I have been talking to many executives regarding their imperative initiatives for 2024 and resource planning. One of the common themes that emerged from these conversations was the need for simplification of their tech stack and reducing their technology spend. This is understandable, given the increasingly high cost of capital, which strains businesses’ investment in growth and IT budgets. (no surprises!)
The common sentiment expressed across my conversations was frustration and disappointment with the level of service they received from their TEM vendors. They often feel they are not receiving sufficient value for their investments, citing issues with unskilled offshore resources, lack of expertise, and responsiveness. Key areas within TEM that require attention include AP-related challenges, invoice processing, service type mapping, carrier dispute resolution, cost optimization, and reporting functions such as accruals and custom client allocation requests. Overall, low CSAT & NPS scoring.
The executives expressed that these critical areas in Technology Expense Management (TEM) needed greater attention and effort than what their current TEM vendors were providing. They felt that their vendors were heavily reliant on low-cost, low-skill offshore teams to manage these tasks, leading to inadequate service and unmet expectations.
This situation raises the question: Will onshore TEM regain prominence in 2024?
The Role of Onshore Technology Expense Management in 2024
Years of M&A in the TEM market have exacerbated these issues, with traditional TEM models relying on low-cost offshore resources, negatively impacting service levels. Although outsourcing development remains relevant, critical failures in offshore service delivery force companies to insource, often eliminating the cost advantages of “low-cost TEM.” TEM contracts support a minimum effort for critical areas and rely on hosting SLA’s (who doesn’t use AWS?) and low effort activities such as automated invoice processing to build a basis of their offering portfolio. While offshore software development will maintain a constant state going forward, with the cost of education in the states (software engineering, i.e.), continued critical failures with offshore service delivery force companies to insource to fill in the gaps, often voiding the cost savings of “low-cost TEM”.
Clients can’t outsource all areas of tech expense management and IT cost reduction work product if their relationship lacks trust. 2024 will witness a growing demand for high-touch, fully managed TEM services that offer a high level of KPI attainment and ROI guarantees. While the market has driven down the cost of invoice processing with the use of tech enhancements, the lack of focus on IT cost takeout has negated those budget savings overall.
A Path Forward
To address these concerns, E78 offers a solution that supports both CIO and CFO needs across various industries. As technology expenses remain significant to companies’ bottom line, our TEM services are vital for profitability and success. E78 guarantees financial success by combining TEM, IT cost takeout best practices, and market-leading advisory services. Our approach delivers ROI at every stage, converting strategies into measurable financial gains and value creation.
If your organization seeks a reliable partner to optimize your tech stack and assist in key finance activities, connect with your E78 operating partner, a trusted partner/agent, or contact us directly for a discussion. Here’s to a successful 2024!
