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Ten New Year Resolutions for the Enterprise
The New Year offers a chance to work on curing bad habits and to develop some good ones to replace them. In that spirit, here is a list of resolutions that can help enterprise IT/telecom customers have a happier, more prosperous 2012:
Get on the right side of the 80-20 equation
A lawyer for a large carrier once told me that the reason his company's contracts were so one-sided and customer-unfriendly is that 80% of the time, customers would sign them without making a single change. With odds like that, the vendor had no incentive to be reasonable until the customer squawked.
Make 2012 the year that you join the 20%. Sure, negotiating terms and conditions up front takes time and resources--but it also produces a fairer allocation of risk, and reduces your exposure while maximizing flexibility. That increases long-term leverage and ensures that you will be able to take advantage of new money-saving and business-enhancing technologies.
Scrutinize Your TEM Relationship
TEM agreements don't get the scrutiny they deserve. That can cause several problems, including delayed implementations, missed billing errors, poor performance, and inflated fees. Customers who assume that their TEM is managing the store and catching all of the billing errors may be in for a disappointing surprise.
And if you're in the middle of negotiating a TEM agreement, note that some TEMs are trying to push key terms and conditions--including crucial implementation-related documents--into attachments that they are willing to provide only after contract execution. Don't let them do that.
Though wireless now accounts for 30-50% of enterprise telecom spend, many companies continue to be reluctant to confront important wireless issues or devote resources to managing their wireless agreements.
Wireless is a different animal, and it raises a host of contract and internal policy issues. Some customers still have not taken the plunge and moved to pooling; or made sure that wireless spend contributes to satisfaction of their commitment(s); or drafted and circulated wireless policies; or committed to a quarterly wireless plan optimization (cheap; requires no change in contracts or devices; saves a ton of money). Make 2012 the year that you tackle these and other issues specific to mobile services.
Start Planning for Your Next Procurement Now
A few weeks ago a large user that should know better contacted us about helping with a telecom RFP. But there was no way to draft a decent RFP, evaluate bids, negotiate agreements and transition the network (if required) within the time left on its contracts. The company can probably get a short term extension, but it won't have improved pricing or terms, and at the very least it wasted a key opportunity.
Don't let this happen to you. It's easy to calculate when to start planning for your next procurement--one year before your current contract is set to expire.
Learn about the Cloud
Start learning about cloud computing even if you have no immediate plans to go there, because you will be negotiating a cloud deal sooner than you think. First, the providers are pushing cloud services hard. Second, customers are finding that in some (though not all) cases, cloud computing makes sense.
Despite the hype about the simplicity and scalability of cloud services, buying them can be complex. Service providers, who don't quite know how to sell these services, are struggling to develop models for delivering them. Some service providers are trying to sell cloud services on price alone, not realizing that there's much more at stake. As a result, contract documents are incomplete and/or inadequate, especially regarding critical provisions such as service descriptions, SLAs, indemnifications, warranties, regulatory compliance and IP protection.
Lend Your Voice to Oppose Carrier Overreaching and Inflated Surcharges
Verizon Wireless recently tried to impose a $2 "convenience fee" for customers making one-time payments. The carrier quickly recanted "in response," in VZW's words, "to customer feedback." Translation: Outraged customers raised hell.
The lesson is clear: When customers make their voices heard (which, unfortunately, does not happen nearly as often as it should), they can get results. At a time when Universal Service surcharges are approaching 20%, enterprise customers must voice their concerns about surcharges to carrier and regulators. The Ad Hoc Telecommunications Users Committee is a good place to start. Consider joining.
Communicate with your Carrier.
No, communicating doesn't mean more golf outings with your account exec. It means developing a better working relationship with your carrier.
When was the last time that you met with your vendor to review billing disputes, account team support, and trouble tickets? Vendors like to talk about selling you new services, but not fixing problems with the old ones. It's up to you to press them.
Avoid the Bad Pricing and Terms that Come with Rush Orders
How often does your primary carrier give you an amendment or new pricing schedule that someone in your organization says has to be executed yesterday, even though the pricing is awful and the documents are filled with boilerplate that you redlined when you negotiated the master agreement 18 months ago?
To eliminate rush projects, train both your people and the carrier account team to communicate in advance about planned projects--regular meetings that look 90 or 180 days ahead are a good way to do this. If you find yourself repeatedly confronting the same issues (e.g. change orders or SOWs to deploy services to additional sites), don't reinvent the wheel. Instead, develop agreed forms using language you have already negotiated.
Start a Relationship with a Second Vendor.
If you are in a sole-source (or virtually sole-source) relationship, give some of your business to another vendor. You'll probably save money; your primary carrier will become a lot more responsive; and you'll have a ready source of competitive pricing information.
Read your Contract.
Do you know what your contract says, and are you getting the most out of it? Do you know what the pitfalls are--two carrier favorites are short cut-offs for disputing bills, and early termination fees that kick in if you discontinue any circuit, even if you are meeting your revenue commitment. Is the carrier giving you timely and accurate reports? Is the carrier "playing well" with your TEMs and other third party vendors? Are you taking advantage of rate reviews, optimizations and similar provisions?
A surprising number of customers fail to do these and other basic contract stewardship tasks. Those who do will get better results and more respect from their vendors.
Justin G. Castillo is a partner in the firm of Levine, Blaszak, Block & Boothby, LLP ("LB3"), where he negotiates agreements for telecommunications and technology-related products and services. He also represents customers in disputes with carriers.