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There is a general trend in the telecom expense management (TEM) market for providers of this service to merge together and to begin offering broader portfolios of solutions. A number of factors are contributing to the trend, including globalization and technology advancements.

 

To get some perspective on the TEM industry, and learn how one firm in particular is responding to market changes, TMCnet turned to Bill Walsh (News - Alert), President and Chief Operating Office at Telwares, a TEM provider.

 

 

BW: Telwares provides Telecom Expense Management (TEM) services to Global 2000 enterprises. Our services span the entire telecom spend management lifecycle—including contract sourcing, historic audit, invoice management, mobility management and cost allocation. We currently manage $6.6 billion of telecom services and have saved our clients more than $5 billion on the more than $15 billion of contracts we have negotiated. Parts of the company date back over 25 years.

 

One Equity Partners (OEP), the private equity arm of JPMorgan Chase, is our primary shareholder. Over the past several years, OEP has helped us bring together five providers in the space (each with unique TEM capabilities) under one umbrella. We recently launched the integrated company as Telwares in November 2007.

 

 

BW: TEM solutions help enterprises manage the full lifecycle of telecommunications services and assets. The lifecycle runs from sourcing and procurement to inventory and invoice management, usage management, dispute management and reporting. Best-in-breed TEM solutions are delivered via a combination of software tools, automation, and high quality managed and professional services.

 

Telecom is one of the largest and most mismanaged corporate expenses, often representing about five percent of revenue. Moreover, industry analysts estimate that 7-12 percent of telecom service expenses are billed in error. This is a huge area for potential corporate cost reductions and utilization of best-in-breed TEM solutions is the answer.

 

Beyond cost reductions, enterprises are looking more and more to TEM as a way to create valuable business intelligence to help empower their organizations and improve their businesses.

 

 

BW: There have been three sweeping changes: the service delivery model, the explosion of wireless, and the expansion of global needs.

 

As recently as a year or two ago, the TEM market was divided into two groups: large/established BPO TEM providers and small/upstart TEM software shops. The BPO providers were saddled with closed legacy software systems that didn’t allow open customer access. The software providers, on the other hand, had either limited or no managed services capabilities. That has all changed.

 

Several of the software providers entered the managed services space by hosting their software for customers. They then began to perform other simple services such as entering billing information into the software, or scanning and storing paper invoices for customers. More recently, these providers have started to move up the value chain by adding professional services capabilities to their portfolios.

 

At the same time, the BPO providers have attempted to leverage their professional services capabilities and customer support experience while enabling their software platforms to address multiple service delivery options desired by customers—ASP, ASP plus managed services, and BPO.

 

 

BW: Wireless/mobile services is driving the industry now and enterprises are aggressively looking to implement mobile spend management solutions globally. One industry analyst recently reported that 59 percent of enterprises identified wireless mobility as the top network technology that will impact their 2008 business strategy. While mobility is the big driver right now, enterprises are looking for integrated TEM solutions that will allow them to manage both wireline and wireless spend seamlessly.

 

On the provider side, companies have aggressively moved to add wireless capabilities to their portfolios. Several software providers have recently acquired wireless management software companies, and they are currently working to integrate the disparate software platforms. Telwares is very well positioned because our software platform was designed as an integrated wireless/wireline solution from the beginning. We also have a tremendous amount of wireless market knowledge and mobile management experience. It is a great combination.

 

 

BW: The Telwares Mobility Lifecycle Management solution is unique in that it offers seamless integration of a client’s wireless and wireline assets on a single technology platform across the whole telecom lifecycle. Clients can derive significant visibility, control and savings through contract negotiation, audit and optimization, inventory and invoice management, device and plan procurement, help desk support, device recycling and over-the-air software updates. No other solution that we’ve seen offers this level service.

 

TMCnet: More specifically, can you provide a few examples of how the Mobility Lifecycle Management solution is being used by companies?

BW: One very recent example is a leading company in the hospitality and entertainment space that came to Telwares to maximize its investment in wireless networks at all of its U.S. properties. This company selected Telwares to help it better manage rising carrier costs while guaranteeing guests an optimal and uninterrupted mobile communications experience. Doing so in the face of rising carrier costs is now far more feasible through the Telwares Mobility Lifecycle Management solution.

 

 

BW: The Telwares recycling solution is offered as part of the strategic, cradle-to-grave approach afforded by the Mobility Lifecycle Management platform. The offering is in direct response to growing demand among our enterprise clients for planet-friendly and secure disposal of cellular devices and equipment. Through our partnership with The Wireless Alliance (News - Alert), devices and equipment that have outlived their usefulness are collected and scrubbed of any remaining data. They then are refurbished for resale, smelted down for new equipment or disposed of in strict compliance with government standards.  

 

 

BW: Utilization of TEM will be understood as a standard best practice for enterprises. TEM providers will need to deliver global solutions and those that don’t will become less relevant over time. Growth in Europe will be particularly strong. Providers will need to deliver integrated wireline and wireless solutions. Providers with strong software complemented by professional service capabilities across the telecom spend lifecycle will be best positioned to win.

 

Systems integrators and outsourcers have had limited success in TEM to date. We believe this is largely due to lack of focus and, more importantly, a lack of TEM-specific industry expertise. However, TEM is a very attractive market for these firms, and we expect a number of them to make progress over time. Telwares, with a unique combination of technology, expertise and TEM experience, is very well positioned to lead the market globally through this exciting time.

 

 

BW: Telwares is the world’s leading telecom sourcing consultancy. We negotiate hundreds of carrier agreements on behalf of our clients each year. No other provider comes close in terms of the volume of spend negotiated. This puts Telwares in the unique position of having the very best view of both market prices and the available contract terms and conditions. Our clients typically achieve significant savings through a sourcing engagement, and that kind of boost to the bottom line is exactly what enterprises are looking for right now.