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At first pass, telecom contracts will almost always favor the telecom supplier. However, because this is telecom, staying up-to-date on the latest trends and navigating through complex agreements becomes a daunting task even for the shrewdest of negotiators.
The majority of telecom professionals are tasked with an impressive array of daily responsibilities, and telecom contract negotiations, to be frank, can be a burden. Whether the task of negotiating the contract falls on the shoulders of the CIO, the CFO, the Telecom Manager, or all three – it detracts from the strategic value that these highly skilled, in-demand professionals provide. In most cases, tracking renewals, resolving contractual disputes, and monitoring contracts are not the most efficient, cost-effective use of their time.
The following are pointers that you should know before negotiating with your telecom supplier(s):
- Terms and Clauses – When most people think of a contract, they think of specific service start and end dates, believing that the duration of the contract is something that must be black and white. What many telecom buyers may not realize is that suppliers are open to negotiations in their clauses and terms. Additionally, suppliers should be in a position to negotiate with you on price stabilization and the removal of contract extension clauses. For example, the going market rate for voice service may drop in 18 months, which would provide you with leverage to go back to the carrier for a lower rate. What happens if business conditions change? Addressing contractual extensions or the removal of certain clauses serve as a pseudo insurance policy against unforeseen changes in your business.
- Rate Pricing versus Total Cost of Telecom – Researching the current state of the industry will provide some introspect into where your organization should be in terms of rate pricing, but it won’t tell you everything. Know about recent consolidations and whether that could present you with an opportunity for cost savings. Be prepared to negotiate on the rate; guide the telecom supplier towards the market rate you feel comfortable paying. Discuss the impact of an unexpected business downturn, and how your carrier would be willing to adjust rates and contractual conditions.
Additionally, what other costs will have to be factored into the total cost of choosing one vendor over the other? For instance, you may need to dedicate a FTE to manage an implementation with one carrier whereas it may be included in the service package with another vendor. When negotiating, have a solid calculation all of the opportunity costs in addition to the rate the carrier is quoting you.
- Bundled Services – Bundling services is another aspect of the negotiation process that could lead you to believe you’ve achieved an attractive contract, but upon closer scrutiny, you may have bundled services that are not absolutely necessary for your daily operations. In general, bundles are typically more beneficial from a cost standpoint, but stay aware of what’s completely necessary and what is superfluous.
- Carrier Competition – The bounty of carrier choices can also work in your favor, if you have the time and depth of knowledge to understand their pros and cons. If they cannot cater to your requirements, move on to the next one. Know your exact spend from the previous year, your current goals and objectives, and existing budgetary constraints prior to meeting with your supplier. Additionally, carriers tend to offer similar products with different names, and it can be confusing when trying to differentiate services amongst carriers. With so many choices of similar products, it can get difficult to determine exactly what it is that you are actually paying for. Having a partner whose expertise lies in the product differentiation can eliminate the cost creep that results from this confusion.cts
If unprepared, you could be losing up to 25% of potential savings because of a poorly negotiated contract. Coming armed to the negotiation table with an experienced, knowledgeable telecom partner like Renodis is an expedient way to ensure the contract works in your favor and not just in favor of the telecom supplier. Contact us to talk with us about your upcoming telecom contract negotiation.
About the Author
CEO Craig Beason launched Renodis in 2001, with a vision to build a telecom management company focused on operational excellence. In the time since the company was started, Craig has grown Renodis beyond its original base of WANS and wired lines to include wireless, telecom expense management (TEM), managed services and consulting; and now Turnkey Telecom Management end-to-end integrated outsourcing.
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