Whether it be blue ballpoint pens or double diaphragm pumps, businesses generally rely on the same products and services for as long as they maintain their current capital, labor, or management. Even if cost reduction might be on the table, nobody like to mess with success. This is particularly true of Procurement teams that are still reliant on the old, tactical way of doing things. 

This philosophy can prove especially dangerous in the Telecom space. Differing from the machines and parts used in production or facilities management, Telecom technologies are in a constant state of change. As new technologies emerge, older systems become more affordable. Unlike parts associated with sunk costs like capital- often, the only thing binding your business to its current Telecom system is a contract. These contracts, unfortunately, often confuse Procurement with their nebulous terminology and wealth of hidden costs.

Here are some steps you can take to ensure that your Telecom contract not only provides competitive pricing, but allows the opportunity to realize cost reduction opportunities as newer and more efficient technologies emerge that better suit the needs of your businesses.

Evaluate:
Before auto-renewing your Telecom contract, it is important to evaluate what adaptations need to be made to accommodate your business’s changing needs. Were you satisfied with your last contract? Has your company grown? Do you have Telecom inconsistencies due to a merger or acquisition?

Factoring-in the ways your company has evolved since your last Telecom contract will not only allow you to account for changes in scale, but to assess how your Telecom needs have changed as a result. 
Bringing Procurement and IT specialists together to re-evaluate your needs and develop cost reduction goals will allow you to build a comprehensive baseline to accommodate the state of your business. 

Educate:
After re-evaluating your company's cost reduction goals and needs, it is important to assess which new Telecom products and services might be worth exploring. A first step in evaluating what the Telecom market has to offer might be looking at Telecom products and packages used by companies similar to your own. Independently, or with the help of a third-party cost reduction specialist, you can assess how your own infrastructure compares with like-companies. If you find that a competitor has implemented a cloud-based Telecom system that has provided for cost reduction and cleared up the kinks in their logistics department, perhaps cloud-based Telecom is worth considering. By educating yourself on all the Telecom options available, you will be able to cherry-pick a plan that best suits the unique needs of your organization.

Compare:
Before waving goodbye to your current supplier, it is important to consider how they might be able to better meet your new cost reduction needs. Since Telecom still depends on some level of infrastructure, staying with the same Telecom provider may reduce costs associated with infrastructural changes that might occur if you switch suppliers. Take care not to jump into a new supplier relationship with taking potential charges like these into account.  

However, if your company’s current supplier is unable to meet your cost reduction needs, going to market might be the more valuable option. With the help of third-party Procurement consultants, design an RFP to achieve side-by-side comparison of the prices, products, and services of potential Telecom providers. Executed well, the RFP process will help you account for expenses like ancillary costs and ensure your customer service needs are met. (There is nothing worse than hearing Vivaldi’s Spring on repeat for an hour while you’re on hold). Determining which company can best meet both your qualitative and quantitative needs through an RFP allows you to find the best supplier for your company.

Commit (?)
After creating a contract that meets the cost reduction needs and expectations of your organization, make sure the contract is pliable. This will ensure you remain satisfied throughout the length of the commitment. If you predict that your company might experience growth within the span of your five year contract, it is important to consider what a mid-contract upgrade might cost. By looking at conditions in-depth and negotiating with your supplier, you may be able to iron out any wrinkles that would get in the way of your business performing as efficiently as possible throughout the length of the contract.

Looking for more cost reduction tips to optimize your Telecom spend? Give the Strategic Sourcing team at Source One a call today.
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Olivia LaRocco

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