Managing telecom spend has always been difficult for enterprises. But as the pace of change in the telecom industry accelerates, the complexities that define telecom cost management grow in lockstep. We recently spoke with telecom sourcing executives from Gap, Inc. and Intuit to find out what’s top of mind for their organizations as 2022 approaches and how they’re working through the challenges and opportunities. Here are some key takeaways:
After 18 months mired in the tactical, companies are getting back to strategic telecom cost management.
Many enterprises had already begun the technology transformations that made remote working possible when the pandemic hit – thankfully. The disruption that began in March 2020 forced telecom sourcing teams to focus on the tactical – things like ensuring quality global connectivity, making sure employees had the right devices and were subscribed to the right plans, renegotiating contracts well in advance of renewal, etc. The focus was largely on activities that enabled the business to keep the lights on and keep cash flowing into the bank.
It ultimately paid off. From a telecom cost perspective, many companies came out of 2020 better than they were pre-pandemic – and more nimble in their support for remote workforces. That’s allowed telecom sourcing teams to return to being strategic, which is a good thing, because they have their work cut out for them. The tech advancements adopted (or more broadly adopted) in 2020 have opened the door to more ambitious objectives like call-center-as-a-service, moving voice more fully to the cloud, and so on.
It’s critical to determine the cost of change amid a rapidly changing ecosystem.
We’ve emerged from the disruption of the last couple of years with a higher tolerance – and appetite – for change. Many companies found they could execute their five-year technical roadmaps in a matter of months. And as new telecom innovations get leveraged more aggressively and quickly than ever, few companies want to go back to the slow days. But it’s important for telecom procurement experts to be a deliberative voice of reason when it comes to evaluating the cost of change.
Telecom sourcing teams have a dual mandate. The first is to enable the business to upgrade technology when it makes sense. The second is to understand, navigate and negotiate the cost of change. What legacy tech and costs will be replaced? What’s the delta? Contractually, how does this play out? What about early termination charges? These questions (among dozens of others) must be considered as companies calibrate the pace of technical change within their organizations and assure alignment with their telecom cost management objectives.
The lines between telecom, software and network are blurrier than ever – and that’s creating new sourcing challenges.
Enterprise communications are just as likely to be powered by Microsoft Teams, Slack (now owned by Salesforce) and Zoom as they are legacy wireless and wireline providers. But who owns those vendor relationships? Is it the telecom sourcing team that has a deep understanding of usage and consumption? Or is it the software sourcing folks who have historically managed the software vendor relationship? Shifts in the provider landscape are forcing companies to reconsider how traditionally siloed categories of expertise can work together. With that comes an opportunity for IT and telecom sourcing teams to collaborate more fully and leverage disparate domains of expertise (and any existing vendor footprints) to rein in telecom costs.
The POTS headache lives on.
There’s no way around it – POTS may be on its way out, but it’s at a sloth’s pace. Maybe slower. This is certainly true for companies with multiple physical locations (think healthcare, retail, etc.). Furthermore, this is still an area where usage and asset visibility is low, which makes it low-hanging fruit for cost optimization based on actual and forecasted usage, decommissioning unused lines, etc. It may not be as exciting as UCaaS or moving voice to the cloud, but the savings can be material.
Companies are looking for nondisruptive ways to reduce telecom costs.
As much as companies are eager to adopt and expand the use of new technologies to meet their telecom needs, they’re also looking for easy and nondisruptive ways to negate or minimize the cost of change. As we discuss in this short piece of research, the two easiest tactics are (1) Carrier Contract Optimization and (2) Subscription and Service Optimization. The first focuses on the optimization of pricing/rates, discounts, credits and business terms. The second ensures the optimal selection of provider/vendor plans and services based on actual and forecasted usage, and the grooming of zero–use lines and services. Savings can be 10 to 30 percent for each tactic. That’s not small change – especially for companies that are looking to fund more ambitious telecom projects!
If you’d like to see the full discussion hosted by Procurement Foundry, you can find a recording here. It’s a fascinating conversation about some of the common (and unique) telecom cost management challenges companies are facing as they deal with a new business and technological reality. If you’d like to learn more about how your peers are tackling these challenges, let us know.