannot have a high-performing TEM program without an inventory that is comprehensive, extremely accurate, detailed, and housed within a configurable TEM technology platform that facilitates high transparency reporting.
Most TEM firms will incur a problem out-of-the gate and this problem has to do with how they agree to build an inventory on their client’s behalf. Most customers – if they agree to move forward with an inventory build – will elect the cheaper inventory option, which is created primarily from invoice details. (This is penny wise and pound foolish, but all too common.)
This level of detail within an invoice is simply not as detailed as detail available through other forms of records; a more comprehensive service inventory is produced by Customer Service Records (CSRs) and other supporting order documentation. We will cover this in much more detail in a subsequent blog but please keep in mind the importance of a strong inventory and the difference between a real quality inventory (i.e., CSR derived) vs. middling inventory (i.e., invoice detail derived).
This is a very important item because it sets up results for savings in other important TEM areas such as Audit and Optimization work, areas that can generate material savings for the organization.
2. Overselling a network audit as a main driver of savings
Yes, your TEM provider may be able to secure material 6 or 7-figure savings for your enterprise via audit work but this is most often not the case. Audits typically produce less than 5% of material savings generated by a TEM program.
Because most TEM providers realize that TEM Audits are the shiny object in the room so-to-speak, they will often oversell expectations in this regard, especially if the prospective customer is focused on this which is usually the case.
TEM Audits – Summary for Poor Results:
Client Audit Focus: Too much emphasis on this area from prospective clients. Sales teams will often encourage such thinking if they feel it will help them sell their TEM solution.
Poor Audit Opportunities: It is sometimes the case that an enterprise may not have an expense management landscape that has incurred many of the typical problems we see within the industry.
They may have basic services, few locations, and the vendor(s) in play may have done a good job supporting such services. They may have a clean situation, thereby reducing opportunities to find material up-front savings. (This is less common than most messes we see but it’s possible.)
Poor Audit Results: When it comes to TEM audits or TEM optimization work, the quality of the work and subsequent savings results is directly correlated to the caliber of the TEM expertise assigned to the project. Many firms will unwisely outsource too much of their work to cheaper overseas companies to save money. Again, penny wise and pound foolish.
3. Poor Optimization Capabilities
To be clear, most proactive savings that can be generated from a TEM program will come from optimization analyses; at Tellennium, this is approximately 25% of the savings we generate for our customers.
This is the case because this exercise focuses more on what is possible going forward as opposed to what is less changeable within the audit world. It’s less about being “right,” and more about “what’s possible,” to generate savings.
For a very experienced, skilled, and creative TEM analyst, optimization analyses can provide a clear pathway to material savings for customers who are invested in really listening and working to pursue all optimization opportunities going forward.
It’s ironic, but the firms that retain such higher-end talent within the states will cost your organization more up front, but they will be in a much better position to generate real material savings over the lifetime of the partnership that will more than make up for their expense.
The basic housekeeping of an audit is needed but it’s always optimizations that will drive your larger proactive savings. Again, it’s penny wise and pound foolish to not invest in proper US-based subject-matter-experts that are accessible, accountable and highly capable. The best organizations think long term, not short term.
4. Poor Customer Support | Offshoring of Team
We have alluded to this above, but the point cannot be overstated: many TEM providers – especially private equity owned firms – will do all that is possible to pare down their overhead and costs. And many will do so to your detriment with excessive outsourcing.
Offshoring will save money on the front end for the TEM firm because the cheaper labor saves them money. And these savings are almost always enjoyed by their investors, not you the customer.
Moreover, these savings come at your expense. (If they had kept the higher-end and more experienced talent, you – the customer – would be afforded more opportunities for savings with optimization analyses that would be passed to you directly.)
When you struggle to get basic tasks performed properly and reported on accurately, you will likely wish you had paid a little more for highly accessible and capable US-based talent. This is a refrain that we hear quite often from customers that have had a poor experience with other TEM firms that overpromised and underdelivered.
Conclusion
When evaluating your next potential TEM provider, stay mindful of the basics and try to steer clear of two very common human foibles: (1) The tendency to want too much too soon, i.e., impatience and (2) the tendency to want more than may be needed, i.e., greed.
The name of the game here is sound 360-degree management of the full lifecycle of network services and assets within your TEM organization. Stay focused on the health of your TEM program over the long term and keep these items in mind.
If you’d like to consider Tellennium in your TEM vendor comparisons, contact us to schedule a brief demo of our solution.
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