Spend Matters welcomes another guest post from NPI, a spend management consultancy, focused on eliminating overspending on IT, telecom and shipping.
Telecom carriers are quickly evolving to become all-in-one information technology service providers, offering a combination of enterprise IT solutions in addition to traditional wireline and wireless network offerings. Today, most carriers, including market leaders like Verizon and AT&T, now have offerings for data center, cloud computing, and managed network and security. This begs the question: should companies pursue a single vendor strategy for both network and IT services? What are the risks?
There are several cost, contractual and service-oriented risks involved with employing a single-carrier strategy for a broad spectrum of telecom services. For some businesses, the risks are outweighed by easier cost, service and vendor management. For others, the risk of a single point of failure (service-wise or other) is too great.
There are no hard and fast rules to choosing a strategy. Each company’s telecom usage profile and infrastructure demands are unique. A complete evaluation of the enterprise network environment and usage demands, as well as a cost-benefit analysis and risk assessment, are essential to determining the best path for the business.
Here are a few additional suggestions to help you decide which type of vendor strategy is best for you, and how to keep costs in check:
- Single-vendor is efficient, and allows you to leverage volume. But …. What if your all-in-one carrier fails to meet its SLA or enacts unreasonable cost increases? What if they get acquired? These are just a few reasons why many large businesses opt for a multi-vendor environment where the cost and service risks are ultimately lower. On the flip side, there are costs associated with sourcing and managing multiple vendors across the telecom footprint, which can be hard to justify some organizations.
- Limit revenue commitments. Never commit more than 70 percent of your total telecom spend to a single carrier.
- No matter your strategy, bid it out. Single carrier or multi-vendor, every provider in your telecom ecosystem should be under pressure to maintain competitive pricing, discounts, terms and conditions. Bid out incremental services to gain negotiation leverage.
- Validate vendor-initiated savings strategies. All-in-one carriers are well trained to extract more revenue through complex ROI claims and justification. Before you sign up for new services, validate claims through price and contractual benchmarking.
- Matt West, Director of Telecom Services, NPI