Verizon's managed TEM services monetizes wireless/wireline complexity

Don’t look now, but Verizon's got your number…and the bills and contracts that go along with it.

Don't look now, but Verizon's got your number…and the bills and contracts that go along with it.

Verizon in May launched its Verizon Business Integrated Telecom Expense Management (TEM) Service -- a suite of managed services that let corporate and government customers monitor, analyze and track telecom service expenses for their wireline and wireless services.

When these services were launched, we thought they made a lot of sense. Verizon (and MCI) has been doing aspects of this for customers for years, particularly larger customers that had custom needs. This offering opened it to the mass market.

While there are many software companies and outsourcers selling telecom expense management solutions today, it's taken a company the size of Verizon to really put this on the agenda of most Fortune 500 companies. "A firm with a $100 [million] annual spend is not going to hire a firm with $2 [million] in revenues to audit their bills," says Cliff Cibelli, Verizon's product manager on the TEM offering.

Cibelli tells prospects, "If you don't know what you're spending, you can't possibly improve." Only a small percent of customers audit their bills and contracts, and telecom is a Top 3 expense for most companies, he says.

However, while savings brought by focusing on telecom expense might be a great lure to TEM for some firms – analysts and vendors claim savings of 8% to 30% – we think the real benefits in TEM come from the ability to control access and enforce security across the widening array of wireless access devices. The liability for information stored on mobile devices is enormous. The vulnerability of stolen laptops and misplaced cell phones is well known, but enterprises have been slow to respond to this exposure with in-house audit plans and enforcement.

Part of this is the newfound management framework that TEM services offer. Users can create a catalog of wireless devices and make separate feature groups available for different employee levels. The TEM service provider will handle procurement, initialization and ongoing help desk for these devices, alongside the traditional TEM stuff, such as electronic invoices, detailed contract and performance analysis, and electronic feedback into the corporate system for "by department" breakdowns and other such customized reporting. For wireline assets, users can track the life of the asset, who's paying for it, what it costs, where it's connected and so on.

Once true fixed mobile convergence kicks in, historically buttoned down networks will blow wide open, and losing a wireless device can mean opening a huge hole deep into user networks.

This all spells opportunity for carriers to address real enterprise problems with a reasonably priced offer. The actual pricing for these services is kept under wraps, but typically we think Verizon is charging in the neighborhood of 0.5% of the telecom spend for these managed services.

So, three months after launch, are there takers? "I've got 50 $80 [million] to $100 [million] average spend customers very interested and well into the sales cycle," says Cibelli, underscoring the core inevitability for service adoption among enterprises. "It's just getting too complex for them to handle alone." Verizon is focusing on multicarrier clients because these have the highest potential for the need for an outsourced offering.

Wireless and wireline services, plus content and other services, are getting more complex all the time. Fewer enterprises have the in-house expertise to manage this array of expense. Outsourcing is becoming more a necessity with each new feature added to services. Firms with global operations face a more complex problems than that.

For many firms, subscribing to a carrier-provided TEM service will make sense. For firms having a hard time justifying the expense, we think the ROI on these managed TEM services will become easier to justify over time because the problem is going to get worse as more wireless seeps into all aspects of enterprise operations.

So it's not a matter of if, but when. As such, TEM represents a viable option for enterprises today more than ever, and for carriers, a viable growth market for managed services.

"Most companies now are auditing less than 10% of their invoices," Cibelli says, "and that's the opportunity Verizon is chasing." It's an opportunity we think more carriers should pursue.

Learn more about this topic

Verizon becomes first major carrier to offer comprehensive telecom expense management - ...

05/15/06

Experts offer advice for reducing telecom costs

07/31/0602/07/06

Telecom expense management 2006

02/07/06

Join the Network World communities on Facebook and LinkedIn to comment on topics that are top of mind.
Related:
Must read: 10 new UI features coming to Windows 10