As the digital infrastructure of your business expands, managing the contracts and invoices of your tech stack can become increasingly complex. Implemented the right way, technology expense management (TEM) can become a driving force in building more efficient processes while simultaneously minimizing your tech costs.
According to one 2022 report, the average business loses up to $1.3 million annually on inefficient manual processes. Any budget or IT leader having to manage these paper-based processes, especially when it comes to vendor agreements and payment structures, knows how important more effective digital business operations can truly be.
More specifically, companies implementing technology expense management can leverage these 5 benefits for their operation.
1. Optimize Your Technology Costs
First, and perhaps most tangibly, technology expense management has the potential to optimize the technology costs your business incurs on a regular basis. By providing visibility into your various tech expenses, it enables you to identify any unnecessary expenditures that might be possible to minimize or even eliminate.
This can manifest in a few ways. For example, you might recognize that you pay for similar feature sets from multiple communications technology vendors, allowing you to renegotiate or eliminate one and streamline your costs as a result. Or, you might identify charged services on invoices that weren't fully rendered, allowing you to dispute or renegotiate the charge.
Optimizing technology costs also occurs at the macro level. Inadvertent auto-renewals, for example, become less likely thanks to active reminders on contract expiration dates, increasing the chances of only paying for contracts that actively benefit and enhance your business.
2. Enhance Your Expense Visibility and Cost Control
The ability of technology expense management to reduce your costs is made possible in large part by the ability to provide in-depth, real-time visibility into your technology finances. All contracts are stored in a single space, and invoices are redirected to that space to compare and contrast easily against each other.
Especially in the age of cloud services and SaaS, technology and cloud costs have become immensely difficult to control, with one report estimating that 44% of executives believe a third of their cloud spend is wasted. TEM has the potential to solve this common challenge, thanks in large part to the centralization of all data and documents related to your technology costs.
That central storage, in turn, leads directly to the ability to make more informed decisions about your technology vendor expenses. With a better overview and more centralized data about these expenses, you can more easily decide where to spend your money, which contracts to keep, and where to streamline your operations. Your cost management efforts become more strategic, providing every contract with the attention and scrutiny it needs to drive your business forward.
3. Reconcile Vendor Expenses With Service Inventory
It's tempting to assume that every invoice you receive accurately reflects the services rendered to your organization. But in reality, there is plenty of potential for error. In fact, a study by the Institute of Finance and Management found that nearly 39% of business invoices contain errors, not counting the nearly 10% of invoices that are actually duplicates.
Manual processes can easily overlook these errors, leading to potentially significant extra expenses. But, when you find the right TEM solution, you can gain a core advantage. Especially if that solution can also hook into and keep track of your service inventory from the same vendors, you can easily and automatically compare any invoices to that inventory—ensuring that you won't pay for anything you don't need to.
4. Increase Budget Transparency Across the Organization
Centralized expense tracking also unlocks a level of transparency that manual processes simply cannot achieve. To start, it enables you to easily and dynamically create comprehensive technology expense and budget reports, keeping better track of all costs in this area.
Those reports, in turn, build transparency in a few important ways, allowing you to:
- Review your technology expense data trends over a longer time horizon, allowing you to make more strategic decisions about allocations in the future.
- Share your expenses with internal and external stakeholders for full visibility into the level of tech expense for your company—both in the moment and over time.
Depending on the nature of your organization, budget transparency to key stakeholders may be a core requirement. But even if it is not, it can give you the insights you need to make better technology decisions and investments.
5. Build More Strategic Resource Allocation
Finally, and partially as a result of all of the above benefits, embracing TEM allows you to become more intentional in how your business spends its technology resources.
By compiling expense data into a single system, and gaining visibility as a result, and through the resulting comprehensive reports, you're able to better understand how and where your resources are best used. From there, you can make more informed calls on which vendors to work with, which services are worth paying for, and which features may not benefit your business as much going forward.
The result, ultimately, has the potential to turn your technology management from an expense effort into a strategic resource. You can focus on vendors and solutions with the most tangible impact on your business success, maximizing efficiencies even as you build a more proactive management system.
Implementing Technology Expense Management to Drive Your Business Forward
Add it all together, and TEM has the potential to make a massive impact on your business. It helps you save costs, gain visibility and transparency, maximize efficiencies, and become more strategic. As you move away from legacy invoice and contract management, the advantages for your business can improve exponentially over time.
Of course, TEM is a complex topic that deserves further discussion than a simple overview of its benefits. Learn more about its potential implications for your business, and how you might be able to implement it to drive your business forward.
