If you’ve read any of our articles on telecoms procurement, then you’ll know that we’re a long term advocate of building in flexibility to mobile contracts.
Contracts that include ‘Tech Funds’ or other upfront incentives, always come with a minimum spend, minimum connection volumes and other commercial commitments; as they are the only ways that the networks can guarantee the revenue and RoI on their upfront incentives and investments.
Those incentives and commitments can sometimes work effectively to secure better pricing and tariffs, but only when there is little or no change over the term of the agreement. And that requires the ability for procurement teams to predict the future!
As soon as business mobile usage profiles or requirements change significantly, then these commitments serve only to increase or at best ‘lock-in’ unnecessary costs. I’ve never come across a large business whose actual spend aligned with their minimum spend commitment over a 24 month agreement. Most overspend those commitments by a considerable margin, which results in bigger profits for the network and lower savings than expected for the business.
Over the last few months we’ve helped a number IT leaders to review their mobile contracts and renewal proposals; and to discuss how they can reduce and better manage mobile costs going forward, especially in light of Covid-19.
In many cases, on review there wasn’t anything particularly wrong or poor about the pricing that their procurement teams had previously negotiated or indeed were about to sign up to, it was simply that their contracts had never previously considered the impact of major changes and their new contracts didn’t have the flexibility or mechanisms to enable the business to adapt to further change
For some they were tied into paying for large roaming data allowances that were no longer needed (but could not be removed); for others large scale changes in data usage and importantly usage profiles at a user level were creating large excess costs; and for a few the rapid migration to using mobile instead of fixed line telephony, meant that their mobile voice usage costs had ballooned.
In these cases, the businesses all had one thing in common: they had negotiated the price of their mobile tariffs and modelled savings and made decisions based on a snap shot of usage and connections.
And when requirements changed significantly they were left with excess costs and little room to adapt; and the result was locked in costs and wastage.
Negotiating a great airtime tariff and generating headline savings with a mobile network is clearly an important objective for mobile contract renewals and market reviews, however it’s only the start.
The only way to actually deliver those on-paper savings is to ensure that you have a flexible and well-constructed mobile contract, that will allow you to adapt to future changes in usage profiles, connection volumes and technology.
Most businesses fail to make such provisions, and many also have no robust processes for checking that their new tariffs are accurately implemented and billed.
Furthermore, few have the tools or the trained resources to keep their contracts and costs optimised over the term of their agreement, and so, most businesses never end up seeing their projected savings.
If you’re interested in negotiating the right mobile deal that will keep your airtime costs optimised on an ongoing basis, then get in touch by emailing us directly at: [email protected] or calling us on 03300 240 444