Comparing TEM and IT spend optimization platforms

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Technology Expense Management (TEM) and IT spend optimization platforms are both solutions that companies can use to manage and reduce their expenses. TEM platforms are a well-established solution category that for many years was the only solution capable of handling enterprise requirements, including invoice processing, contract management, and usage reporting. This reporting has helped companies make data-driven decisions about how to cut costs. However, TEM platforms come with large investments and the reporting that helps companies make spend optimization decisions will be compliant but are insufficient in that they don’t go nearly far enough in capturing the full potential that spend optimization offers. IT spend optimization, on the other hand, uses advanced technology that is designed specifically to help automate the IT spend optimization lifecycle, from automated opportunity identification to implementation. 

In this article, we will discuss in more detail what TEM platforms and Spend Optimization platforms provide to customers, the additional advantages of investing in an optimization solution and how it could complement a TEM platform already in place in your organization.

TEM Platforms: Automating the management of technology expenses

TEM (Technology Expense Management) solutions are software platforms that help companies manage and track their telecom expenses. These expenses include the costs associated with Telecom, Data Networking, and Cloud services. TEM solutions are designed to automate and streamline the process of managing these expenses. They provide a variety of features to help companies better control their spending on technology services, such as:

Invoice management: which automatically collects and processes invoices from telecom service providers, making it easy to track and manage expenses.

Payment processing: which automates the payment process for telecom expenses, allowing companies to pay bills on time and avoid late fees.

Contract management: which helps companies keep track of their telecom contracts, including expiration dates, terms, and conditions.

Usage tracking: which provides detailed usage reports, allowing companies to identify and control unnecessary expenses, such as overage charges.

Cost allocation: which allocates costs to different departments or cost centers, making it easy for companies to understand where their telecom expenses are coming from.

Auditing: which helps companies detect errors, discrepancies and fraudulent activities in their telecom expenses.

Disadvantages of TEM Platforms

While comprehensive, TEM platforms are hefty investments and require significant resources to implement. While their reporting will be built according to the customer’s requirements, this isn’t necessarily a good thing because the level of depth that is required to fully capture spend optimization potential is not known to the customer. This leads to reporting that helps streamline and automate certain processes, while requiring manual effort to deep dive into contracts and invoices. The resources required to correctly and consistently manually analyze contracts and invoices is cost prohibitive to most enterprises, resulting in a significant pool of untapped potential. 

Spend Optimization Platforms: A comprehensive and holistic approach to managing expenses

Spend Optimization solutions are the modern answer to TEM. They cover a wide range of categories within IT, including telecom, data networks, infrastructure, and cloud. They provide automation, insights and analytics to help companies gain the full potential that spend optimization can offer. They do this by automating the process of identifying and managing opportunities in cost savings, process automation, contract risk management, and cost avoidance. Additionally, spend optimization platforms offer insights & visibility into spend and contract pricing.

By using special technology to combine invoices and contracts, companies gain a unique perspective into their spend and contract pricing that wasn’t available before. The bottom line for companies is more cost savings, reduced risk, and resource efficiencies. 

Advantages of spend optimization Platforms: Covering multiple areas of expenses and providing real-time visibility

Spend Optimization Platforms have the following advantages over TEM:

  1. They are more cost efficient. They can be deployed in any region of the world without the significant cost and time investment needed for TEM
  2. They yield more spend optimization benefits. They automatically analyze contracts and invoices and use deep learning techniques to continually adapt and find new opportunities that TEM platforms will miss
  3. They are simpler to use. The platform leverages its technological advantage to learn each company’s unique processes and adapt the most efficient workflow while also automating most of the steps. TEM platforms rely upon the customer to define their workflows.
  4. They are transparent. The platform shows a detailed trail of the data analysis that was performed at each stage to give companies comfort the automation is accurate. 

Complementing Existing TEM Solutions: Automating the Analysis of Invoices and Contracts

If your company already has a TEM platform, you can still use a Spend Optimization platform to complement your company’s investment. 

Spend Optimization platforms can be used to automate the analysis of invoices and contracts that would otherwise be done manually. Considering the resources needed to run this work manually, this work often gets left until a special once a year project.  As a result, a Spend Optimization platform can be a valuable addition to a company’s existing TEM solution, providing added value and automating processes, all there to help improve the company’s bottom line.


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