Companies of all sizes have specific enterprise telecom service and equipment requirements as part of their business operations. The requirements generally include:

  • Voice
  • Data
  • Internet
  • Video  

Several recent trends in telecom and information technology ("IT") contracting practices could impact your bottom line. These trends are:

  • Efforts by vendors to migrate customers to mobile broadband applications for business telecommunications needs;
  • Increased costs for access to mobile broadband services;
  • Resistance to flexibility in negotiating services and prices; and
  • Insistence on high minimum service purchase requirements and corresponding high penalties for failure to satisfy such requirements.  

Given the importance of telecom and IT services to business operations, it is critical that companies understand how these trends will affect contract negotiations and that they know what tools they possess to get the desired services at the best prices. Failure to properly negotiate a contract could be costly. Industry experts estimate that properly drafted contracts could save up to 20 percent in your telecom/IT spend.

Here are some tips for addressing these trends and optimizing the value of your telecom/IT contracts:

  • Recognize that telecom contracts typically are complex and require specialized knowledge about certain industry-related issues to ensure that your needs are met.
  • Assemble experienced internal and external teams to manage the contract negotiation.
  • Develop an internal plan of negotiating your next contract.
  • Know your current and anticipated future usage and spend levels.
  • Identify future changes in your business that could impact what you want in the contract.
  • Use the RFP process to define what you want from the vendor. Detail expectations about such critical contract issues as pricing, scope of service, technology upgrades, service level obligations, billing dispute resolution mechanisms, and provisions for re-negotiating prices and services offered.
  • Implement ongoing monitoring of your activities under the contract. Such monitoring is especially important to ensure that minimum purchase obligations are met to avoid costly penalties.