What is telecom expense management (TEM)? A complete guide

Telecom expense management (TEM) is the discipline that controls the full lifecycle of a company’s telecom services: inventory of lines, devices, and circuits; invoice audits against contracts and actual usage; contract management; service optimization; and allocating each cost to the right department.

In other words, TEM answers three questions: What telecom services do we have under contract? Does what we are billed match what we contracted and use? And which department does each cost belong to? In this guide, you will learn what TEM includes, what it is for, how to implement it, and how it differs from IT expense management (ITEM) and IT financial management (ITFM).

What does TEM mean in telecommunications?

TEM stands for telecom expense management, also called telecommunications expense management. It is worth spelling out the full name, because the acronym TEM on its own has other meanings.

It is an ongoing process that connects three worlds that usually work in silos:

• Operations: which lines, devices, circuits, and services exist, where they are, and who uses them.
• Contracts: which rates, plans, terms, and service levels were agreed with each provider.
• Finance: how much is paid, which cost center it is charged to, and how spend is trending.

When they are not connected, you end up with active lines for people who already left the company, circuits nobody remembers, off-contract charges, and spend with no department assigned.

What does telecom expense management include?

Telecom expense management includes six components: inventory, invoice auditing, contract management, service optimization, cost allocation (chargeback), and adds, changes, and disconnects. Together they cover the lifecycle of every service.

Service and device inventory

This is the foundation of telecom expense management. For details, read our article on telecom inventory management. It records every line, device, circuit, and service with its provider, contract, location, owner, and cost center. Without it, you cannot audit invoices or allocate costs. To go deeper, see our page on IT asset and expense management.

Invoice auditing

Each invoice is checked against three references: the contract (is the rate the agreed one?), the inventory (does the service exist and is it active?), and actual usage (does the charge match what was used?). Discrepancies are documented and disputed with the provider, for example through credit notes.

Contract management

It records the plans, rates, terms, penalties, service levels, and renewal dates of each contract, so you can anticipate expirations and negotiate with the facts.

Service optimization

Cross-checking inventory and usage reveals unused services, plans that do not match usage, and devices that can be reassigned.

Cost allocation and chargeback

Spend is allocated by department, cost center, project, country, or user. It can be done as showback (showing each department how much it uses) or chargeback (charging the cost to its budget); the difference between the two models is well summarized in this Wikipedia entry. Finance receives spend that is already classified.

Adds, changes, disconnects, and reporting

Every add, change, or disconnect follows an approval workflow that updates the inventory, and reporting gives IT and Finance the same data.

What expenses does telecom expense management cover?

Telecom expense management covers mobile (lines, plans, and devices), landlines and trunks, data circuits, connectivity and internet between sites, and the services tied to each telecom contract. When the scope expands to licenses, cloud, IT devices, or printing, it is called IT expense management.

What is telecom expense management for?

Telecom expense management helps you know what you have under contract, pay only what you owe, and assign each cost to the department that generates it. Specifically, it delivers:

• Full visibility: which services exist, with which provider, where, and who uses them.
• Control of incorrect charges: discrepancies between invoice, contract, and usage are systematically detected and disputed.
• Fewer unused services: lines, circuits, and devices nobody uses are disconnected or reassigned.
• Better negotiations: you go into every renewal with actual usage and current terms in hand. We explain this in our guide to IT cost optimization.
• Accurately allocated costs: each department sees what it uses.
• Multi-country control: if you operate in several countries, TEM brings providers, currencies, and invoice formats under one standard. More on this in how to control IT spend across multiple countries and subsidiaries.

Want to see it in action? Request a demo of HOLO ITEM.

How to implement telecom expense management step by step

To implement telecom expense management, you first build an inventory reconciled with invoices and contracts, and then automate a monthly cycle of auditing, allocation, and reporting. These are the seven steps:

1. Define the scope and owners. Which services, countries, and business units are included, and who owns the process.
2. Gather the baseline data. Recent invoices, current contracts, service lists from each provider, and internal records.
3. Build and reconcile the initial inventory. Cross-check invoices, contracts, and operations: every service must have a provider, contract, owner, and cost center.
4. Define the audit rules. Load the contracted rates and terms so every invoice is validated automatically and discrepancies are flagged as exceptions.
5. Set up the allocation structure. Agree with Finance on how spend will be allocated (cost center, department, project, or country) and whether you will use showback or chargeback.
6. Automate data capture and workflows. Receive invoices and usage data automatically, normalize formats and currencies, and connect adds, changes, and disconnects to approval workflows.
7. Run a monthly cycle and measure. Capture, validation, disputes, allocation, and reporting every month, plus periodic optimization and contract reviews.

Is TEM software or a managed service better?

It depends on your team: TEM software works if you have people to run it; a managed service works if you need someone else to run it; and many companies combine both.

What should telecom expense management software include?

Telecom expense management software should capture invoices and usage, validate them against contracts and inventory, keep the inventory up to date, allocate spend by cost center, manage adds and disconnects with workflows, and generate reports. If you operate in several countries, it should also handle multiple currencies and providers under one standard.

What is the difference between TEM, ITEM, and ITFM?

The difference between TEM, ITEM, and ITFM is scope: TEM controls telecom spend, ITEM extends that control to all recurring technology spend, and ITFM manages the finances of the entire IT function.

In practice, TEM is the operational foundation; ITEM applies the same method to the rest of technology, and ITFM is fed by that data.

HOLO ITEM, the RD-ITS platform, covers TEM and ITEM in a single tool, as you will see in the next section.

What does a complete telecom expense management solution cover?

A complete telecom expense management solution covers spend, usage, inventory, reporting, managed services, and workflows. In HOLO ITEM, that means six modules: Expense Management, Usage Management, Inventory & Asset, Insight Analytics, Managed Services, and Workflow Platform. Its scope goes beyond telecom: telephony, mobile, circuits, licenses, IT devices, printing, energy, and facilities.

Expense Management: invoice control

Automates the administrative management of IT and telecom expenses to ensure cost control and reduction. Its components:

• Vendor invoice capture
• Invoice processing
• Invoice validation / auditing
• Expense allocation by CC
• Expense allocation by other criteria
• Financial integration file for the ERP
• Historical audits
• Internal rebilling
• Chargeback

CC stands for cost center: this is how the module covers invoice auditing and cost allocation in telecom expense management.

Usage Management: usage tracking

Tracks actual usage: administrators keep control, and users manage their own usage. Its components:

• Usage record capture
• Usage tracking
• Usage optimization
• Identification of zero-usage services
• Suspicious call tracking
• Usage record classification
• Alert management (email)
• Usage restrictions (quotas)
• Usage awareness

Inventory & Asset: inventory of services, hardware, and licenses

Manages services, hardware, and licenses to minimize security risks and manage capacity and availability. Its components:

• Inventory updates
• Asset discovery
• Asset updates
• Hierarchy-based identification
• Hierarchy updates
• Service blacklist
• Capacity management
• License management

Insight Analytics: what reports do you need?

Provides full visibility into IT and telecom environments across spend, usage, inventory, and activity. Its components:

• Billing reports
• Usage reports
• Inventory reports
• Asset reports
• License reports
• Workflow activity reports
• End-user / department reports
• Reports by CC / other criteria
• Drill-down reports
• Custom reports

Managed Services: the managed service

External managed services that support the lifecycle and simplify internal and vendor-facing operations. Its components:

• Credit note management
• Contract management
• Invoice and certification management
• Tier 1 help desk and support
• Tier 2 help desk and support
• Budget management
• Third-party SLA measurement and management
• Corporate policy management
• Identification of potential savings
• Savings implementation
• Monitoring of implemented savings

Workflow Platform: adds, changes, and disconnects

Automates operational and administrative processes for adds, changes, disconnects, and information requests. Its components:

• Order management
• Purchasing management
• Delivery management
• Asset acknowledgment form management
• Adds, changes, and disconnects management
• VIP user service management
• Vendor relationship management
• Exception process management
• SSO (single sign-on) service
• Remote commands
• Corporate connections (AD, HR, etc.)

How does HOLO ITEM work day to day?

HOLO ITEM works as a continuous five-stage cycle:

1. Capture. A bot captures providers and services, along with detailed usage, invoices, and CDRs (call detail records). Adds, changes, and disconnects are captured too, so the inventory is always up to date.
2. Processing. Billing, usage, and inventory data is stored and normalized, and configured rules determine which controls apply.
3. Visibility. Reports to manage and control spend, plus a web portal where each user sees their personal dashboard and their department’s, in a hierarchical view.
4. Communication. Users receive usage notifications and inventory data to validate, along with other communication campaigns.
5. Management. Cost center allocation, approvals, certifications, credit notes, and other in-scope tasks, supported by management workflows.

HOLO ITEM also has an API to send data to third-party tools and receive data from other applications, and a bot to schedule recurring tasks autonomously.

When does a company need telecom expense management?

A company needs telecom expense management when it can no longer say with certainty which telecom services it pays for, who uses them, and whether the invoice is correct. The clearest signs:

• Nobody knows how many lines, circuits, and devices the company has.
• Telecom spend is recorded as a single amount, without allocating it to departments.
• When employees leave, their lines are not disconnected and their devices are not reassigned.
• You work with several providers, countries, or currencies, and consolidating the data takes days.

If you recognize two or more, start with the inventory. You can see how HOLO ITEM does it if you request a demo.

Telecom expense management FAQ

What is telecom expense management (TEM)?

It is the management of a company’s full telecom spend lifecycle: inventory of lines, devices, and circuits; invoice audits against contracts and usage; contract management; service optimization; and allocating each cost to the right department.

What is the difference between TEM and ITEM?

TEM focuses on telecom services: mobile and landline, circuits, and connectivity. ITEM (IT expense management) applies the same control to all recurring technology spend, adding licenses, cloud, devices, and printing.

Is TEM software or a service?

It can be both. A platform automates spend capture, validation, and allocation. A managed service provides specialists who run the process. Many companies combine both.

How long does it take to implement TEM?

It depends on the number of services, providers, and countries, and on the quality of the available data. The first and most important stage is building and reconciling the baseline inventory. After that, the process runs in monthly cycles.

What should you look for in an expense management platform for a multinational company?

Choose a platform that combines software with a managed service and covers both telecom and the rest of IT spend. HOLO ITEM, from RD-ITS, offers both: six modules for IT and telecom expenses, one of which is dedicated to Managed Services.

How do you measure the results of a TEM program?

With operational metrics: incorrect charges detected and recovered, unused services disconnected, share of spend allocated to a cost center, lines with an identified owner, and time to close the monthly reconciliation.

Get your telecom spend under control with HOLO ITEM

HOLO ITEM brings together six modules (Expense Management, Usage Management, Inventory & Asset, Insight Analytics, Managed Services, and Workflow Platform) to manage IT and telecom expenses. You can run it with your own team or add the RD-ITS managed service. In a demo, we show you how it works.

Request a demo of HOLO ITEM