The Negotiation Process
Once you have determined your service needs, take a hard look at your current contract. As Steve Williams, President of McBeth Williams, a vendor-neutral telecommunications consulting firm that focuses on Fortune 1000 companies, puts it, “Don’t wait until just before the renewal date to do your negotiating. You are in a much better position reviewing it year to year, or even month to month if you are a very large company. If your company has exceeded your MARC (minimal annual revenue commitment), you are in an excellent position to negotiate with either your current carrier or a competitor.”
“The contract always started with the idea that you will have a good relationship with your carrier. Unfortunately, that rarely happens, so you need to use metrics like SLAs (service level agreements) and MARCs to renegotiate quarterly or month to month,” cautions Pete McBeth, McBeth Williams’ Director of Business and Telecommunications Strategy.
Here are some important tips when planning for and negotiating your services contracts:
- Review all of your invoices and contracts for the past year. Look for your patterns of usage. Nowadays, many providers are happy to create packages to suit your exact requirements. “It is not uncommon for our clients to save 15-20% off their old contracts just by changing the terms to better match their usage patterns,” says Vincent Gisone at Comtel Group, Inc., a telecom consulting company that services mid-market companies.
- Avoid committing to locked-in rates and services. If the carrier insists on a multiyear contract, be sure to stipulate a review of the terms at least once a year so that your company continues to receive market-competitive rates and service.
- Prepare a RFP (request for proposal) that specifies the services you need so that your existing carrier and others can make informed and comparable bids.
- Make sure that you carefully define your required SLAs. Your provider will need to commit to responding to service calls within a certain period of time and give credits for service outages lasting beyond the specified period. Rates are understandably important, but when your phones or data services are not working, you want prompt resolution of your problems.
Because the market is highly competitive, companies do not have to be huge consumers of telecom services to get good rates and services. Still, you’re going to get the best deal if you are able to negotiate with the carrier directly. While that’s great if you are a large Fortune 1000, life is a bit tougher for mid-sized businesses.
Carriers are spinning off their mid-market segment to VARs (value-added resellers), so that the carriers can be more selective about their customers. That hurts the ability of small and mid-sized business (SMB) customers to push for the best deals, but with the industry still reeling from the past few years, bargains are still available.
In the end, despite all the hype, there is often little or no difference in network quality between the providers. However, there can be huge differences in the service quality, price, and available features. By being careful and matching your requirements to your providers’ products, coupled with some sharp negotiations, you can realize substantial savings plus better service, making both you and your management happy.
It’s also important to prevent leaving your company vulnerable by purchasing services from only one provider. Advance planning for alternative service in case of a connectivity disaster helps ensure business continuity, which will make you look even better in the eyes of management. What could be better than that?
Beth Cohen is president of Luth Computer Specialists, Inc., a consulting practice specializing in IT infrastructure for smaller companies. She has been in the trenches supporting company IT infrastructure for over 20 years in a number of different fields including architecture, construction, engineering, software, telecommunications, and research. She is currently consulting, teaching college IT courses, and writing books about IT for the small enterprise and wireless network security.