Tail spend is typically only 20 percent of a company’s third–party spend but can compriseup to 80 percent of its transactions. This ratio has defined the tail as an administrative headache,sometimes overlooked entirely.
For large global telecom operators, this view can be outdated and increasingly risky. As operators navigate shifting regulations, rising compliance demands, fast-evolving technology cycles, and increasing pressure to meet ESG goals and deliver cost efficiencies, the case for managing tail spend as well as their strategic categories has never been stronger.
In this environment, the fusion of artificial intelligence (AI) and human intelligence (HI) offers telcos a model to manage tail spend with the speed, precision, and contextual understanding it demands.
What makes tail spend in telecoms a unique challenge
Unlike other industries, where procurement categories can be much more evenly distributed, the supply chain for telecoms can be very large and fragmented.For telecom operators, the network itself is usually the key attribute for that business;it’s their core. Network infrastructure and direct services to rollout and manage those networks, therefore, represent the strategic heart of procurement and naturally dominate strategic decisions and internal resources. Outside this core, from subsidiary services, information technology to small niche software categories to office and corporate services often appear in a company’s tail spend. Yet this category is more dynamic than it appears.
Tail spendin telecoms is constantly evolving. Equipment that begins its lifecycle as tail, such as devices used in early-stage trials, can quickly become strategic once rolled out at scale. Conversely, items from legacy technology may shift from strategic to tail spend as they age and are gradually phased out. Geographic variation adds another layer of complexity. Procurement priorities in Western Europe, for instance, can differ significantly from those in other geographies, even within the same telecom group, particularly when potentially regulated differently by local legislation. Licensing structures, infrastructure maturity, and investment capacity can all influence what falls into a tail spendcategorisation.
The definition of tail spend, therefore, can vary not only by industry or organisation but also across territories. This fluidity makes it difficult to manage using static systems or narrow definitions.
Compliance, ESG and the cost of invisibility
Telecom operators play a critical role in managing the national infrastructure of a country and are directly accountable to governments and regulators. This makes compliance and ESG oversight critical at all levels of procurement, including the tail.
Tail spend typically involves a large number of smaller vendors. These vendors can represent significant compliance risks if they are not subject to the same level of scrutiny and compliance as the strategic core suppliers. Of course, compliance levels and requirements vary by product, but there are still minimum standards and commitments. The real challenge lies not just in identifying non-compliance, but in not knowing whether compliance has even been achieved at all.
A lack of visibility can expose organisations to audit challenges and potential reputational damage, and regulatory penalties. The smallest purchase order can lead to significant consequences if it involves a non-compliant vendor. As a result, telcos are increasingly treating tail spend visibility as a core compliance function rather than an afterthought.
The AI + HI model
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, AI is indispensable for surfacing actionable insights from data.
However, AI is only as good as the data it is trained on. It may flag the lowest-cost supplier but miss recent delivery failures, geopolitical risks, or ESG violations not yet embedded in structured datasets. Contextual understanding, ethical judgment, and nuanced decision-making still require human input.
Human intelligence complements AI by bringing oversight, contextual awareness, and strategic judgment to the process. A hybrid model ensures that AI’s speed and scalability are complemented by human expertise. This collaboration is particularly vital in cases where decisions cannot be made based on data alone. It also allows for continuous improvement, as human feedback refines AI models over time.
In practice, this AI + HI approach enables telecom operators to ensure compliance across diverse and evolving regulatory environments, while also reacting quickly to changes in technology lifecycles and market dynamics. It allows procurement teams to validate supplier performance beyond what historical data alone can provide and to identify and cultivate relationships with niche or innovative vendors that may otherwise be overlooked. This combination of speed and insight,allows procurement functions to make informed, data driven decisions.
From cost centre to strategic asset
Historically, tail spend has been seen as a cost centre, a necessary but low-priority function. That perception is changing. Tail spend now touches nearly every department, spans multiple geographies, and increasingly features in ESG reporting. It also offers a unique window into buyer behaviour and opportunities for innovation.
In telecoms, where procurement cycles are closely tied to technology rollouts and regulatory frameworks, tail spend management can directly impact business agility and risk exposure. When managed strategically, tail spend becomes a lever for resilience, cost savings, and competitive differentiation.
A hybrid AI + HI model transforms tail from a fragmented, low-visibility category into a structured, auditable, and insight-rich part of the procurement portfolio. This shift not only identifies quick win opportunities and improves operational efficiency, but also supports long-term strategic goals.
Redefining strategic procurement
As telecom operators continue to adapt to technological, economic, and regulatory changes, procurement functions must evolve in parallel. Tail spend is fast becoming central to anorganisation’s ability to operate efficiently, remain compliant, and innovate at speed.
AI alone cannot meet these demands. It is the combination of AI’s capabilities with the contextual judgment of experienced procurement professionals that creates a system both scalable and strategic. In the hybrid model, tail spend is no longer unmanaged or invisible. It is transformed into a value and innovation driver. By redefining tail spend as strategic and leveraging the tools and talent to manage it accordingly, telecoms can ensure their procurement is fit for the future.
By Nick Petheram, Founder, Chairman, and CEO of Nomia
