In this blog we discuss the miscalculations and unpredictable extras involved in telecoms purchases.
Finance teams often need to display a wide range of skills in order to secure the best deals for their organisations – negotiation skills, persistence, logic, and to a degree, knowledge of the products they are purchasing.
Weighing up the pros and cons of a strategic purchase and comparing the offering with similar competitor deals can be difficult, in particular when each solution may not be ‘like for like’.
Hidden costs, optional extras, upsells and cross sells are all common pitfalls and by the time the solution has been installed your spend may have spiralled way beyond the original budget. Often a deal that may appear to be great value initially is really not in the long term.
Let’s take a look at three examples alongside useful advice:
1. Mobile roaming charges, a blank cheque
Do you think that your current network offers the best roaming rates in the countries that your teams regularly visit? Each network has specific “sweet spots” in specific countries where they are the most cost effective. Review your existing usage profile and negotiate with your network to find out about extra discounts that may be available.
If your staff visit certain countries on a regular basis, it may be an idea to source local SIM cards - this is often the most cost-effective solution.
A large amount of hidden and unpredictable mobile costs come from data roaming because users are just not aware of the pricing or the potential measures to reduce costs. For example, do your staff know?:
- That the most effective way to control data usage while abroad is to log onto Wi-Fi wherever possible
- If they wish to only use cellular data in an emergency situation it may be worthwhile to switch roaming off and only turn it back on when needed
- To turn off automatic updates for apps. Check all apps are switched off, there are options for both iPhones and for Androids
- To compress data usage on iPhones and Androids with Onavo
- To track data usage click here for iPhones or here for Androids
According to computerweekly.com many companies have been paying for their mobile technology at divisional levels, but are now negotiating requirements at a central management level. This means they can now see the full cost to the business with a rationalised company-wide approach and fewer unwelcome surprises for finance teams.
2. Fixed voice deals with broken costs
Fixed voice telephony is the norm; everybody expects to see a phone on their desk. Yet making a fixed voice telephony infrastructure work effectively can be expensive, and again incur hidden costs.
According to Vodafone’s research report, ‘Working smarter to succeed’, nearly a third (29%) of SMEs wants to reduce fixed costs on telecoms equipment, whilst nearly a fifth (18%) will outsource support services such as phone systems to reduce overheads in the future.
Consider the following:
- The time it takes to install a new telephony solution and the change management required
- The time it takes to manage this solution on an ongoing basis, as well as any downtime from disruption
- New hardware costs as well as the costs of disposing legacy equipment
- Energy consumption variations
- Merging fixed telephony and mobile communications – fixed mobile convergence is increasingly popular within SMEs
3. Networks, a dark and costly art
According to Alexander Budzier, author of the Black Swan Management report, 15% of IT and infrastructure projects spin out of control. And a report by the University of Oxford’s Said Business School states that the average cost overrun for IT projects is 27%.
According to computerweekly.com 39% of SMEs are worried about vulnerabilities associated with the use of technology. In addition, almost two-fifths cite the failure of local network systems as one of the three biggest technological risks to their business.
Network deals are often a challenge to decipher and compare. Every organisation’s requirements are different and complex, so what is the best way of managing this?
- Work with a project management team (internal, external or both) to screen project proposals and create transparency. Cost overruns have been known to reduce when managed in this way and you could even under spend by 30%, according to Budzier.
- Brainstorm unpredictable worse case scenarios rather than focusing on the average performance of previous projects. Major IT projects are 20 times more likely to fail than other business initiatives, mainly due to unforeseen issues taking place.
- Stick to the original scope: Robert Morgan, director at sourcing broker Burnt-Oak Partners, says almost all IT projects experience changes in scope. "This is what causes projects to fail. To prevent this you need good project management that will say no to changes unless a business case is given."
In conclusion, the overriding advice from this blog post is to work as a team with either external or internal stakeholders to ensure all your bases and possible scenarios are covered. Knowledge is key and the greater involvement you are able to engage in with relevant teams from around the business, the better. Work out how equipment is being used now, and how it could be used more effectively in the future. Dig a little deeper into bids, proposals and contracts and work out if you are really getting value for money, including the longer term management, support, energy and even disposal costs. This way you can avoid the hidden extras and work towards closer budget and spend alignment.