An “Eyes Wide Open” approach to performing a Telecom Benchmark

So you’ve done your homework, spoken to senior management and confirmed that it is, indeed, time for performing a telecoms benchmark! Where do you start?

You would expect a typical benchmarking exercise to last at least a few weeks, however it is more than likely it will take a few months to complete, so it may be prudent to divide the project into the key focus areas to ensure that your goals are manageable.

Once you have analysed your contract, your technology and your company’s value, you should have a comprehensive overview of your company’s limitations, requirements and expectations.

The first thing to do is to establish your inputs. Your inputs form the foundation upon which your benchmark will be built. These are the key factors that need to be considered before you begin the pricing stages, to avoid inaccurate projections and unrealistic expectations.

Key inputs can generally be divided into three main groups: your contract – current technology leveraged today, existing network footprint and your company’s valued areas such as SLAs and strategic vs. niche vendor partnerships. To give you an idea of how to develop and layout your inputs, we’ve put together a template to make it easier for you to identify your key input goals and get going with the task at hand.

The best thing about investing time developing the key inputs is that these become the foundations upon which to build your benchmark weighting scale formula of the overall benchmark results. Therefore, once your benchmark is underway, keep referring back to your inputs to make sure that you are staying on track.

Sounds complicated? Well, in reality it’s quite simple and here’s our suggestion on how to do it.

Contracts – Identify all the key contractual elements that need to be factored into your benchmark.

Goals:

• Work out where you are in your contract (for instance, are you in year one or three?) Make a note of the total contract length and the number of months remaining. Generally speaking, the more mature your contract, the better chance you have at renegotiating a new deal.
• Find out whether or not you have a spend commit on your contract, and whether you are meeting this commitment.
• Establish whether you have any established pricing tiers – it is worth creating a detailed report on these to help you identify any areas where you may be able to make savings or add value.
• Find out whether you are receiving any credits or rebates (including expected rebates and loyalty credits).
• Identify any existing benchmark clauses in your contract.
• Look back over the last 12 – 18 months to assess how much net new business has been awarded as well as how much “write down” savings have been offered

Technology – Don’t walk into your benchmark with blinkers on.

Goals:

A) Technology Life-Cycle

Understanding where your organization is, from a product life cycle perspective is important. We’re not just talking about the carrier services but the complete picture including hardware assets. If your network runs on legacy technology and the assets are end of life, it’s probably about time to understand what’s new in the market place and factor that technology cost into your overall benchmark, in order to obtain a complete picture of today’s cost vs. tomorrow’s cost. It may be that migrating to new technology not only saves money but also increases the performance of the overall network.

Perhaps you have recently migrated services to a new technology and its taken 18-24 months to complete the migration. This is the perfect time to benchmark in order to understand how the market rates have shifted.

B) Understand your current network landscape

Calculate the level of network coverage you currently receive from your supplier. Break this down by region or country (if applicable) for added accuracy. Work out what your current liability is in terms of on-network and off-network coverage. It may be worth working out a ratio of on-net v’s off-net coverage over a set period of time so that you can work out whether or not you should be prioritising this area in your negotiations.

 Negotiation Tip: Find out where there is significant overlay between your network and the suppliers network in scope for the benchmark – where their network coverage is dense, your service is likely to be better and more competitive. If there is only a small overlay, you may have to go to a third party, which could prove expensive.

Your Company’s Value – Now that you’ve established your supplier’s value for your network, you will need to work out your value to them. Needless to say, the larger your footprint, the better your negotiating power will be.

Goals:

Understand your footprint as it relates to your supplier network. Identify another provider with a similar footprint to your needs, as you should in theory be getting the same (or better) prices as them.

Look back historically at your spend year on year to understand how much business you’ve done across your suppliers. Look for trends that show how your revenue has grown or decreased. Assess your performance in terms of network stability as well as delivery and the ability to send a correct invoice!   Understanding this is important for negotiation purposes.

Benchmark

Once you have analysed your contract, your technology and your company’s value, you should have a comprehensive overview of your company’s limitations, requirements and expectations. Leverage your key input layout and establish a weighting scale across each of the elements. We strongly believe if these guidelines are followed you will be in a strong position to negotiate the best value package for your network.

Buyer Beware! – Many companies now choose to use a third party service to deliver the most accurate benchmarking data. Look out for benchmark companies and consultants that are itching to get their hands on your rates. These companies simply create massive databases that are used to sell benchmarking services to the next schmuck in line. They’re easy to spot; we refer to them as “The Name Droppers” as they will ensure you know about companies they’ve worked with in the past!

Your contract rates are yours. If you go down this path make sure to protect yourself, have clear contract terms stating clearly that your rates cannot be used or sold in any way shape or form outside of your organisation and ensure you ask for a reference. Watch out for companies claiming to save you millions by migrating you from enterprise to wholesale, the reasons for this are two fold. 1 – Off the back of these deals the companies receive a cut from the carrier for the new business and 2 – Good luck maintaining a decent level of account support. … If there’s a problem you’ll be dialling a 1-800 number with your CIO standing over your shoulder lamenting “what did I just sign my organisation up to?!”

Conclusion

Temforce recommends our PriceLab Utility– based on your company’s inputs, our app can compare your existing rates with real market figures in order to give you an independent idea of what you should be paying. This sort of solution will save you time and react to your inputs in order to get the most competitive pricing plans for your network.

Temforce is a provider of Professional Auditing Services with a difference: When we have groomed your network and squeezed every saving possible from it, we leave you with the tool we used to achieve those savings – why? So that you don’t need to audit your network ever again.

Want to know what should go into a benchmark clause? Don’t miss our essential post “What should go into a Benchmark Clause”?