* Your goals and those of your service provider don't overlap when renegotiating contracts
Last time, we discussed a couple of ways that IT organizations can reduce their recurring WAN costs. Today, we’ll focus on renegotiating contracts with WAN service providers.
Many IT organizations currently have a three-year contract with their WAN provider(s), and there is less than a year to run on one-third of these contracts. This is definitely the time to begin to renegotiate these contracts, and possibly some of the contracts that are not quite as close to expiring.
There may well be service issues that need to be included in the renegotiations. This includes reducing the excessive lead times for installing a new service, providing more useful information online relative to service quality and reducing the billing errors. However, the primary focus of the renegotiations has to be reducing WAN costs.
During the negotiations, your organization has two primary goals: to improve the quality of the service that you get and to lower the costs. The service provider also has two primary goals: to keep your company as a customer and to get as much money from you as possible. It should not come as a surprise that there is absolutely no overlap in the goals of your organization and that of the service provider.
In virtually all cases, the service provider has a much better idea of how WAN prices have been changing than does the typical IT organization. This puts the service provider at a distinct advantage. To counter that, we recommend that before beginning negotiations with their WAN service providers IT organizations consider hiring a firm that can identify what WAN pricing similar organizations have been receiving over the preceding months. The firm can also identify if IT organizations are receiving signing bonuses if they move from one WAN service provider to another, or analogously, if IT organizations are receiving loyalty bonuses for not switching WAN service providers. One such firm is Economics and Technology.
Next time, we’ll continue our look at ways to cut WAN costs. In the meantime, we would like to hear from you. What type of IT initiatives will be getting the most attention inside of your organization in 2009?
