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.

Shocking results!

These results provide important insights into the real-world experiences of mobile customers. Operators can do much more than they are currently doing to help customers avoid unexpected fees.

In Europe (European Union) mobile data roaming will be cut off at €50 and users will receive a warning when they reach 80% of the chosen limit. These measures were taken after enormous media exposure to “Bill Shocks” with a German traveler running up a €46.000 bill while downloading a movie in France. The typical operator response has been “tough luck” and please pay your bill as the operator has to pay the roaming operator. The EU has also taken an active role in regulating and reducing the cost of mobile voice and texting while in roaming, and addressing operator practices of “per minute billing” and “start fees”. More info at http://europa.eu/rapid/pressReleasesAction.do?reference=IP/10/215

The European reality has been that the cost of mobile roaming or international calls has moved away from the EU to North America, Middle East, India and China (See Ezwim Telecom Monitor, http://www.ezwim.com/news/ezwim-telecom-monitor-2008 ). So the question becomes what can operators or regulators do beyond the EU border? The EU could consider to have this topic included as part of their bi-lateral trade agreements or through the WTO (The world is flat…isn’t it?), and nothing stops operators to have a “cap” or “cut off” mechanism in non EU countries . Technically this is a matter of treating post-paid subscribers as if they were “pre-paid” subscribers when in roaming, this forces all calls to contact the home operator (HLR/VLR) and allows for setting a “wallet” against this service.

The research is about consumers, not businesses. However businesses generally have multiple service providers and contracts in multiple regions so the risk of experiencing Bill Shock is even higher than for customers. The highest shock bill we have seen at Ezwim was €32.000 when one of our clients was using Skype for calls (and listening to radio) while being Bahrain. Mobile data cost ~€5 per MB in Bahrain and Skype uses around 55 kB/sec.

This reality demonstrates the need for Telecom Management solutions; systematically and proactively managing telecom will almost certainly lead to more control on telecom costs and better services. It also shows the need for integrating Telecom Management solutions, like Ezwim, with Mobile Device Management (MDM) solutions…..MDM provides the ability for real time call and data logging, Ezwim can use this data for real time forecasting or calculating the cost per call or data session.

This is a blog, so I’ll do my best to get to the point (sorry I am Latin and it is not our forte). My experience is that the challenge is often times the client itself and the battles within their organizations. Also, the large TEM providers recognized the money in the Fortune Sector, and the software is mostly adapted to the huge US sizes, complexities and expectations. However, the world of such companies and many smaller companies is built on years of “geographical and class segregation” across entities and divisions to the point that they look like the European Community, supposedly united but with multiple countries each doing their thing, with their own budgets, mindsets, emergencies, issues, controls and priorities; which happen not to be those of the European Council.

So, uniting a global corporation under the umbrella of “global TEM” requires in my humble opinion a very unique process and methodology. I can speak to this because we have spent 3 years developing such methodology and have had the unique opportunity to reflect and practice much of what I predicate on:

• Global but fragmented – and rebellious
• Nice objective — but please politics and medals are first I decide, but you have to pay for it!

The next wave of global TEM is from Complexity to Simplicity: A large global firm recently made a choice to move from the “Cadillac” to the “Camry deluxe”. I call it the “Cadillac” ( no offense intended) because it has too many , generally useless, features and too many buttons for the poor folks that need to use them.

One of my beloved clients – Applica Consumer Products (owns Black and Decker and other brands) even has been migrated by us to the “Camry”. And is happy enough with the weekly report providing a dashboard of all activity, budget, processed stuff and status of things and don’t even play with the software. Why? Simple. They don’t have the time. Please Hide all the bells and whistles. They look fantastic on the webex tm until you have to fill all of them daily yourselves with largely useless information as far a savings , visibility and control is concerned. SIMPLE please!

Mobile versus fixed: On a global scale, save a few companies, the vast majority of companies have a good grasp on their fixed assets, and more and more mobile services account for a larger portion and represents a more complex management challenge for its inherent type of service. Random subscriptions, employee dynamic, user facing services, etc. So mobile is the priority for “application based services with BASIC fixed line management”

Global versus local: the key word here is shared services. The methodology we have thought out seeks to service at the same time Local, Regional and Global management simultaneously, and providing to each one or obtaining from each one what is required. If this is not accomplished like this, sponsorship and success to the adoption are a nightmare at best. A formula must be worked out so each country can do their thing and corporate/headquarter also benefits.

I worked as consultant to a Fortune 50 I won’t name for confidentiality reasons but mostly to save them the embarrassment. After countless meetings at corporate in USA and RFI and RFP and interviews with everyone, they take us to their Latin-American HQ. Surprise , surprise, the Latin-American HQ says: “Well, corporate needs this as they are complex and a mess, but we here know exactly where we stand. We would love to do the cell phones in the region but:

• we don’t have “one person”. In charge . Responsibility is spread across business units
• is corporate paying for this? I don’t have budget
• so on..

In summary, to succeed at a global implementation:

Keep it simple, with simple applications with global ability; Make sure you acquire or develop predefined methodologies for collecting initially and aggregating all data about infrastructure, processes , expenses, providers, and users within company so you can inventory your multiple processes and other factors affecting expectations; Methodology for inserting AND SHARING services within a CORPORATION; Plan for actionable data and being willing to act and assimilate the consequences of findings; Track, measure and report everything you find and fix from day ONE.

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

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.

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

Many TEM vendors have a national service and approach and must seek strategic partnerships (or build themselves) to be compliant to the enterprise trend moving away from national to global services. An example of this trend is the announcement of the global partnership between Ezwim and Movero Technology to deliver a joint lifecycle management service globally. The joint service is based on the full integration of the respective Software-as-a-Service (SaaS) platforms.

The integrated offering will be available in Q1 2009. The benefit to enterprises: a total lifecycle management approach for policy development, procurement, administration of services and expense management across multiple carriers, allowing for more effective cost control, service and support.

Leading analysts like Gartner (see link below) and Forrester advise enterprises to start adopting Telecom Expense Management (TEM). According to Jeffrey Kaplan it is also a good time to adopt Software-as-a-Service (SaaS).  In his article “Time is right to consider SaaS and Cloud Computing” he elaborates on the main advantages of SaaS for enterprises; like the speed of implementation and the pay-as-you-go basis of the products.

I believe that the time is indeed right for SaaS services and Telecom Expense Management is one of these services that is well suited to be offered in a SaaS model. It allows enterprises to start managing telecommunications expenses in a matter of weeks and allows for well-founded decisions on how costs can be decreased in a structural way that have a positive impact on their organizations.
My quick and dirty business case for TEM in a SaaS model:

• Savings: >20%
• CapEx: 0 $
• Implementation: weeks
• Savings / Cost Ratio: 7/1
• All the benefits of a managed service…

More info:

• Gartner: Strategic Companies Will Use Business Intelligence
• Time is Right to Consider SaaS and Cloud Computing

Link to the Gartner Report