Negotiations: Upside of a downturn
One of the great advantages of a market downturn is that vendors get hungry - and hungry vendors can provide lower costs and better services, at least for purchasers who are willing to dicker.
Telecommunications service costs represent roughly 30% of the typical company's IT spending, so if you haven't revisited your telecom contract in the past 12 months, now would be a great time. Network managers who are willing to put in the effort can decrease their telco expenditures by 20% or more.
Where to start? The first step is to issue a request for proposal (RFP). I know, I know - for most network managers, the prospect of writing a telecommunications RFP ranks right up there with getting a root canal. But it's the single most important step you can take.
For most large organizations, I usually recommend the "matrix RFP." The concept is to construct a matrix listing all the services your company uses across the top and all the geographic regions in which the services are used down the left-hand side.
Services might include Internet services; local, national and international voice; WAN data ... and don't forget cellular. Geographic regions might include U.S. local, U.S. national, Asia/Pacific, EMEA (Europe, Middle East, and Africa) - you get the idea.Each square in the matrix thus represents a particular type of service in a particular region-for example, EMEA WAN data services.
This matrix then becomes the centerpiece of the RFP. Issue this to as many carriers as possible. Don't limit yourself to the "old faithfuls" - the AT&Ts, SBCs and WorldComs you've been dealing with for years. This is the one time that you return all calls from service providers - even the ones you've never heard of. Tell each they're welcome to bid on as many of the matrix squares as they wish.
Why do all this?
First, collecting all the telecommunications contracts forces you to come nose to nose with exactly how much money your company spends on telco services. A client of mine recently pointed out that his company has 33 separate networks - and that's not counting wireless services.
Second, by listing all the services on a single RFP, you will get more attention from the providers. Particularly these days, a potential $10 million contract is considerably more interesting to carriers than a $1 million one.
Third, thanks to recent mergers and acquisitions, service providers may offer services or operate in regions that they didn't the last time you looked.
Finally, by laying out all the services you consume on a single page, you might get some creative ideas about how to reduce the number of networks and services you require.
What happens next? I'll cover that in my next column.
RELATED LINKS
Johnson is senior vice president and CTO for Greenwich Technology Partners, a network consulting and engineering firm. Her column appears biweekly. She can be reached atjohna@greenwichtech.com.
