Evaluate Your Telecom Contracts and Terms For Optimal Savings

Leo Berz

The telecommunications environment is rapidly changing. Resources are tight and the end of your telecom contract term is approaching. It is decision time; do you execute an extension to your current agreement, or go to market?

As you are faced with this decision, it is important to carefully weigh the pros and cons to determine which option best meets your needs. While tempted to base this decision on current resource and time limitations, the choice you make today will have ramifications for years to come. Best in class pricing and business terms take time. These best in class terms are not typically reached in a single telecom procurement event but rather through a series of agreements and negotiations between business partners.

With rapidly evolving technologies and regulatory changes, the telecom landscape is in continuous flux. This offers increased competition and the potential for lower price points than you may have been able to achieve even a year ago. As this trend continues, services such as basic conferencing, long distance (LD) and Internet have become more commoditized, thus blurring the distinction between the big “Tier 1” players and the rest of the suppliers in the space and presenting a tremendous amount of savings potential. With Internet Protocol (IP) becoming the transport of choice, newer providers without the encumbrances of Time Division Multiplexed (TDM) backbones are redefining the Tier structure altogether. Ask yourself the following questions prior to making a decision to extend or go to bid on your next agreement:

  • Is this service still relevant to the needs of our End Users? Even if the technology has remained relatively stable, business needs may have changed the required volume or configurations.
  • Do we fully understand how our current or proposed pricing compares to prevailing rates?
  • Are there alternative services or technologies to meet our business needs?
  • Is our current provider the only option for our service needs?
  • Does our existing telecom agreement include all the protective business language and Service Level Agreements we need?

If you can’t answer yes to all of these questions, a telecom procurement event might be your best course of action. If time is tight, consider executing a six to twelve-month extension of your existing contract to allow yourself enough time to do it right.

Over the next several months I will be blogging on these questions in detail along with other procurement topics to provide a good roadmap for obtaining world class agreements with your vendors.

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