Telecom Suppliers are Never in a Hurry
The old adage “Time is money” is directly relevant to the sourcing, procurement and negotiation of enterprise telecommunication agreements. The impact of this time tested truth is magnified when discussions and negotiations involve the current or incumbent suppliers of telecom services. The price direction of the industry has only gone one way for the past 25 years and that is down. Advancements in technology, regulatory changes, competition and the general productivity gains in society have all contributed to the one way march of telecom pricing. Having had responsibility to manage revenue streams for some of the largest telecom carriers, it was my job to put in place processes to mitigate the adversity of industry price declines.
Think about this. What incentive or motivation does the incumbent carrier have to act with haste in reducing the prices for business they already have? This is the same business they have forecast to retain in their budgets and are counting on to meet their performance goals and personal incentives. When deals are renegotiated supplier personnel have a real motivation to delay and above all minimize the revenue impact of customer renewals and contract extensions. Inside the carrier finance organizations, the dreaded process of writing down existing revenue is despised by everyone. As an enterprise buyer, it is important to never forget that if there ever was an immutable law in telecom sourcing it is this: Incumbent suppliers are never in a hurry to write down existing business.
While sympathy for carriers that some enterprises consider “Strategic Business Partners“ and friends appears noble, it can be extremely costly to the enterprise that doesn’t also balance their own need for market leading contracts.
At TelAuthority we understand these process dynamics and know how to maneuver around them and eliminate the inherent waste and cost to the enterprise. We know because we have years of experience navigating the cumbersome, seemingly complex and at times frustrating procedures we ourselves helped create when working on the carrier supply side of the industry. I like to refer to the process as gamesmanship, but saving money is no longer a game. Time spent performing due diligence, soliciting bids, evaluating options, making decisions, negotiating the underlying contracts and terms, is time well spent but time can get away from you if you lose control of the process.
Carriers are mostly to blame for missed savings opportunities, but sometimes there is a large contribution from consultants and advisors that have no incentive for speed of execution. Some telecom consultants and law firms charge fixed fees and hourly fees to negotiate telecom contracts. These hourly fees can be several hundreds of dollars per hour. I have seen enterprises wait months for contracts to be drafted with unbelievable amounts of time being spent haggling over the precise wording of relatively insignificant legal clauses. Customers continue to hear “they are working on it” yet in the meantime consultant fees are racking up and thousands to even millions of dollars of potential savings evaporate as the new carrier pricing only takes effect once a new contract is executed. As long as the clock continues to tick, savings are lost. With the advent of Sarbanes Oxley years ago, the days of getting partial relief in the form of retro-credits are all but over; so the burden is squarely on the enterprise buyer not to become a victim of this dynamic.
TelAuthority believes strongly in incentive and performance based engagements. We share a common goal with our clients, to drive maximum improvement in the shortest period of time, while safeguarding network reliability and contractual flexibility. If the only benefit we brought to our clients was speed of delivery or acceleration of results, TelAuthority would be providing a valuable service. But we bring so much more and we look forward to speaking with you about your specific telecom contracting situation(s) and opportunities for telecom savings.
Written By: Bob Arnold, President, TelAuthority, LLC