Telecommunications may be the one operational area of business that has changed the most drastically throughout the past fifty years. What was once heavily focused on landline phone calls has evolved to include wireless networks, data, and internet. The telecom industry continues to change nearly every day, with new ways of networking constantly emerging. This continuous evolution is just one aspect that makes telecom contract management so complicated for businesses.
Telecom procurement can be complex and time-consuming, but it’s essential to running a successful business. Without dedicating efforts to formulating a solid telecom procurement strategy, companies will likely be overpaying for these necessary services, negatively affecting their bottom line.
Keep reading to start understanding why telecommunications procurement is such a vital business area to focus on for cost reduction.
Telecommunications procurement is a specific part of telecom contract management, where a business aims to implement a strategy to source the most valuable and cost-efficient telecommunication providers for your organization. Telecom procurement can refer to both services and products that are necessary to run day-to-day business operations.
Telecom contract management isn’t just about finding the lowest price — it’s crucial to do your research and choose a supplier that can meet your specific needs. There are many factors to consider when selecting a telecom supplier, including price, quality, customer service, and contract conditions.
While it may sound relatively simple, as with many aspects of running a business, it’s quite a complex process. Recent supply chain interruptions, high demand for quality services, continuously evolving technology, and the sheer amount of time necessary for effective telecom sourcing are just some of the issues that in-house teams can face.
Procurement in the telecom industry is a long process that should begin up to nine months before your current contracts are up. Following these basic guidelines during telecommunications procurement will lead to the best outcomes.
The first step is having a strong understanding of what your current situation is, including how much you’re spending and what your usage looks like. Knowing your traffic will give you a better stance for negotiation. In addition, each company has unique requirements that must be considered when deciding on telecom providers.
Once you’ve got a good benchmark, the next step is identifying the ideal supplier or suppliers. Finding the provider that is the best fit for your needs involves putting out a request for proposal to multiple vendors. Vendors will then submit their proposals, which you will review and compare before making a decision.
Bigger doesn’t always mean better in the telecom industry. Make sure you fully understand what options are out there, like the different types of providers available to you. Competitive local exchange carriers (CLEC) tend to adopt newer technologies more quickly than incumbent local exchange carriers (ILEC). They often have more competitive pricing. ILECs might need a bigger push for better offers.
A request for proposal (RFP) is a critical step in the telecom sourcing process. Unfortunately, it’s also a long and monotonous process that can waste valuable employee work time. RFPs are used to get proposals from various providers for the services you need. These proposals are used to compare options and help the decision-making process and are essential for leveraging competition among providers.
An RFP will need to include the specific contract terms imposed by the provider. This includes info on billing terms, contract termination, auto-renew clauses, and pricing. While this is a broad overview of an RFP structure, there are many minute details that are essential for determining which provider to go with. Ideally, you want providers to understand and address your specific pain points.
Once you receive your proposals, your work’s not done. You can go through multiple rounds of negotiations with more than one telecom provider to ensure the best rates and conditions. Arm yourself with your data and formulate precise negotiation demands.
Be sure to compare all aspects of the telecom contracts, including rates, discounts, credits, and commitments.
That’s a lot of work. Unfortunately, even after you choose a provider and sign contacts, more work must be done. Make sure to follow up to ensure that your invoices match the agreed-upon terms and that the provider applies all of the promised incentives and credits. A good telecom contract management strategy will involve continuing to audit invoices.
Handling the telecom procurement strategy for a business is no walk in the park. As mentioned, it’s a long process that can sometimes take more than a year. While some companies may have the workforce to dedicate to such a feat, many others don’t. While direct-to-provider is one option for telecom sourcing, there are other options as well.
We will start by gathering data via customer services records, checking for unused lines and services, bill padding, or misapplied surcharges, taxes, tariffs, and other fees. Next, we will examine any current contracts to ensure that your carrier follows their agreed-upon terms and conditions and key in on any errors appearing on invoices.
As part of the telecom audit, we will work with our clients to negotiate with their current telecom provider as well as other potential carriers to secure new agreements and set up the most cost-efficient telecom programs.
If you’re looking for telecom procurement strategy assistance, there are many companies that specialize in this area. These companies can help you find suitable suppliers, negotiate contracts, and get the best prices. They can also provide valuable advice and guidance throughout the process. Some benefits of working with telecom procurement experts include:
Telecom procurement can be complex, but the benefits of getting it right are clear. Understanding the process from start to finish may scare business owners, but realizing that help is available will put their minds at ease.
Schedule a full telecom audit with P3 Cost Analysts for expert help with telecommunications procurement.