Why Finance & Procurement teams are better placed than IT to take the lead in Telecoms Cost Management

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It’s my experience that most large businesses typically look to negotiate better terms with their vendors (normally in return for contract extensions) as their primary method of reducing telecoms cost. Often procurement teams will be tasked to take ownership of such activities and manage the process either via an RFP or tactical negotiations.

Whilst this approach often delivers a satisfactory short-term result, it regularly fails to initially truly challenge whether current services, processes, support, and contracts are really fit for purpose and optimised to the needs of the business and its usage profiles. There is an inherent assumption that if things aren’t obviously broken then a reduced tariff and new contract is all that’s required to bring costs under control, and that more of the same at a lower cost is fine.

Unfortunately, for many businesses this approach means that significant hidden savings, wastage and inefficiencies are being left unchallenged, and more often than not, it also results in the renewal of contracts that can’t easily adapt to future changes in business and technology requirements or from changing usage profiles. For example, over the last year, I have talked to many businesses that found out to their cost, that their mobile contracts simply couldn’t adapt to rapidly changing mobile data usage and roaming profiles created by COVID lockdowns and travel restrictions. A return to mobile working, 5G, and the migration to cloud IT services will continue to drive changing mobile usage profiles over the coming years, and planning ahead for those changes will make a large difference to long-term costs.

I believe that procurement and finance teams can materially increase cost savings by first challenging the status quo, before seeking to engage in negotiations. 

If your RFP basically says ‘here is our current estate and usage profile, please provide commercial terms and service details’ then your business is going to miss out on significant opportunities and risk increasing costs over the term of the agreement.

IT teams are rarely set up to proactively monitor IT costs and telecoms usage or to search for hidden costs and issues. Most are already struggling with limited resources that are already stretched to breaking on IT transformation projects and day-to-day service requests, faults and user issues. Despite good intentions most never find the spare resource or time to truly challenge telecoms costs and usage.

Procurement and finance teams by contrast are better placed to take a more proactive approach, before engaging in negotiations. With the right targeted questions and by looking “inwards” at telecoms usage, processes and behaviors before engaging with vendors, these teams can place their businesses in a much stronger position to deliver long-term sustainable savings and even more suitable contract terms that can adapt to future change.

By taking this approach prior to engaging in vendor negotiations, your business can drive better results in two key ways. 

First, you’ll be able to rapidly identify and drive out your own business wastage and costs, which for many firms will deliver a 10-20% immediate cost saving. This is important because these hidden cost are often pure profit for your suppliers and often remains after new terms are applied.

Secondly, you’ll also be able to negotiate based on your real business needs and usage profiles, which otherwise would be distorted by these issues. This prevents suppliers from seeking to “lock” in this hidden wastage with new spend commitments and provides procurement teams with much greater insight into telecoms needs that will typically help to deliver a further 20% or more in negotiation savings on top of the optimisation savings. For many businesses I’ve supported through this process, the end result has been a 50% reduction in spend on services like mobile.

I can offer a wide range of tools and support services that are specifically designed to assist finance and procurement teams with the end-to-end process of optimising their mobile, fixed-line and UC costs. If you’re interested in learning more, message me directly to arrange a 15-minute discovery call.

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About me

I’m a Founder, Investor & Consultant working with innovative businesses that help IT leaders to adopt and manage next generation networks and mobile technologies. 

Picture of About me

About me

I’m a Founder, Investor & Consultant working with innovative businesses that help IT leaders to adopt and manage next generation networks and mobile technologies.