Prognosis for TEM Market Consolidation
July 2, 2009 (Vol. 30, No. 13)
The “telecom procurement support” market is made of bill auditors, telecom expense management providers, pricing and negotiations consultants/attorneys, and telecom outsourcers and telecom operations managers, telecom attorney Hank Levine said in his keynote address at Voice Report’s 5th Annual National Summit on TEM.
But that’s too simplistic a view, says Joe Basili, managing director of the Telecom Expense Management Industry Association (TEMIA). He breaks the supply chain management industry into providers of inventory management and change control, service order management, strategic sourcing, invoice management, expense management, usage management, reporting and business intelligence and help desk capabilities.
No matter how you categorize the silos, providers are trying to grab more market share in a crowded industry by expanding into other market segments through “vertical integration,” says Levine, partner at Levine, Blaszak, Block & Boothby, in Washington, D.C. But so far no provider has mastered the “one-stop shop” model.
TEM providers will try to differentiate themselves with analytics to improve forecasts for spending on technology migrations, support sourcing strategies and negotiations with providers, handle price benchmarking and plan usage scenarios for enterprise telecom services, predicts Stamford, Conn.-based research firm Gartner in its “MarketScope for Telecom Expense Management” report.
One differentiation tactic that won’t work is patents, Levine believes. He points to the Supreme Court’s decision in Bilski v. Doll, in which it struck down attempts at patenting business processes. TEM patents that try to stake a claim on processes instead of technology will likely be invalidated, Levine says.
He thinks it’s more likely that TEM firms will use mergers and partnerships to survive. But attempts at consolidation will run into complications regarding how leads will be shared between partners, how to integrate different business models and how to overcome conflicts of interest.
Giant technology management firms like Accenture, EDS and IBM could become more interested in the TEM space, and they’d do well because they’ve got trusted brands and deep pockets, Levine says.
Entry by mega players has been predicted for a while but never really materialized, Basili counters. But he does expect the TEM market will see new entrants even as it consolidates in the coming years. (