What we have learned from large businesses about renegotiating business mobile phone contracts
At Utelize our team has been lucky enough to engage with hundreds of IT, Finance and Procurement decision makers of all size businesses, about their mobile phone contracts and mobile management challenges. For many cost, (or more often than not, large levels of overspending vs. budgets) has been top of the agenda.
However, what we see now is an increasing complex spectrum of issues including increased frustration surrounding poor standards of account management, service from mobile networks, clarity on mobile security and the cost of financing smartphones. What we have learned from these discussions is there are a number of consistent lessons emerging repeatedly when we explore where things had gone wrong in the past.
Here, we highlight eight of the most common pitfalls and outline the actions you can take to ensure that you have the best chance of securing the right mobile contract and services for your business.
Lesson 1: Not starting planning and negotiations early enough
Businesses that leave their market review and negotiations until a few months before the end of their mobile contract typically end up contracting on sub-optimal terms and normally with their existing vendor. The mobile networks know that most businesses with a large estate of mobiles that only start looking at options close to their renewal date is in all likelihood conducting a benchmark and often have little real intention to change, so they use delay tactics and hold back on savings.
Recommended Action: Commence your review at least 6 months before the end of your contract; or 12 months where you have significant systems integration (e.g ordering) or in building coverage signal boosting with the network or where the mobile network provides dedicated mobile administration/help desk resource either on site or within their call centre.
Lesson 2: Failing to review mobile coverage requirements and capabilities of each network, especially at large sites
Procurement teams are often not fully briefed by IT about network coverage, especially where the existing mobile network has installed technology to enhance reception (also known as coverage schemes). Coverage can be a significant issue, especially in larger buildings and so a change of network may leave your business without suitable reception. Too often businesses realise this either late in the procurement process or worse after the new service is contracted. In either case it quickly leads to additional costs and impacts users.
Recommended Action: Review mobile coverage options early and create the time and flexibility to change network if required. A competitor network will be more likely to fund enhanced coverage before contracts are signed as part of winning the deal.
Lesson 3: Allowing “tech funds” to build up unused
“Use to or lose it” rules normally apply to tech funds in mobile contracts. As a result, businesses feel pressurised into resigning with the existing network where there is an unused fund and normally on sub-optimal terms.
Recommended Action: If you think that you’ll end up with a large unused tech fund and you are more than 6 months from the end of your existing contract then consider whether you could negotiate an option to convert the remaining tech fund into a credit against airtime (without resigning terms). Alternatively; your business can always purchase devices using the remaining tech fund and immediately resell these new devices to a mobile trade-in or recycling firm before you start negotiations. (Typically buying Apple devices will generate the maximum return from this action). Your business will lose some of the face value of the fund, however you’ll be clear to then start your market review and significantly improve your long term costs.
Lesson 4: Resigning contracts without engaging with alternative service providers
Most businesses don’t want to go through the challenge of “porting” their numbers to a new network especially where users appear to be happy with the current network. As a result, many businesses simply opt to only negotiate with their existing mobile network and often forego significant savings as a result.
Recommended Action: Consider engaging with mobile network resellers and managed service providers as an alternative route to staying on your existing network. These providers can allow your business to retain your underlying network but do not require you to unlock devices or change your SIM card. This creates less barriers to change, promotes natural pricing competition and may provide your business with different service options and support models that can be better tailored to your business.
Lesson 5: Renewing mobile agreements early to fund major device refresh plans
Many businesses that run out of “tech fund” or don’t have the Capex budget to fund new mobile device purchases often resign existing contracts early on sub optimal terms. Many businesses often do this without first engaging with the market and inadvertently end up tying their businesses into long term excess costs and commitments.
Recommended Actions: Consider funding mobile devices separately to mobile network agreements; this provides total clarity on the real costs of each element and keeps long term costs optimised. Where Capex budgets are limited, consider using mobile device finance and leasing. Whilst this route will clearly have finance costs, in our experience these transparent costs are often materially cheaper than using mobile network agreements to hide device costs in the airtime charges.
Lesson 6: Failing to fully understand business mobile usage profiles and data consumption (UK and roaming)
Many businesses enter into new mobile agreements without fully understanding their mobile usage profiles and current costs or without being able to truly model the impact of proposed tariffs. Businesses that do not have the detail or capability to objectively compare the various supplier proposals side by side, struggle to make a clear decision and commonly end up focused on the headline tariffs. The devil is in the detail with mobile contracts and tariffs and avoiding the detail or trying to create too simple a model will often lead to significant unplanned spending later on.
Recommended Actions: Build a detailed and clear total cost of ownership model (TCO) that includes a detailed analysis of voice and data consumption and breaks down roaming usage by country over a relevant and reasonable period of time (3 – 6 Months minimum). Where tariffs are complex and require the calculation of roaming days and user bolt ons then use a specialist third party to complete independent analysis.
Lesson 7: Failing to estimate the likely impact of changing data consumption (e.g from cloud services and faster networks) over the term of the agreement
Data consumption is increasing rapidly, however many businesses base their procurement decisions on historical usage data. Mobile networks know this and will often offer extremely competitive headline terms to address today’s usage knowing that they will make significantly greater profits in the future as customers exceed their data plans and are forced to upgrade with no negotiation leverage.
Recommended Actions: Ensure mobile tariffs are flexible and remain competitive as usage grows and engage with IT teams to assess the potential impact on cloud services on data consumption.
Lesson 8: Not building in flexibility to adapt to market and business changes
Planning for business change is complex, however many businesses fail to negotiate sufficient flexibility into their mobile contracts. Brexit, migration to cloud services, changing “Bring Your Own Device” adoption rates and Unified Comms are going to have some impact on every business, however these are just a few of the many challenges facing business mobile usage and costs.
Recommended Action: Build in clear flexibility to increase or decrease connections without penalty during the term of your agreement, and to renegotiate terms in the event of significant changes in your business (up or down). Don’t agree to spend commitments that are based on 100% of your projected spend or connections. allow yourself the headroom to manage change.
If you think your business is suffering from a lack of a managed mobile service, and you’d like to learn more about Utelize’s managed mobile services then please get in touch or click here to download our free Best Practice Guides or white papers on mobile management.