Telecom procurement is a long process with plenty of opportunities for missteps and errors. Today, we’re talking about 12 of the most common procurement mistakes and we’ll explain exactly how to avoid them.
1. Failing to Negotiate
The Mistake: Assuming prices for telecom products and services are set in stone or avoiding negotiation due to a lack of skills or comfortability.
How to Avoid It: First, you need to know that nearly everything is up for negotiation in the telecom and data networking industry. Negotiating is a normal and accepted part of the procurement process. Going with the first price a vendor offers you means your business could be paying far more than it needs to, missing out on the opportunity to save big over the course of the contract term.
If negotiation isn’t your strong suit, remember that it’s less about negotiating and more about timing and preparation. Negotiation is neither an art nor a science; it’s a learned skill that anyone can master. So, look out for resources on how to negotiate telecom contracts the right way.
Educate your procurement team on vendor ploys and corresponding tactics that they can use to maintain your company’s leverage and get the products and services you need with the pricing and terms you desire.
2. Overspending
The Mistake: Going beyond the set budget for IT services. This mistake is very common, but usually preventable. It stems from a combination of poor cost management throughout the year, “emergency” spending, lack of coordination, and poor communication.
How to Avoid It: One of the best ways to prevent overspending is to plan ahead, set a realistic budget, and pace spending accordingly throughout the year so that other purchases don’t cut into the telecom budget. Setting monthly spending limits can be a good way to keep purchases in check.
Another effective method of preventing overspending on telecom and IT procurement is to use software with AI algorithms to track purchases in real time. Procurement and purchasing software allows you to put controls into place that govern purchases. With the correct telecom expense management service, you may also reduce costs and streamline your procurement procedure.
Also important is effective communication with all of the links of the supply chain, rather than handling everything within the procurement team and failing to inform others who should be aware of purchases. Addressing any visibility gaps in the budget can help as well.
There are significant differences between procurement vs supply chain management (including their roles, objectives, and strategies) although many people use the terms interchangeably.
3. Not Utilizing Helpful Tools
The Mistake: Not employing technology, avoiding the use of procurement software, and refusing to work with a telecom consulting company. Often, failing to utilize helpful tools comes from concerns regarding security and additional costs.
How to Avoid It: The simple way to avoid this mistake is to use the tools available to your organization. Procurement software can save you time and money while simplifying and streamlining the entire procurement process.
Working with a telecom consulting company can also be worth it, especially if your team is struggling with procurement, has too much on its plate, just needs another set of expert eyes, or doesn’t know how to implement a strategy to reach its telecom and data network objectives.
Of course, it’s vital to ensure that if you’re leveraging technology and using procurement software, all employees involved understand how to use it and are comfortable doing so. It’s wise to make time to learn how to use your software to its highest potential so that you can achieve your procurement goals and save as much as possible.
4. Not Keeping Up with Supplier Relationships
The Mistake: Failing to stay in contact with current and potential telecom suppliers, therefore missing out on savings, opportunities for innovation, and new supplier programs that could benefit your organization.
How to Avoid It: Avoiding this mistake is simple. Subscribe to supplier newsletters (and read them!) and be sure to follow suppliers’ social media channels to stay updated.
You can take this a step further by reaching out regularly so that suppliers can offer up any new ideas they have for you or introduce products and services they have in development that may be useful for your organization. It’s possible to automate these communications as well.
If you’d like, you can even go so far as to schedule regular calls with suppliers, which can be particularly helpful as your business gets closer to the procurement process.
5. Acting Impulsively
The Mistake: Making snap decisions and impulse-buying telecom products and services. This happens more often than you might think.
Failing to consider whether the purchases align with your organization’s strategy, not looking at the bigger picture for a more accurate perspective, or not having a plan for procurement in the first place can all contribute to impulsive decisions that aren’t the best choice for the company.
Impulse buys can also occur when the procurement team focuses on one aspect of the decision, such as cost, without prioritizing other factors that are just as important, like quality and customer service.
How to Avoid It: To avoid impulse buys, the first thing to remember is that you should not rush the procurement process and your final decision. Instead, be sure to establish and implement telecom procurement strategies and procedures.
Take plenty of time to shop around and compare vendors to ensure you get the most beneficial deal for your organization. Avoid making decisions based on emotion; stick to the facts and figures. Procurement and purchasing software can help you make educated decisions as well.
6. Not Including Other Departments
The Mistake: Attempting to speed up the procurement process by isolating major decisions and leaving out other departments that can benefit from having a say in IT choices. Often, this backfires, resulting in a poor decision that needs to be rectified later on, costing additional time, money, and resources.
How to Avoid It: Ensure that you have a representative from all affected departments on the procurement team and keep lines of communication open. You may wish to use software to automate communications and make it simpler to work together with multiple departments across the organization.
7. Not Implementing a Vendor Compliance Policy
The Mistake: Failing to create or implement a compliance policy for vendors, which can lead to various risks, such as potential litigation. Without a compliance policy, your company won’t be able to do much about issues like price increases, cybersecurity breaches, and late deliveries.
In many cases, the failure to implement a compliance policy has to do with the assumption that vendors are already aware of the organization’s expectations. In other situations, companies may think that because they’re procuring telecom services at a good price, everything else will work out, too.
How to Avoid It: To avoid this potentially costly mistake, it’s crucial to establish a vendor compliance policy. Your company undoubtedly wants its working relationship with its vendor to have a foundation of consistency, reliability, and strong ethics.
Your first step should be to schedule a meeting with stakeholders so that everyone can collaborate and develop a compliance checklist, which can then be used to draft the policy. It’s vital to train everyone who is a part of procurement to use the checklist, which should be reviewed and updated yearly.
When you share your compliance policy with vendors (you can attach it to your RFP), it ensures they’re aware of everything they must agree to when doing business with your organization. Plus, it protects you if legal issues arise.
In the telecom industry from a service provider’s perspective, various compliance elements are typically covered in their Service Level Agreements or SLAs, which are a crucial part of telecom contracts.
8. Being Inflexible
The Mistake: Having an extremely rigid procurement strategy and not being open to any adjustments or changes. This can cause problems for your procurement system as a whole, mainly because it can hold you back from accepting the best deal available.
An inflexible strategy might mean you can’t respond to vendors in a timely manner, or perhaps you can’t switch to a new vendor, even if they’re offering a better deal. Too much rigidity can mean you lose sight of the big picture, miss out on opportunities for innovation, and fail to recognize potentially beneficial solutions.
How to Avoid It: Create a strategy, but allow for flexibility. While you don’t want to completely abandon your strategy or let it spin out of control, it’s wise to be open to some adjustments as the procurement process moves forward. It can be helpful to review and adjust your strategy regularly.
9. Lacking a Procurement Strategy
The Mistake: Failing to establish any kind of internal procurement policies and strategies. When you don’t have any guidelines for procurement, you’re much more likely to have a problematic process leading to poor decision-making. Your procurement team won’t have a structured plan to follow, and they likely won’t be prepared to handle the issues that will inevitably arise.
How to Avoid It: The clear avenue to avoid this mistake is to take the time to establish procurement policy and strategy. Set goals and identify the best ways to achieve them. Communicate this information to all procurement team members in order to standardize the process and prepare the team to prevent and handle problems.
You can also program your procurement software to automatically enforce your policy and strategy. Of course, review and update your standards as needed.
10. Rushing Through the Process
The Mistake: Assuming procurement will take less time than it does in reality and failing to set aside the necessary time for the full process. When you don’t start procurement early enough, your team members won’t have the time needed to complete all of their responsibilities, and this can lead to poor results.
How to Avoid It: Allow at least nine to 12 months for procurement, beginning the process around a year before your current telecom contract ends. Estimate that each step of the process will take longer than you predict it will. Make sure that all procurement team members understand the procedures, strategy, and expectations, and provide them with the time and resources they need to complete the tasks assigned to them.
11. Leaving Out Stakeholders
The Mistake: Not involving all stakeholders in the process. Important stakeholders for businesses can include employees, suppliers, shareholders, and customers. In some cases, you should also consider external stakeholders, like the government or the public.
How to Avoid It: Even if certain stakeholders can’t be directly involved in the process, it’s important to consider how the organization’s procurement decisions will affect them. Whenever possible, maintain open communication with all who will be impacted by new telecom products and services.
12. Overlooking Data Risks
The Mistake: Failing to notice or address terms within the telecom contract that concern data privacy. Similarly, not making potential vendors sign non-disclosure agreements (NDAs) can also be a huge mistake.
How to Avoid It: Don’t forget to send out NDAs with your RFP to be returned with vendors’ bids. Be sure to carefully look through the contract, as well as all SLAs and terms and conditions, to check for any terms that address data privacy. It’s wise to have a lawyer look over all of these documents as well.
If any problematic clauses or provisions are found, then address them directly with the vendor, and ensure that your agreements lay out the consequences of data breaches. It’s also key to make sure that your telecom contracts comply with the General Data Protection Regulation or GDPR if you do business outside of the United States.
Simplify Procurement with Technology Procurement Group
Telecom procurement can be complicated, but we’re here to simplify it. At TPG, our procurement specialists can help you through each step of the process, putting our expert industry knowledge to good use and ensuring you achieve your business objectives.
Not only do we offer telecom procurement strategy consulting and IT procurement services, but we can also provide telecom and wireless expense management, RFP management, wireless expense reduction, and telecom contract negotiation services.
For more information, give us a call at 1-888-449-1580, email us at info@TPG-llc.com, or complete the form on the Contact Us page. We look forward to hearing from you!
