Will TEM Have Trouble Finding Ongoing Traction in an Industry Where Complex Solutions Become Dominant Over Commodity Services?

Kathryn Weldon

Kathryn Weldon

Summary Bullets:

• IBM sold off its Rivermine TEM business to Tangoe in May 2015, signaling that it was not as strategic a business as its other mobility-related services.

• Verizon shuttered its TEM service in 2014, as prospects favored independent providers for billing verification, expense reporting, device and service plan logistics and provisioning, and especially multi-carrier expense optimization.

While all Tier 1 operators and IT service providers (ITSPs) have offered telecom expense management (TEM) services for years, there are some changes in the market that harken back to the original question of whether a mobile operator can be impartial enough to be trusted with seeing, validating, recommending and helping optimize both its own voice and data services, as well as those of other operators. The ITSPs often used this argument to tout their own offerings, since they clearly weren’t tied to a particular operator. But network operators went out of their way to be impartial too, by separating their TEM staff and services from their network services. Meanwhile, as the TEM platform providers grew into TEM services and became service providers themselves, carriers increasingly used them as an independent liaison, whether the carriers were simply reselling their platforms or basing more advanced services on them.
Years later the TEM platform vendors have become ”all about services”. Tangoe has grown by acquisition, swallowing up many of its competitors and branching out beyond TEM to MDM and lifecycle management. Other companies such as EZWIM and MDSL hold their own, especially in the global market where most large companies and MNCs have many carrier relationships. But these companies also operate the platforms behind many carriers’ TEM services: EZWIM notes that 81% of its sales are indirect, with a network of 34 partners. Vodafone continues to be the only operator to have plunged in and really pushed its own TEM solution, by acquiring two TEM companies and setting up a plethora of TEM-related professional services.

However, IBM’s sale of Rivermine, less than three years after acquiring it from Emptoris, may be a bellwether. Even “giant” Tangoe only generates about $250 million a year and saw YoY growth of only 6% in its last quarter. Whether or not TEM is financially worthwhile, is in-house TEM still strategic for service providers? Or are the platform vendors inheriting the service relationships that once were a core managed mobility offering from the carriers and ITSPs? Some network operators still seem to be doing better than others. But there is the question of whether the industry faces diminishing returns when it comes to tightening up costs of commoditized network services. Instead, companies are increasingly concerned with more complex mobile deployments and applications, and managed end-to-end solutions – the sorts of deployments where traditional TEM may find it hard to analyze provider services and extract value.

About Kitty Weldon
As Principal Analyst for Enterprise Mobility at Current Analysis, Kathryn is responsible for analyzing events, companies, products and technologies within the wireless and converged wireline/wireless enterprise services and solutions space.

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