While the smart phone market growth has so far mainly been driven by the high-end segment, the market is now reaching a tipping point where the mid-level makes up a growing proportion of that growth. Smart phones are becoming the standard!

The specifics of the Vodafone deal were not announced. Combined, Gartner estimates that the two acquired TEM companies generate under US$25M in revenue. Based on the estimated 2009 revenue of the acquired companies, their trended growth over the past 36 months as well as considering comparable TEM acquisitions; Gartner estimates that the two companies were likely acquired by Vodafone for less than US$40 million. TnT has appx 85, and Quickcomm 35 staff.

TMT Ventures announced the acquisition of Ezwim this week. TMT Ventures is an investor consortium in Telecommunications, Media & Technology, that intends to expand Ezwim’s business globally. For more information about this acquisition check out the press release.

The acquisitions made by Vodafone pose the question if a strategic buyer like Vodafone, in particular an operator, is a likely exit route for TEM players. On the one hand, the answer is evident as an operator like Vodafone has substantial cross-sell opportunities and can leverage the typical TEM product suite well. The counter argument is equally evident; why would it be in the interest of an operator to help decrease customers’ ARPU, and why would customers appreciate having an operator as TEM provider.

My view as a recent entry into the TEM market, is that it is increasingly likely for an operator to offer TEM services as part of their core portfolio. If anything, it should increase customer loyalty and provide differentiation to the typical operator portfolio that is otherwise quite homogeneous.

From a customer perspective, the recent acquisitions demonstrate the importance of telecom expense management tools for large customers to control telecom costs across the enterprise footprint. Enterprises are facing increased telecom spend as mobile data and personal usage costs are growing and employees are becoming more mobile and are using advanced mobile devices and services. They require increased visibility into, and control over their mobile and fixed communication assets and costs. In addition, customers, in particular in the multi-national space, tend to favor the ‘one throat to choke’ argument.

The timing of the Vodafone acquisitions has surprised investors as the market for TEM services is rapidly developing with many new and exciting products, and customer adaptation seems to recently (as in this year) has progressed into a mainstream service, at least here in Europe.

If it is the right exit route for TEM players in the long run, time will tell.

Increased productivity, improved efficiency and response times are some of the important benefits of wireless solutions. But to ensure cost control and security a formal mobility policy is crucial for any organization.

To ensure that policies will be effective, consider the following tips:

Policies should never be written in isolation, the people who are asked to use or enforce them may have differing opinions. A sole policy writer may also neglect things that are important to others. This is not to be taken lightly: enterprises need to get the right people involved, and should include as many people and groups as is practical.

Consider a usage policy per user group, enterprises should focus first on the target audience for mobile solutions, and second on what are the most appropriate and beneficial applications to a particular user group. The following three questions for mobility are important:

1. Who should have a device?
2. What applications should be mobilized?
3. What device platforms should be mobilized?

Insight into employee user costs, make sure you have insight into telecom costs across the organization and have the possibility to track policy compliance. Insight into telecom costs is not only important for management but also for individuals to be aware of their personal costs as it significantly raises cost awareness.

Management buy-in, management should enforce and buy into policies or the implementation of them may be adversely affected. Managers should be careful not to use their own handheld devices in ways that contravene policies, and they should demonstrate that adhering to policies is an issue they take seriously.

After you have defined a wireless policy, the implementation can start and in this phase it is crucial that employees know the policy and understand it. Training on the policy should also be part of the new hires’ orientation and periodic newsletters, workshops, or seminars can help explain the policy.

After employees are informed and can expect to comply to the corporate policies the organization should have the tooling in place to track policy compliance. Telecom Expense Management services are useful as they do not only help to gain insight into telecom costs it also helps to automate policy compliance through the implementation of business rules.
Mobile technology is rapidly changing therefore it is especially important to review and update the telecom policy every 12 months.

For more information also check out our webinar slides on developing an effective mobile policy

Fantastic news for operators?

Not completely as a recent study carried out on 1,000 UK customer claims that the strong uptake of smartphones threatens to damage the profitability of operators.  The combination of expensive subsidies, flat rate data tariffs, complex service set-up and the high cost to support means that it can take up to 16 months for an operator to breakeven on every new smartphone user.

Almost a third of consumers experience difficulty setting up email and 21% struggles to set up internet on their device. Customers need help and the operator is spending a lot of time and money supporting the customers as resolving smartphone issues takes on average 30% longer than with feature phones. A large group is struggeling with the advanced functionality of the smartphone and is defaulting back to the more familiar voice and SMS phone. Operator’s margins can quickly erode because of these factors.

So what’s next for the operators and what is their plan to increase profits? I my opinion the device manufacturers and operators need to design their products and services around the end-user. Making the products and services easy to use for their customers, question is if they have the capability and competence to turn this into reality……

Source

Comprehensive telecom expense management (TEM) solutions have been shown to be highly effective in reducing telecom costs, generating strong ROI and paying for themselves in less than one year of operation. An automated invoice management system will generate hard dollar savings and productivity gains.

The value of reviewing invoices for accuracy before paying them is easy to appreciate. But for organizations that receive hundreds or thousands of telecom invoices every month, manually validating every charge on every invoice is a time-consuming and costly process. Whether deployed as an on-premise or outsourced solution, an effective TEM invoice management program includes four essential components: electronic invoice processing, invoice validation, dispute management, and contract negotiation.

Electronic invoice processing

Invoice management solutions are effective to the degree that the data is made available in electronic form. Invoices received in electronic form can be processed more rapidly, accurately, and at lower cost than paper invoices. Electronic invoices can also provide levels of detail that are critical for thorough and accurate analysis, validation, and allocation.

Invoice validation

To fully verify the accuracy of invoices, charges must be validated against three criteria:

• Usage – Were the services billed for actually consumed? Call accounting systems collect Call Detail Record (CDR) data off the telecom switch that can be used to validate costs. Wireless services do not provide this kind of activity log and are typically validated against charge thresholds.
• Contract terms and company policies – Rates applied to delivered services, as well as taxes and other charges, should be validated against terms defined in the carrier contract. Charged activity should also be checked against company policies governing appropriate use.
• Inventory and MACDs – The inventory of services in effect and the technology deployed are constantly changing. Invoices from telecom providers must be validated against what is essentially a moving target.

Dispute management

An automated dispute management system can help you quickly and efficiently work with carriers to achieve credits and/or corrections for discrepancies identified during the invoice validation process. Best-in-class dispute management systems include an automated workflow component that provides full lifecycle tracking of the disputed charges, including disposition, amount recovered, important dates, and more. Invoices with disputed charges can be paid in full with disputes or short paid.

Contract negotiation and optimization

Negotiating favorable rates and selecting service plans that match usage needs are powerful ways to reduce telecom spend. The spend and usage data collected for other invoice management efforts provides valuable insight that can be leveraged to reduce present and future telecom spend. Data gathered from invoice processing reveals how your organization actually uses telecom services, arming you with the information you need to negotiate the most favorable carrier contracts and wireless plans. Invoice management solutions with spend analytics capabilities can help you analyze this information and project future requirements and costs. Armed with this information, you can enter negotiations knowing exactly what you need, and what you can afford to leave on the table. You will be able to make informed decisions that result in significant cost reductions – such as moving to pooled plans or limited wireless data services – without jeopardizing overall quality of service.

Hard dollar savings and more

An invoice management system encompassing electronic processing, invoice validation, dispute management, and contract negotiation can generate immediate hard dollar savings, such as elimination of overcharges, as well as long-term savings resulting from stronger contract negotiation and compliance. Invoice management helps organizations understand and control their telecom usage and spend.

Reducing Telecom Costs: Why Invoice Management is the Best Place to Start
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• TEM services continue to be popular among enterprises as they are eager to reduce telecom expenses.
• The market for global capabilities is maturing – ahead of Gartner predictions.
• Demand in Europe is growing ; although the market is a couple of years behind the US, Gartner expects that 2009 and 2010 will be breakout years, as companies based in Western Europe start to adopt TEM services in greater numbers.

The US is still dominating the TEM space; this is also reflected by the providers reviewed in the research as almost 75% of the profiled TEM players are based in the USA.

Link to research http://www.gartner.com/DisplayDocument?id=1032315&ref=g_fromdoc

Key facts:

• Telecom costs continue to rise with an increase of 2,5% in 2008 compared to 2007
  • Strong increase in purchase of flat-fee bundles for both voice and mobile data
  • Data cost category continues to grow while smart phones become more popular
  • Number of mobile devices increase by 13%
• Private use of corporate mobiles is common
  • 28% of call costs are private
  • Holiday destinations are top roaming countries in July & August\
  • New Year’s Day and Bloody Friday (global stock exchange decline) are top days for SMS volume
• Regional Differences
  • Roaming continues to represent an important cost consisting 24-28% of the telecom cost in European countries, whereas USA is only 13%;
  • SMS and Service Numbers (Voicemail, Number Information) are most popular in the USA and UK, when compared to European continental countries (Germany, Netherlands).

Find all results here: http://www.ezwim.com/news/ezwim-telecom-monitor-2008

My take:

• Mobile/wireless cost are still on the rise;
• Enterprises follow the trends in the consumer markets; flat fee voice & data bundles grow strongly in popularity;
• Strong growth of mobile data usage are pushed by private usage; mobile data is being used, next to corporate email for downloading music, keeping in touch with social network and using YouTube, Twitter, MSN etc.

What to do?

• Get insight into what you spend and how you are spending it on a global level;
• Increase end user awareness of their private usage and make them responsible of their own private costs (private/business cost allocation), and create clear policies;
• Centralize cost and service management globally and automate the processes (Install, Move, Add, Change) with your service provider.

Is this a big surprise?  No!

As long as device manufacturers have a strategy of competing on design and providing consumers a Swiss Knife-like device (Technology/Feature push) to keep their Average Sales Price (ASP) high without developing an end-to-end service (device, software, network) with the end user in mind (only most relevant features, take away comlexity). Likewise most operators are deploying MDM tools, with a focus of firmware updates (>200 software bugs per launched device) and pushing the right network settings, to keep connectivity/data revenues going.

Basically the device manufacturers and operators need to change their business model from a technology/infrastructure push to an end-to-end service designed around the end-user. Both Blackberry and Apple have already provided the proof points that this is the way to go.

Question will be whether the device manufacturers and operators have the capability and competence to make this change over time…..

http://www.mformation.com/mformation-news/press-releases/95percent-of-mobile-users-would-use-more-data-services-if-setup-were-easier

Market consolidation in the TEM space is taking place and will accelerate. Why? Here are some reasons:

• Completeness of Product/Service
  The market is moving beyond being a national market to a global market, away from billing validation to full telecom lifecycle, from fixed to mobile…..
• Flawed Business Model
  Most vendors have their resources onshore and deploy a premise based model with high levels customization (no SaaS). Their ability to scale is limited and they face high CapEx and OpEx to maintain their service. 
• Limited Differentiation & Competitiveness
  Most US TEM players have limited differentiation and find themselves in a very competitive market place leading to high customer churn and high customer acquisition cost.
• Retreat of Venture Capital and Private Equity

Given the above considerations this implies a lot of the TEM vendor will simply not reach profitability leading to a shake out and companies looking for economies of scale. 

Consolidation in the TEM space – who is next?

http://www.tangoe.com/news-events/press-releases/tangoe-combines-with-information-strategies-group-isg.html 

http://www.controlpointsolutions.com/news-resources-resourcecenter.htm

TEM players selected as finalists for Innovation of the Year include a.o. Ezwim, Visage Mobile and Asentinel. Stay tuned for the final winners that will be announced in February during the TEM 2009 conference in Orlando, Florida.