Special thanks to Source One Management Services for this guest post.
One of the biggest decisions for a business revolves around their telecom services contract renewal. There are countless questions to be asked such as: Should I upgrade my services? What are my options? When does my contract expire? How much will this cost? Will there be any savings? And, while these all provide a great foundation, these are only the tip of the iceberg when it comes to starting the contract renewal process.
Telecom services make up three to six percent of a company’s gross revenue. And understandably, this can create a lot of pressure on the business to get the best pricing available in the market. As a result, a simple phone bill has become a complex, ever-changing maze of costs.
Here are 10 tips to make sure you are well prepared:
1. Start contract renewal 12 – 18 months in advance. Starting the process this far in advance gives you plenty of leverage against your current provider when it comes to negotiations. You will have enough time to run a full RFP as well as anticipate any changes or new implementations that need to occur after benchmarking your services.
2. Consider phasing in changes if significant impacts are identified. It is important to understand what services you currently have as well as what other options are out there. Most carriers want their customers to upgrade to a newer technology so they no longer have to manage old legacy services therefore will offer better pricing if a customer is willing to upgrade.
3. Conduct an RFP. The best way to gain leverage over your incumbent is to know what other vendors are offering for the same services. This will give you the ability to compare all vendors side by side and get a better view of the current market pricing.
4. Contract review. You should never accept a vendor’s contract as is. You should carefully review all terms and conditions and request amendments to make the contract fair for both parties. Also, focus on the more difficult terms and conditions, such as entitlements, end of term merger/acquisition/divestiture events, and pricing.
5. Service level agreements (SLAs). SLAs are important to include in any contract to cover the performance of the vendor and its product or service. Many times companies dispute with their suppliers over the standards they believe they should be receiving in regards to their services. In order to prevent this it is important for it to be clarified within the contract and agreed to by both parties.
6. Negotiating the contract. Always negotiate for the current contract term and the next one. Although vendors may not lock every item down for two terms, many will allow some concessions to be carried forward to the next term.
7. Finalizing the contract. Determine the profitability of the contract, and know when to push and when to back off on pricing issues.
8. Implementation. Review implementation together with all involved stakeholders before any services are delivered to be prepared for any problems that may arise. Also, you should review all integration responsibilities during the initial phase of development so all parties understand their part.
9. Contract management. It is important to tell your vendor your expectations regarding the qualifications of your account team. You should meet regularly to ensure proper communication continues and the right people are involved.
10. Stay prepared. Even though the deal may be complete you must stay prepared. Do this by drafting a “cheat sheet” with key dates, rates and terms that easily available at all times in case of emergency. Also, this will guarantee you are ready for when your contract is up for renewal again.
Ultimately the best contracts are those that meet your company’s needs. And, the best way to achieve a contract that meets your company’s needs begins by understanding your requirements. Before kicking off the contract renewal process, be sure to assess the current state of your wireless services and plan for the future. This is best done when procurement and IT department stakeholders come to the table together and align on what investments will work best for the company as a whole. Aligning internal stakeholders to establish your requirements sets your firm up for entering the contract renewal process by knowing what terms are needed in the contract from the start. This guidance will help simplify the process and ensure an effective telecom investment.