What Is Telecom Procurement? How It Works, Benefits, & More

Aaron Stahl / Telecom / October 19, 2022

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.

What Is Telecom Procurement?

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.

The Telecom Procurement Process

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.

Know Your Position

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.

Know Your Options

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.

Submit Requests for Proposal

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.

Engage in Negotiations

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.

Continue to Monitor Contacts

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.

Forms of Telecom Procurement

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.

  • In-house procurement: This route is ideal for smaller businesses or those with their own in-house telecom department. The telecom procurement team would follow the process outlined above and work directly with telecom carriers to make the best sourcing decisions. The in-house team would also carry on monitoring invoices after the procurement process.
  • Agent procurement: Larger companies or those with complex telecom needs may consider working with an expert in telecom procurement. One popular route is by working with a telecom agent. These agents are independent entities that can analyze your business’s existing services and compare them with other available vendors. The benefit of working with a telecom agent is that they go through the process of securing quotes and negotiating terms for you. The potential fallback of using a telecom agent is that they get paid by the providers once you sign a contract. This means they may be inclined to sell to you at a higher rate in order to earn a higher commission.
  • Telecom aggregator: Also known as a reseller, aggregators have agreements with telecom vendors to resell their services. Working with a telecom aggregator can benefit your company by supplying a single point of contact that gives you access to multiple vendors. However, since aggregators buy services on your behalf, communication and transparency can get complicated.
  • Telecom expense audit: An alternative method to handling telecommunications procurement is through a telecom expense audit with a firm like P3 Cost Analysts. Procurement is just one step in the telecom services auditing process, meaning we can save you money during contract negotiation as well as through invoice auditing. Furthermore, we bring a consultative approach to help you understand the myriad of telecom and technology options which may mean a better solution and a better price.

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.

Benefits of Working With Telecom Procurement Experts

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:

  • Lower telecom expenditures: Perhaps the most obvious benefit is that it can save you money. These services can help you get discounts from suppliers, negotiate better terms, and avoid overspending.
  • Save your employees’ time: As you can see from the outline above, the telecom procurement process is very lengthy. Overall, telecom contract management never truly ends. Working with a third party can save your employees thousands of work hours and allow them to focus on more critical tasks.
  • Guide you through growth: Companies experiencing growth can benefit from telecom contract management as they work through growing pains. As you start to need new services, choosing the right providers from the start can help drastically in the long run.
  • Offer continued support: Once the procurement process is finished and negotiations have come to an end, the continued support offered by third-party telecom experts will keep saving your company money. Ensuring carriers stick to agreed-upon terms and conditions and monitoring for errors on invoices is just as important as choosing the best providers.

Make Your Life Easier by Working With P3

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.

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