Your Trail Guide to Telecom Contracts - Part Three
Gaining Critical FLEXIBILITY for Your Business
Part Three: Gaining Critical FLEXIBILITY for Your Business
About This Blog Series:
Business telecom vendors want to protect their own interests and get you to follow a pre-determined trail in the rigid map of their standard contract. That’s a pretty big problem when your business needs to pioneer, explore, and grow.
If you can form a negotiation strategy that addresses three criteria: Fit, Flexibility, and Freedom, you’ll be able to avoid getting trapped in an unfavorable agreement and instead get a flexible and fair contract that protects you as the maker of your own map for your business.
Here’s the One Thing You Can’t Afford to Miss
This is it. This is the big one that companies miss consistently and often to great detriment. You need the flexibility to re-draw the trail map of your business telecom contract.
As we mentioned in part one of this series, telecom vendors want to position themselves as helpful guides who promise you freedom, opportunity, and limitless possibilities for your business through the voice, data, and internet services they provide. However, what they’re really wanting to give you is a highly-structured and pre-planned journey like a Mediterranean cruise or a guided tour of the Grand Canyon. They want to control the agenda, cost, and details of the time you spend together.
What your business needs instead is the freedom of the open road. You need the great American road trip or a backpacking adventure through Europe. You need the freedom to respond to the world around you, because that world is changing fast.
Flexibility Has Never Been More Important
Flexibility is everything in the ongoing governance of your business telecom contract because that standard three-year term you’re asked to agree to is an eternity in terms of change in the worlds of business and technology.
If you’re tracking technology news, you know that the next three years in business telecom are about to see far more than the norm. The world is about to see revolutionary change through 5G technology, the kind that alters a generation’s view of what’s possible.
We’re talking self-driving cars now, so anything you may be trying to track that you think is cutting edge, like the Internet of Things, is going to look unrecognizable in a few years, both in its capabilities and its necessity for remaining competitive.
Why Do Negotiations Fall Short on Flexibility?
In part one of this series, we mentioned that a lack of strategy is the number-one root cause of problems we see businesses struggle with when dealing with telecom vendors.
It’s not that flexibility suffers from a lack of concern when business telecom contracts are being negotiated, it’s that it suffers from a lack of strategy. More specifically, it suffers by not being part of a larger strategy of gaining Fit, Flexibility, and Freedom in a contract.
It’s hard enough to gather requirements and consensus around what the contract needs to cover. It takes time to project what future needs will be. By the time all of the work is done around finding the right fit for a company’s contract, there’s often little time left to consider clauses that affect flexibility in ongoing governance. What happens more often is that issues of flexibility are addressed piecemeal if and when they are recognized.
What’s needed instead is intentionality and conversation around this one, critical issue. Flexibility is one big area where Serviam has been able to make a difference. A sales rep is unlikely to expand your thinking on what’s flexible in a contract, and brokers don’t understand the internal thinking of a telecom vendor. However, Serviam’s deep experience in Fortune 500 telecom leadership allows them to see the “World of the Possible” when it comes to contracts. In short, there’s always more flexibility on the vendor’s side than they want to offer up front.
Tactics for Gaining Flexibility in Your Telecom Contract
Below are just a couple of examples of business telecom contract clauses that might be examined or added during negotiations as part of a larger strategy.
Example #1 – In Telecom, Competitive Review is Not Just About Price.
You’re probably familiar with a Competitive Review clause as part of a business contract. It gives your company the chance to re-open the contract mid-term and make certain adjustments. Given that the vendor’s modus operandi is to keep you locked in tight for 3 years, it shouldn’t be surprising to business telecom clients that the clause is rarely, if ever, included in a standard contract.
What’s also surprising is how much impact this clause can have. The opportunities for change in a telecom contract aren’t always limited to minor details. Because of massive competition between the vendors and rapid change in technology, there can be game-changing drops on your critical services like fiber internet and metro ethernet. What was a good deal and a good fit for your company can easily become a detrimental one by year two of your contract.
More importantly, the changes that need to be addressed are not just about pricing.
A common mistake made by decision makers is to assume a review is squarely about cost savings. What’s equally important if not more so is that often, a year or two down the line, much more value can be gained at the same rates. Suddenly, far more bandwidth, storage space, or circuits may be available at the same price. As your company grows, discoveries that provide new resources without impact on overhead can be more valuable than lowering the overall bill.
Unfortunately, what often happens, even if the clause is in place, is that a business misses out on the opportunity to have a review. They simply run out of bandwidth to track the opportunity or the time to prepare for it. They may also lack the knowledge of what’s happening elsewhere in the telecom industry and what might be possible. That’s another area where Serviam’s model of Telecom and IT Vendor Management is helping clients get the most from their contracts. They track critical milestones like competitive reviews and make sure clients are well-prepared and informed on what should be addressed.
Example #2 – Where is Your “Travel Insurance” for Significant Business Changes?
There’s not a single business that doesn’t need more flexibility from its three-year business telecom contract, so you might ask why business telecom contracts don’t embrace this fact to meet customer demand. It’s certainly happening on the consumer side. Contracts and commitments are disappearing if not extinct for mobile phone services.
Telecom vendors simply don’t think that way on the business telecom side. They’re driven to achieve specific, aggressive goals that are met by much fewer, much larger clients than the consumer division, and they don’t have the inherent flexibility to support you that way. Their pricing models aren’t written to be flexible, and their contracts certainly aren’t.
In truth, the telecom vendors have written their own form of “travel insurance” into their standard business telecom contract, and your business deserves to have its own journey “insured” for the inevitable changes that lie ahead.
The Significant Business Changes clause is your travel insurance for the journey forward. It covers major events that occur mid-contract which could cause you an unreasonable financial loss because of the commitments of your existing agreement.
It can cover external changes.
What if there is a global, economic downturn?
What if new, vital tech has come along that needs to replace your existing tech?
It can cover internal changes.
What if you close several locations?
What if you open several new ones?
What if you sell off part of the business?
It can cover changes more unique to telecom.
What if you need more bandwidth?
What if you decide to fundamentally change your infrastructure and move to the cloud?
What if new concerns or regulations emerge about data security?
And it can cover potential changes that are unique to YOUR business.
What are they? Here’s where some intentionality helps. One conversation about the unique situations your company might face could help you save tens if not hundreds of thousands of dollars in excess spending or revenue lost from an inefficient infrastructure that’s frozen in place for years.
Flexibility is Achievable.
Those are just two examples of how you can create flexibility in your contract. There are many more options and possibilities. It’s simply takes intentionality and strategy to make it possible. With the right guidance, you can humanize a standardized, corporate telecom contract and give it the flexibility to ensure that the game will be played fairly between you and your voice, data, internet and cloud providers for the next three years. It’s reasonable, achievable, and vital.
Next in Part Four
As we close out our Trail Guide to Telecom Contracts, we’ll be addressing the issue of protecting your FREEDOM on the back end of the contract. We’ll look at the ways business telecom contracts are engineered to push you towards renewal, how punitive they can be if you don’t, and how to avoid those penalties and preserve your ability to choose the provider that’s best for you.
How Can We Serve You?
If you'd like help reviewing your telecom contracts and infrastructure for improvements in rates, contract terms, and tech, you can contact us here.
Once a contract is signed, we continue to guide clients and actively manage their vendor relationships. You can discover a long-term partner who becomes an extension of your existing IT teams, allowing your company to focus on its core competencies.
Our availability to take on new clients is limited, but we'd love to hear from you to see if we can be of service. Learn more about Serviam and its unique approach to serving business telecom clients at www.serviamco.com.
The telecom industry expects you to find your own way
through a complex landscape of vendors, options, and risks.
We guide you through those risks
to the right voice, data, and internet solutions
for your business.
Then, we serve as your partner,
managing those solutions
So you can focus on the trail ahead.