Nick Petheram, Founder, Chairman, and CEO of Nomia writes about the telecom tail spend challenge and where AI and HI can help
Tail spend has long been seen as a black box in telecom procurement. Low-value transactions scattered across thousands of vendors are often ignored in favour of the big-ticket strategic spend categories. However, as telecoms operators confront fast-moving technology lifecycles, tightening regulation, and rising pressure to deliver on Environmental, Social, and Governance (ESG) goals, this overlooked category is proving too risky and too valuable to neglect.
For operators under pressure to deliver efficiency, compliance, and agility, managing tail spend effectively is becoming a strategic necessity. With the right approach, what was once an administrative burden can be transformed into a structured, auditable, and insight-rich area of procurement. This is why the combination of AI and Human Intelligence (HI) can prove to be a competitive advantage.
The telecom tail spend challenge
Telecoms are unlike most industries when it comes to procurement. Network infrastructure, spectrum, and direct services dominate spend and attention. Everything else, from IT and office services to niche software, pilot devices, and subcontracted operations, sits in the tail. Although tail spend typically represents only 20% of total spend, it accounts for around 80% of transactions.
This category is also far from static. A product may start in tail, such as a device used in a limited pilot, and then rapidly become strategic once rolled out at scale. Conversely, as legacy technology ages, it may fall into the tail as it is gradually phased out. Meanwhile, procurement priorities shift depending on geography, licensing requirements, or local regulation, meaning what qualifies as tail varies across regions. This constant flux makes tail spend difficult to manage through traditional systems or rigid definitions.
The hidden risks of tail spend invisibility
Telecom operators run critical national infrastructure, which places them under scrutiny from regulators, auditors, and the public. Every procurement decision, including small purchase orders, can carry compliance implications.
Tail spend, with its long list of smaller vendors, is a weak spot if not properly managed. Vendors who are not subject to the same oversight as core suppliers can expose operators to regulatory penalties and/or ESG violations. A single non-compliant vendor hidden in the tail can create outsized consequences. For this reason, visibility into tail spend is fast becoming a compliance requirement.
AI alone isn’t enough
AI has been a game-changer for procurement, especially in areas like spend analytics, supplier discovery, and compliance monitoring. In tail spend, AI’s ability to process thousands of small transactions in seconds is indispensable for uncovering anomalies and identifying potential risks.
But AI has limits. Algorithms can surface the cheapest supplier but miss critical context, such as a vendor’s history of delivery failures, exposure to geopolitical risks, or lack of ESG compliance. On its own, AI risks producing decisions that are technically correct but strategically flawed.
The AI + HI advantage
AI brings unmatched processing power to procurement. It can analyse thousands of transactions in seconds, uncover patterns in supplier behaviour, and flag potential risks or inefficiencies. In tail spend, where the volume of transactions is high but individual value is low, this kind of visibility is essential.
But AI is only as effective as the data it is trained on. It may identify the lowest-cost vendor, but overlook recent delivery failures, geopolitical exposure, or ESG violations that are not yet captured in structured datasets. This is where human intelligence is indispensable. Procurement professionals provide the oversight, contextual awareness, and judgment that machines cannot replicate. They negotiate, validate supplier performance, and refine AI outputs with real-world feedback, making the system smarter and more responsive over time.
Maximising value
When operators adopt this AI + HI model, tail spend shifts from being a fragmented, low-visibility category to a structured part of the procurement portfolio. This approach can deliver measurable savings, often in the range of 5% to 15%. For a large telco with $10 billion in external spend, this translates to as much as $300 million that can be recovered and redirected into core investment priorities. Yet the value is not just financial. By applying the same rigour to tail suppliers as to the strategic core, operators can ensure that even the smallest transactions are aligned with regulations, ESG commitments, and internal procurement policies. This safeguards against compliance failures while also creating clearer audit trails.
Effective tail spend management also opens doors to innovation. Many of the most agile and creative vendors sit outside traditional supplier rosters. Simplifying onboarding and contracting enables operators to tap into these smaller, specialist providers more quickly, capturing technologies and services that might otherwise be overlooked.
At the same time, transparent oversight of the tail brings greater operational resilience. With better visibility into purchasing patterns, supplier reliability, and hidden inefficiencies, operators are able to respond more quickly to change, whether that’s a new regulatory requirement, a supply chain disruption, or an emerging technology shift.
Rethinking tail spend
Historically, telcos have focused resources on core infrastructure. Today, managing tail spend well is integral to resilience, agility, and reputation. While AI can process the data, HI can apply critical judgment. Together, they give telcos the visibility, compliance, and agility they need to thrive in a fast-moving market.
By rethinking tail spend as a strategic opportunity, operators can future-proof procurement and drive business value. In a competitive telecoms landscape, turning hidden costs into sources of competitive advantage may be what defines the next generation of winners.
Nick is the Founder, Chairman, and CEO of Nomia and also serves as Chairman of the Nomia Board, the Founders Committee, and Bell Integration. He leads Nomia’s Executive Team, driving the company’s strategic direction and innovation.
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