Your telecom contracts are up for renewal, but how do you decide when to negotiate with your existing carriers or receive RFPs from different ones? Hint: do it with telecom expense management (TEM) professionals.
Much of the boilerplate language in telecom contracts is negotiable. Yet what many companies don’t have is the expertise to understand that the default contract language is 100% to the advantage of the carrier. Here are five items to evaluate before you sign your company’s name on the dotted line.
1. Research Your Contract Options Early
Automatic contract renewals are beneficial to the carrier, not the customer. Many telecom services are bought under a 1–3 year term contract with major carriers. Often these contracts automatically renew upon expiration unless a company notifies their carrier, in writing, 30 or more days before expiration, if auto-renewal is not wanted. Without notification, a contract will renew with the original term, at the same or even an increased rate, meaning your company is stuck with rates that could be up to 3 years old. Start researching your contract options at least six months in advance. As a best practice, begin 12–18 months in advance.
2. Engage Your IT Department
Engage the IT department and those who will actually implement services early when evaluating your contracts. The last thing you want is to have the IT department blind to the goals of the business and its telecom needs. Ideally, each branch of the business — from both a customer and provider perspective — should discuss the best renewal strategy. Often times, IT departments have a long-term technical strategy around telecom and the needs of the business. If they don’t, TEM firms can help.
3. Watch out for the Upsell
Telecom carrier sales staff are highly motivated to sell much greater volumes of services than can or will ever be used by their customers. In fact, at the time of contract renewal, sales staff commonly take that opportunity to “upsell,” claiming that their customer’s need for services has increased, without quantifying what the actual traffic is on that facility or group of facilities.
4. Keep Minimum Revenue Commitments
Carriers are incentivized to have companies commit to the maximum monthly or annual revenue commitment they can attain with the services you are buying. Keep in mind these agreements can be negotiated. TEM firms are up to date on the most recent technology trends and pricing structures. With this knowledge, they’re able to research and document a company’s historical telecom usage to determine any changes expected by the business that are likely to change the traffic volume. A very common finding is that these commitments exceed the historical usage and a smaller commitment is actually called for. TEM firms
TEM firms also are up to date on technology trends and pricing structures
5. Follow Technical Roadmaps
Having a technology roadmap and clear understanding of your company’s telecom and cloud strategy will help your business and IT department with futurecasting. The technology roadmap can be 18-24 months out and needs to be taken into consideration when evaluating a telecom contract. If you sign a contract for 36 months that limits your ability to migrate from one piece of technology to another, you’ll lose money and savings by having to negotiate and adopt new services.
Telecommunications contract management is vital to avoid a host of potential pitfalls and added telecom expenses. With Ruby+Solberg, all of these concerns are eliminated by meticulous and expert services from TEM professionals who can facilitate third-party contract negotiation to ensure all available discounts are received.