Telecom expense management (TEM) is a business approach to managing non-wireless telecommunication service expenses with a combination of software tools and manual auditing. Wireless Expense Management is a separate segment of the industry that specifically handles wireless (voice and data) service expenses.

Businesses can assign telecom expense management duties internally or outsource them.

Internal TEM

One or more employees are responsible for monitoring telecommunications costs. This may be a dedicated task or folded into general budgeting and accounting. Small businesses are more likely to use this approach. Many job functions are now included as part of an in-house TEM solution, including the telecom, IT, financial, accounting, vendor management, legal, contracts, and procurement departments. There are several software tools available to assist with this task, the newest ones being delivered via the internet, limiting deployment time and IT support issues.

Outsourced TEM

The business outsources telecom expense management duties. Some companies offer a "no risk" service where they guarantee net savings for the client, though the TEM firm takes payment from the margin of savings. Providers typically provide a wide range of additional services, including invoice processing and payment, invoice auditing for contract compliance, validation of an approved inventory, reconciliation of orders (Move, Adds, Changes and Disconnects - MACDs) to invoice charges, order provisioning and escalation, physical inventory validation, sourcing and negotiation of contracts against databases of industry best-in-class rates, help desk, and other services.

The basic telecom expense management activity is a cost audit that determines possible savings. TEM auditing methods can be divided into three broad categories:

Manual auditing

The auditor performs research and comparisons himself, with the help of less specialized data applications like a spreadsheet or database.

Software auditing

Auditors use specialized software tools designed to aggregate usage and billing data.

In-cycle analysis

ERP-class analytic tools automatically reconcile detailed billing elements to service inventories and contracts/tariffs prior to payment processing.

Specialized TEM software applications have become more common in recent years, though they have not replaced manual auditing. Many firms use a combination of manual auditing and TEM software. With TEM software electronic invoice feeds from a carrier can be automatically downloaded directly into the TEM software, which immediately conducts an audit of each single line item charge down to the USOC level. The provisioning software captures each circuit number provided by all of the carriers and if there are bills outside of the contracted rate, an exception rule triggers a red flag and notifies the pre-established staff member to review the billing error.

The telecom expense management industry can be categorized as emerging but has gained wide adoption in recent years. Various companies provide research and vendor reviews. TEMIA develops ethics and standards as well as bringing together the top vendors.^[1]

Until early 2000, the TEM industry was confined to North America. The industry grew due to intense competition between local exchange carriers in North America. With the advent of social networking sites and professional networking sites, TEM has moved into other countries as well. It is currently establishing itself in EMEA and APAC countries.

In recent years international corporations have realized the need for an all in one truly global solution in order to integrate all of the functions that fall under the TEM umbrella. While TEM is still considered by many to be a "niche" market/industry, it is rapidly growing and now includes many dozen providers. There are also a handful of organizations dedicated to TEM industry awareness and consulting.

• TEMIA Telecom Expense Management Industry Association