Emptoris, Telecom Spend Management, and the Need for Specialized Solutions with Rivermine (Part 1)

Earlier today (see Spend Matters and Spend Matters UK/Europe coverage and analysis here, here and here), Emptoris announced it had acquired Rivermine, one of the leading telecom expense management (TEM) vendors. The case that Emptoris and Rivermine makes for procurement organizations to get more serious about pursuing telecom is an important one. Emptoris shared some points with me, paraphrased below, outlining the basics of the telecom category challenge (and opportunity):

  • Telecom is often one of the largest and most complex categories for businesses (typically over $100mm in annual volume for a Fortune 500 company)
  • It represents a top-five spend category overall, yet one where procurement organizations have had minimal influence and control over in the past
  • As a category, telecom requires a complete set of unique enabling capabilities to bring spend under management and achieve the 7-30% savings that companies should realize from comprehensive telecom expense management (TEM) programs
  • SKU/service proliferation contributes to the telecom challenge; companies pay for hundreds of different services from 1-800 numbers to T1 and OC3 connections that are often individually managed/administered by dozens of individuals spread across different functions in the business
  • Aside from paying too much for services that could be sourced and managed more effectively, companies know they are over- and miss-paying telecom vendors, as 8-10% of invoices contain errors (almost always in favor of the supplier)
  • The fundamental challenge of telecom, as it is with other complex categories, seems relatively simple – control and compliance
  • The actual hurdles are immense, given the size and complexity of the problem. In this case, organizations have a difficult time matching contracted rates with invoices and available inventory, which leads to a significant contract compliance headache
  • Challenges with carrier (i.e., supplier) billing systems are complex and fraught with errors, change intensive processes, high volume contracts and transactions, format complexity (hundreds of invoice and format types, including electronic and paper), and security and compliance complicate matters further

In short, with so many users, stakeholders and requisitions, ensuring visibility into what organizations have (inventory), who ordered what (and for whom), which provider it was ordered from, and at what specific service level/requirement is creating larger and larger headaches for companies. In the second part of this post, we'll examine some of the fundamental telecom expense management (TEM) capabilities that can help address these unique challenges.

- Jason Busch

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