Nine Big Trends for Technology Expense Management in 2020
What are the key IT cost trends that you need to be aware of in 2020? In case you missed my webinars with MDSL yesterday, you can get a short summary right here.
1. TEM will continue to be a transformational catalyst for SD-WAN. The Software Defined Wide Area Networks market continues to grow 40% per year and will break $5 billion next year. However, to ensure that SD-WAN effectively covers all locations and projects, SD-WAN implementers and Technology Expense Management administrators need to work hand in hand to replace circuits, gain a full perspective of footprint, and understand the cost structure of the legacy network.
2. 5G is overrated in 2020, at least in terms of impacting IT budgets. Despite the breathless hype provided by mobile careers, can anyone provide a concrete example for 5G that will fundamentally transform their business? It’s not there yet for three big reasons: lack of network infrastructure, lack of devices, and the inability for 5G to go through walls. These three issues will make 5G a strategic topic in 2020, but not an operational one of any great scope. 5G is going to be a big deal. Just not in 2020.
3. Mobile device lifespans will continue to expand to 30 months and beyond due to a lack of significant form factor evolution. This trend is another reason that 5G won’t be as big of a deal in 2020: older phones and devices work just fine. And they’re sturdier than they used to be. And the smartphone form factor has been perfected. Why switch and go through the challenge of setting up a new phone when the old one works just fine and is personalized to the user’s preferences?
4. There will be a strategic partnership between HR and IT to support employee engagement shifts in 2020. For those affected, TEM will be a career-changer. For about 10% of organizations, IT and HR will be increasingly tied at the hip as technology is seen as a fundamental component of employee experience. For these organizations, TEM will finally be seen for what it is: a catalog and cost record of services that employees use to increase productivity. These organizations will take an important step in aligning IT with business productivity and start transforming the TEM role from bill processor to productivity enhancer.
5. Cloud IaaS/PaaS spend will grow faster than Communications Services spend in 2020. Cloud IaaS and PaaS at ~$100 Billion will still be about one fifth the size of telecom services at~$500 Billion. But the cloud spend will be growing at 25% per year while telecom spend grows 2%. Companies unprepared for the cloud tsunami are going to get drenched.
6. Amazon’s Savings Plans are about to upend cloud IaaS purchasing by changing the focus from time frames to utilization. Amazon’s Savings Plans for Amazon Web Services are based on maintaining a minimum commitment of spend per hour. This standard is going to replace reserved instances over time and provide a usage-based standard for savings. Rather than focus on the monthly or annual cost for a specific service, Amazon Web Services customers can now look at their holistic spend per hour. Expense managers with a network usage monitoring or call accounting background will be better equipped to handle this change.
7. There’s an app for that: SaaS becomes a larger enterprise concern as companies realize they are supporting thousands of apps: an order of magnitude more than previously realized. Amalgam Insights estimates that there is an app per employee, on average in companies up to 500 employees and then a fractional increase per employee afterwards. This means 500 employees, 500 apps. 5,000 employees, 2,500 – 3,000 apps. And enterprises are typically only managing 10% of these apps, leaving the other 90% as financial risks with the potential for out-of-control costs, operational risks as user interfaces and functionality can change without enterprise visibility, and as security risks as enterprise data is transferred to these unmanaged mystery apps. It’s like Bring Your Own Device, except that Bring Your Own App is cheaper, more pervasive, and creates more risk for the enterprise.
8. Robotic Process Automation continues to drive TEM innovation across invoices, contracts, and service. The combination of Optical Character Recognition, Machine Learning, Analytics, and workflow automation will continue to make TEM processes faster and more scalable. The value of TEM is in providing financial management, operational orchestration, and process guidance for technology and not in having an employee validate individual invoices that are within scope and range. In fact, process automation needs to happen to allow TEM analysts to become more strategic and helpful.
9. As IT becomes more service-driven with SaaS, PaaS, and IaaS, the role of TEM will fundamentally transform. Today, it is seen mostly as an expense management role to support telecom and mobility. But as cloud expenses continue to grow and companies see their revenue and operations directly tied to cloud computing consumption, TEM will start changing from a cost management role to a resource management and alignment role to help ensure that cloud costs are aligned to growth initiatives.
Questions? Comments? Seeking advice on what to do about all of this? If so, please reach out to us at firstname.lastname@example.org. We are here to help!