
Over-consolidate
There are a lot of benefits to consolidation: improved supplier relationships, reduced costs, increased efficiency, gained visibility, simplified infrastructure, etc. And while consolidation comes with risks, it also comes with a loss of leverage. As you consolidate and focus on your "preferred" carrier, you are losing touch with alternates and lack the ability to posture or demonstrate a willingness to move services away from your preferred carrier. This is not to say you cannot compete business; you can definitely still do that, but don't expect your preferred carrier to come to the table with as attractive an offer as they would if they were routinely tested against one or preferably a few of their competitors.
Be a Captive Customer
Not to be confused with consolidation, you will compromise leverage as a captive customer by consuming critical services that cannot be easily decoupled from the rest of your infrastructure. Large-scale custom fiber builds to support head ends of an MPLS wide area network (WAN), deeply integrated SIP and Cloud-connected services, carrier provided colo space with restrictive cross connect policies/costs, etc. are all good ways to make sure the carrier knows you're unlikely to go anywhere anytime soon. Similarly, allowing the carriers to spread service/circuit terms across multiple years leaves you in a similar bind. Through service deployments and contractual hooks, the carriers will gain the upper hand and can confidently be more reserved with their renewal proposals.
Renew Near the End of Term
Waiting too long to begin working on a renewal will compound your consolidation and captive customer woes. The best way to enhance your leverage is to leave yourself plenty of time to identify and move services to an alternate if your incumbent won't come to the table. Often, that means planning about two years before renewal and starting sourcing and negotiations about 18 months out. Any longer a deferment will show your incumbent you're not serious about moving and likely can't move within the timeframe you have, so you should expect any offers you receive from them to reflect that.
Don't Mind the Market
The telecom market is notoriously challenging to keep up with. Mergers are happening all the time, new services are being rolled out and rolled up daily, and as technology shifts, so does pricing. Anyone who has worked in the telecom category knows that pricing trends downward. What's more difficult to track, though, is how much pricing has shifted downward, and if a renewal for existing services makes sense or if an upgrade may be possible with an alternate technology while still saving money. These types of questions are not easily answered internally as being tuned into the market over the entire course of a 3 year agreement is impossible while keeping the lights on and all the plates spinning.
It takes a lot of time to plan for and manage these facets of your telecom spend. Even with the best laid plans can be easily sent off track by carrier tactics, operational imperatives, and other priorities and distractions. For help developing and managing a long-term telecom category approach, contact Source One.
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