Emptoris, Rivermine, and what makes telecoms procurement challenging

We wrote yesterday about the Emptoris acquisition of Rivermine, a leading Telecoms Expense Management (TEM) firm .  Today we’ll look at the Telecoms category and how Rivermine – and indeed other providers – can help organisations in this area.  Jason covered thoroughly here some of the reasons why telecoms is a key area for procurement, so I’ll try and draw on a few personal observations about the category to add to that.

Telecoms is without a doubt one of the toughest categories to manage well.  The complexity does vary by country, depending on how de-regulated markets are, but the growth of wireless / mobile services has led to greater competition and hence opportunities, even in countries where fixed line is still a State monopoly.   And I believe it is fair to say that wherever you are buying the services, the commercial picture is complex, with a great rage of tariff and service offerings.   In addition, demand management is such a big issue in this category, which brings its own issues and opportunities.  (I remember in one of my roles we discovered that the growth in spend was largely down to endemic use of the office phones by the cleaning staff after hours; long chats with friends and family in Australia, India, Nigeria, etc)!

The advent then growth of mobile telephony led to many organisations and procurement teams believing that this was an easier sub-category than traditional telephony, one that would lend itself to a more straightforward ‘leveraged’ procurement approach.  I think I’ve been guilty of that myself, and certainly mobile contracts are often quoted as one of the ‘obvious’ areas where the public sector for instance should  be able to do some great ‘volume deal’ for huge amounts of spend.  But, sticking with that example, you realise that the mobile telephony needs of the police are very different to those of a health worker, which are different again from a senior manager in the Foreign Office.  So different services and tariffs need to be considered, and the optimal solution is not just a single contract with a single supplier.  And then the tariffs change, and what looked good suddenly doesn’t...

So what can a TEM provider do to help organisations manage this area better? Just as a start here’s Rivermine from their website:

“The Rivermine solution manages the full mobile and network-related communications lifecycle, including procurement/ordering, inventory management, auditing, invoice processing, optimization, cost allocation, contract management, asset decommissioning and the analytics associated with all of these activities”.

So given this pretty scary list of potential opportunities, how do you make a start on managing telecoms successfully?  Like most categories, it starts with data.  One of the big advantages of getting advanced capabilities from an expert provider is the ability to get more real-time data, not just a bill looking back at what happened months ago.  By the time you’ve analysed that, the usage and probably tariffs will have moved on again.  Understanding what equipment you have installed / is in use is often another huge challenge.  Then, the ‘soft’ data is also vital; just what do your users really need to do their jobs? (Not what they would like, which is different!)  And the growth of personal devices has led to staff, usually senior, insisting on using their iPads or Kindles for business purposes, adding another layer of complexity to requirements.

And all of this is before we’ve even got into the different potential sourcing approaches, how to tender successfully, use of optimisation or auctions, and so on.  But you need to have a reasonable view of the current situation, and the requirement, before you can even consider the different market options.

I could go on and on...but I’ll finish with some comments about the human side of things.  My experience through the nineties as a CPO was that finding good telecoms category managers was probably THE toughest recruitment challenge (I never liked poaching from previous organisations, but this was one of the few times I did that to get someone really good!)  From recent conversations with CPOs and recruiters, I don’t think that has changed.  And the internal stakeholder challenge is considerable; IT / telecoms technical professionals will often want to keep ownership of decisions here.

So it seems to me that, for the procurement function, making use of external assistance; consulting, software, even outsourcing, is pretty attractive here.  I would still want a very good telecoms category manager, if I can find him / her, but it seems to me that being able to show what procurement can deliver by combining internal and external expertise (in the form of software or services)  gives us the best chance of persuading the CIO or CTO to let procurement play a key role in this category.

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