In a recent article on Spend Matters, Jeff Muscarella of NPI provided a few guidelines to ensure your organization has secured market competitive rates and discounts for its telecommunications needs. Jeff makes a great, valid point: unraveling the complexities of telecommunications spend is a challenge; it always has been and as service offerings become more unified and layered on top of one another, their intermingling becomes even more challenging to dissect and compare.

It is not only the giants, AT&T and Verizon, but their competitors as well. Especially as acquisitions continue to develop one after the next (See Windstream/Nuvox/PAETEC/Cavalier, Level3/Global Crossing, CenturyLink/Qwest, Earthlink/One Comm/ STS, etc.), service offerings are becoming more diverse and include everything from traditional local and long distance services to wide area networks and everything in between: Internet, hardware and software, management and maintenance, cloud services, and consulting.

The article provides a roadmap toward validating pricing, albeit the road is a bit bumpy and sparsely marked. While identifying fair market price for telecommunications services can be challenging with limited market exposure, it is certainly possible. Not only is it possible to ensure you are getting a good deal, it is possible to ensure you are getting a deal as good or better than your peers and competitors. Further, in the process you can make sure your infrastructure and services are optimized so your organization can feel confident that it is getting the maximum value for the lowest possible cost. To optimize your spend add the following details to your checklist:

  1. Create an inventory of your physical and logical infrastructure. This should include all circuits, lines/trunks, numbers, hardware, etc. Also, trend usage. If your organization is prone to seasonal usage spikes, be sure to include the applicable periods in your analysis. This will give you a snapshot of your spend (or several depending on how you elect to drill down) from which you can identify target spend areas which may be ripe for savings. Further, it allows you to ensure all services and components of your spend are considered prior to going to market or renegotiation with your incumbent.
  2. Audit your existing spend. Telecommunications providers almost never bill 100% correctly. A great way to trim your budget is by auditing against the contract. This will take some work, however, identifying services that have been billing incorrectly can trim your budget significantly and potentially reward you with a one-time recovery that may be significant depending on the billing error and how long it has gone unnoticed. In the same way, ensure all services you are paying for are in use. Your Telecom or IT team (or a third party) can check all your smart jacks to see which circuits are lit and active as well as tone and tag your lines. You may find that some circuits are lit but not connected to anything or that there is dial tone on lines that are not punched down to an extension.
  3. Evaluate your organization’s requirements. This evaluation should include what is required today, but also what may potentially be required in the next few years. This is critical for two reasons 1.) the carrier or technology you choose today may not offer or support what you will need in the future 2.) the carrier’s contract language may be an impediment to change during the contract term enforcing Early Termination Liability and/or Volume Commitment for changes. The final value of a requirement analysis is that you may identify requirements that are currently below the thresholds when the services were introduced. E.g. the company’s Storage Area Network (SAN) have been moved to the collocation so WAN connection to headquarters does not need to be so large anymore.
  4. Research before going to market. All telecommunications carriers are required to file contracts for regulated services online according to the Telecommunications Act of 1994. That means that there are plenty of published deals online that you can derive solid market intelligence from. Further, you can assist your incumbent account manager by presenting such contracts which they can take to their pricers to demonstrate that the deals are available and that their customer is entitled to them as well. The benefit of putting in this legwork is that your new, better pricing will be with your existing carrier so no forklift changes are necessary, just contract filings which yield savings faster with no one-time costs associated.
  5. Develop your design and requirements before going to market. If going to market is necessary due to organizational rules or because an alternate carrier is preferred, do so with a design and set of requirements established. Scope creep is one of the most challenging aspects of sourcing telecommunications simply because of the vast amount of variables that all serve as a means to the same end in a technology solution. As your requirements or design inevitably changes, continue developing it with your preferred carriers’ sales engineers to keep your model as standardized as possible. This will level the playing field and ensure you are taking advantage of the best solution from each carrier. Keep in mind, however, that this is the phase where critical analysis is most important. Some carriers simply cannot match the offering or combination of offerings of another. No matter how hard you try, you may need to consider multiple solutions that each contains certain caveats and unmatched benefits.
  6. Manage spend across carriers responsibly. While it is generally ill advised to work with a single supplier for telecommunications, you may benefit from basketizing a majority of spend with a single carrier. It can be a challenge to balance economies of scale and leverage against captivating yourself with a single carrier. A good example of this would be to lease your own dark fiber as a redundant way to bring in large carrier services (WAN and Internet) rather than buying your entire network and ring from the same carrier. This way, you can bring in a different WAN provider later without a costly and drawn out new fiber build. While utilizing multiple carriers can provide some value in ensuring the pricing provided is competitive, carriers will also tend to respond favorably to loyal customers. They are motivated to maintain existing, loyal customers and win new business with them. Regardless, all suppliers need to be challenged from time to time. Complacency lends way to less advantageous offerings in which case #5 tends to jumpstart them again.
  7. Offload the burden of the exercise to a third party. Organizations such as Source One can help you with all of the steps above, and more. The primary benefit of engaging a third party consultant is that the market intelligence derived from participating in the market on a daily basis allows them to identify optimum solutions and help your organization achieve more savings faster while your people focus their efforts on more pressing matters.
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David Pastore

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