They are both important, but we would say optimization is even more important. Although both TEM audits and TEM optimization analyses are both 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 we believe TEM optimizations generally deliver more value than TEM audits alone.
TEM Audit and TEM Optimization
These terms are bandied about 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 analyses focus primarily 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 important and it needs to be done. But this exercise is limited in its ability to drive savings.
There is only one way to realize savings for your organization and that is by clearly identifying billing errors that result in overcharges. And 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 and one that is more limited in its ability to generate material expense management savings for your organization. Firstly, this is because you have no control over whether the vendor bills accurately or inaccurately.
Secondly, as noted, once errors are identified it will take significant wrangling to realize credits for overcharges. This could take 6 months or greater. For example, vendors will typically fight how far back credits can be recovered, either 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 but audits are somewhat more limited in their ability to generate 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 costs for audits.
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 type of analytical framework opens itself up to far 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 not.
The scope of the analysis is far greater. It’s concerned with two primary concerns and is less restricted by current agreements and/or existing service pricing:
1. Carriers/Services/Operations
Are we leveraging the right carriers and services?
We may be able to use different carriers and/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 perhaps extend the term if we get reduced pricing for certain products/services?
There is a multitude of different ways that experienced TEM analysts can get creative to open up 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 is a proactive analytical process that 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 or not, is it currently 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 indeed 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 not just a matter of verifying billed charges to existing agreements but more about 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 type of analysis that is primarily focused on service costs for existing services as is the case with audit analyses. For optimization work, the goal is to review all carriers/plans/services with an eye toward optimizing 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, no doubt, much more room to identify savings via optimization analyses than audit analyses.
Much like managing one’s own health, you need to assess your current status via check-up, which reviews what is/has already been done, which we will liken to a TEM audit. You will need to take your medicine, or don’t, and deal with the present situation, whether good or bad.
But optimizations are like deciding what can be done to live a healthier lifestyle going forward and are more about identifying what can be done proactively to get the next checkup report in much better shape, requiring hopefully less medicine and lower medical costs in general.
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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