Drive Major Savings in 2025 with Technology Expense Management

As budget season approaches, identifying opportunities for cost savings is crucial. One area ripe for optimization is technology expenses. Technology Expense Management (TEM) can significantly reduce costs and streamline operations, making it a smart move for the upcoming year. The return on investment (ROI) for TEM is substantial, encompassing direct cost savings (in as little as three weeks), improved efficiency, and sustained long-term financial benefits as well.? In fact, we guarantee a savings of at least 8%!

Understanding Technology Expense Management (TEM)

TEM is about more than just cutting costs. It involves managing and optimizing technology expenses across the board. This includes invoice management, contract oversight, inventory tracking, and usage optimization. By implementing TEM, businesses can ensure they’re not overspending and that they have clear visibility into their technology expenditures.

A good TEM solution offers robust cost optimization, asset inventory, and workflow automation. According to Gartner, enterprises should look for TEM vendors that provide comprehensive solutions to manage communication services efficiently and cost-effectively. This approach not only cuts costs but also enhances operational efficiency.

The Five Pillars of Technology Expense Management

Identifying Common Technology Cost Issues

Technology billing is complex.? In fact, 80% of technology invoices contain errors!? The following list represents just some of the most common errors we find in audits:

• Improper Contract Implementation: Contracts often aren’t managed post signature correctly, leading to charges that don’t align with agreed terms.
• Closed or Acquired Locations Still Billing: Services for locations that are no longer in operation or have been sold are frequently still billed.
• Misc Fees or Random Features Billing: Unnecessary fees or unused features can sneak into invoices, inflating costs without providing value.
• Rate Errors: Incorrect billing rates, not matching the contract or market rates, can lead to overcharges.
• Tariff Rate Billing: Without oversight, services might default to tariff rates, which are typically higher, due to inattentive account reps.
• Legacy Service Types: Outdated services that are no longer needed or used but still being billed add to unnecessary costs.

• Incorrect One-Time Charges: Mistakes in one-time charges, such as installation or setup fees, can add up quickly.
• Duplicate Billing: Duplicate entries for services already paid can go unnoticed in complex invoices.
• Unneeded or Underutilized Services: Services that are no longer required or not fully utilized should be canceled or optimized to cut costs.
• Late Payment Charges: Inefficient processes leading to late payments incur avoidable fees.
• Contract Analysis and Rate Benchmark Recommendations: Regular review and comparison against industry benchmarks ensure you’re getting the best rates and terms.
• Questionable Usage: Unauthorized or unusual usage patterns can indicate fraud or inefficiencies that need to be addressed.
• 3rd Party Billing: Charges from third-party services not directly managed by the technology provider can slip into invoices unnoticed.

• Taxes/Fees/Surcharges: These charges can be incorrectly applied, resulting in overbilling.
• Inattentive Account Reps: Without diligent account management, services might revert to default rates, increasing costs without a real review.
• Delay of Contract Implementation: Delays in implementing contract changes or new services can lead to billing at higher, non-contracted rates.
• Grandfathered Services Billing: Older services with higher rates might still be billed despite newer, more cost-effective options being available.
• Non-Optimized Rates: Regular renegotiation and optimization of rates are crucial to ensure cost efficiency.
• Improperly Negotiated Poor T&Cs: Weak terms and conditions can lead to higher costs and less flexibility in managing technology expenses.

With such a comprehensive list of problem areas, any company with a sizable technology budget is overpaying if they don’t have a TEM in place.

The Impact on IT Resources

A TEM system doesn’t just save money; it also reduces the workload on IT teams. By automating technology management processes, IT staff can focus on more strategic projects. This improves IT efficiency and allows for better allocation of resources.

Freeing up internal resources means that the IT team can concentrate on innovation and strategic initiatives rather than routine technology management. This shift not only enhances productivity but also drives more significant business outcomes.

Rules of Thumb for Implementing TEM

TEM is particularly beneficial for companies with over 500 employees, annual revenues of $50 million or more, and multiple locations. These metrics indicate a complexity and scale of technology needs that can greatly benefit from TEM solutions.

Companies with significant technology spend, typically exceeding $1 million annually, should seriously consider TEM.?

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The more complex the technology needs, the greater the potential benefits of a centralized, automated system for managing these expenses.

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Market Insights and Trends

Gartner’s Market Guide for TEM Services emphasizes the need for robust cost optimization, asset inventory, and workflow automation capabilities in TEM solutions. Enterprises should seek vendors that offer comprehensive solutions for managing communication services efficiently and cost-effectively.

McKinsey’s 2024 Telecom Market Outlook projects an 8.5% growth in the tech and telecommunications B2B market. Significant investment is expected in cloud, business applications, and communication products. This outlook highlights the shifting vendor preferences and the increasing importance of TEM in managing these changes.

Deloitte’s 2024 Telecom Industry Outlook discusses the operationalization of generative AI in telecoms and the evolving competitive landscape. Telecom providers need to adapt to these changes to maintain their market position, making TEM an essential tool for staying competitive.

Conclusion

The ROI on TEM is substantial, encompassing direct cost savings, improved operational efficiency, enhanced visibility and control, and long-term financial benefits. As we head into budget season, evaluating your technology expenses and considering a TEM solution can lead to substantial savings and better resource allocation. Implementing a robust TEM system is a strategic move that can deliver long-term value.

Digital Direction stands apart in the technology Expense Management (TEM) arena with 22 years of expertise built into our solution. Our unmatched industry knowledge, combined with optimized tools and processes, ensures that you get the best value for your technology investments. No other provider can compete with our depth of experience and comprehensive approach to technology management. If you’re not using Digital Direction for your TEM needs, you're likely leaving money on the table. Our proven track record in identifying savings and optimizing technology expenses speaks for itself, making us the go-to choice for businesses aiming to maximize their telecom budget in 2025.

Ready to see how a TEM can benefit your business?? Schedule a discovery call with us today.