TEM Optimization vs. TEM Audit – Which is Best?

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TEM Optimization VS TEM Audit

Both TEM audits and TEM optimization analyses are essential to maximize savings in healthy TEM programs. 

In this article, we’ll highlight the value that TEM optimization analyses provided by your TEM provider can deliver for larger enterprises. We will also provide more context for why TEM optimizations have more flexibility to creatively generate savings than TEM audits alone.

TEM Audit and TEM Optimization

These terms are bandied together, and for good reason. Even though they are technically different, they certainly go together – just like peanut butter and jelly or peas and carrots – and therefore, they can create confusion for newcomers to the telecom/technology expense management (TEM) world.

TEM Audit

Telecom audit analyse focus on a binary framework for viewing your communications network services and other expenses. In short, is the service/expense accurate as per contractual or carrier service guide directives, or is it incorrect?

Performing TEM audit analyses to validate the pricing of vendor equipment and services is essential and it needs to be done. However, this exercise is limited in its ability to drive savings.

There is only one way to realize savings for your organization: by clearly identifying billing errors that result in overcharges. Once you identify said savings, your TEM team will need to wrangle intensely with the carrier(s) responsible for the overcharges.

TEM audit takeaway

This is a reactionary analytical process that is more limited in its ability to generate material expense management savings for your organization. Firstly, you have no control over whether the vendor bills accurately or inaccurately.

Secondly, once errors are identified, it will take significant wrangling to realize credit for overcharges. This could take six months or more. For example, vendors will typically fight to see how far back credits can be recovered, pointing to contractual language limiting dispute windows or some vague and obscure tariff/service guide language limiting retroactive credits.

It’s important to perform audit analyses because material savings can be recovered from them. Still, audits can be more limited in generating material savings than optimizations for these two simple reasons.

TEM Optimization

This type of analysis has a proactive versus reactive focus. Optimizations focus on what “can or should be” in terms of services and their respective costs, as opposed to “what is” relative to existing services and their associated audit costs.

If you have a knowledgeable and motivated team, they can discover various avenues to generate savings opportunities over time, especially if they are creative and motivated.

Naturally, this analytical framework opens more opportunities to generate savings for your enterprise expense management organization. This is because the focus is not limited to whether charges for existing services are correct or incorrect. (Audit analyses are very binary in this way.)

The scope of the analysis is far greater for optimization reviews. It’s concerned with two primary concerns and is less restricted by current agreements and existing service pricing:

1. Carriers/Services/Operations

Are we leveraging the right carriers and services?

We may be able to use different carriers or services in the future that satisfy our communications network needs at cheaper costs.

2. Costs and existing pricing

Or, for example, can we renegotiate with our present vendor(s) to extend the term if we get reduced pricing for certain products/services?

Experienced TEM analysts can get creative in many ways to open savings opportunities via different carriers and plans. Everything is always open to negotiation or renegotiation. And those not aware of this reality are, undoubtedly, leaving money on the enterprise expense management table

TEM optimization takeaway

This proactive analytical process is less constricted by the present situation of your current TEM agreements and service pricing. To be clear, it’s focused on examining:

1. Operational performance optimization

Where are we currently in terms of operational performance? Do we have the right mix of vendors and services for our communications network needs?

2. Carrier plan and services pricing

Irrespective of whether our pricing is accurate, is it competitive and in line with the current market? It could be right, but your organization’s prior TEM manager may have signed a poor agreement in the first place. If so, this is where the value of the optimization analyses kicks in: How do we get into better pricing as quickly as possible?

Highlights – 2 Big Reasons why TEM Optimization is more important than TEM Audit Alone

1. More TEM savings flexibility

Experienced TEM subject matter experts can explore and identify areas to optimize network operations and costs without being rigidly constrained by existing agreements and services. It’s verifying billed charges to existing agreements and identifying possibilities for optimizing service operations and costs.

The mobility area within the expense management arena is one area that is especially fertile for mobile optimization opportunities, and we’ll elaborate further in part 2 of this article. We’ll provide additional, more detailed examples as well.

2. More TEM opportunities for savings

As noted, this is not just a right or wrong analysis primarily focused on service costs for existing services, as with audit analyses. For optimization work, the goal is to review all carriers/plans/services to optimize for both operational effectiveness and costs, especially for important or “big ticket” services.

Where there is a will, there is a way, and this type of analysis identifies areas for improvement. But just as importantly, experienced TEM leaders can then navigate towards either negotiating or renegotiating to obtain the more optimal services at the most competitive costs.

Conclusion, part 1

It may seem like the tone of this article has skewed toward making audits sound inferior to TEM optimization analyses. That is certainly not the intent, but there is more flexibility to identify savings via optimization analyses than audit analyses.

Much like managing one’s own health, you need to assess your status via check-up, which reviews what is/has already been done, which we will liken to a TEM audit. Whether good or bad, you will need to take your medicine and deal with the present situation.

But optimizations are like deciding what can be done to live a healthier lifestyle from now on. They are more about identifying what can be done proactively to get the next checkup report in much better shape, hopefully requiring less medicine and lower medical costs.

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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