Here at TPG, we’re happy to share our expertise and industry knowledge to help you achieve procurement success. Read on to discover our collection of the best telecom and IT procurement tips and strategies for effective telecom and IT procurement.
For more detailed information on any of the topics touched on in today’s article, check out our Telecom and IT procurement Research & Insights pieces or reach out to us directly by filling out the form on our Contact Us page, emailing info@TPG-llc.com, or calling at 1-888-449-1580.
Top 187 Telecom and IT Procurement Tips
Use these links to navigate to telecom and IT procurement tips for specific parts of the procurement process:
- Procurement Preparation
- The RFP Process
- Evaluating Vendor Proposals and Narrowing Down Your Options
- Negotiation
- Reviewing and Signing the Contract
- Post-Procurement
- Midterm Negotiations
Procurement Preparation
- Set a realistic timeline for procurement, starting about nine to 12 months before your current contract ends.
- Use financial models and cost transparency for leverage.
- Know your company’s telecom and IT data, including inventory and traffic transmitted over networks. Be aware of current figures, general needs, and future projections.
- Identify your organization’s needs, from products, services, and features to your budget, current and future business objectives, pain points, and need for scalability.
- If you can clearly identify your organization’s IT procurement needs and objectives, you’ll increase the chance of satisfying those needs and achieving those objectives exponentially.
- Review existing contracts, previous RFPs, and notes from past procurement processes.
- Assemble a procurement team with representatives from all affected departments. Be sure to fill the roles of capture manager, proposal manager, subject matter expert, author, review team leader, and cost strategist.
- Establish communication and collaboration tools for the team to stay up-to-date and informed.
- Consider partnering with a telecom consulting company to fine-tune your procurement strategy and ensure success.
- Take the time to evaluate your current providers and determine what you like and dislike about them. Consider their products and services, pricing, customer service and support, flexibility and scalability, security and reliability, transparency, and your overall satisfaction.
- Build telecom procurement leverage by following through on what you say, having a company history of sending out RFPs and moving business, having low existing commitments, and allowing sufficient time for the procurement process.
- Being desperate for savings, having strategic relationships with current providers, telling vendors your deadline and budget, having high existing commitments, and being in a long-term contract of over 36 months can erode your leverage.
- Use the DIKW Model (Data, Information, Knowledge, and Wisdom) Model to make better procurement decisions.
- Employ effective change management principles, which focus on proactive preparation for change, to ensure telecom and IT changes are well-received.
- Focus on effective communication before, during, and after procurement; communicate with all who will be affected.
- Remember that success factors for change management include clear communication, a proactive and structured approach, good timing, thorough planning, active change leaders, comprehensive training programs, effective integration, and an established roadmap for sponsors.
- The best leadership style for change management is one with authenticity, strong communication skills, emotional intelligence, and the ability to think strategically and contextualize the change within the bigger picture.
- Offset telecom vendors’ advantages by ensuring your procurement team knows about common vendor ploys, competitively bidding procurements, pre-negotiating deals, and using your organization’s contract template instead of the vendor’s.
- Familiarize yourself and your team with the General Data Protection Regulation and telecom procurement, a European law that affects any organization handling data pertaining to people in the EU.
- Avoid overspending by setting a realistic budget, planning ahead, addressing visibility gaps in the budget, and using procurement and purchasing software to track purchases in real-time and put controls in place. Dive into our latest blog for effective methods to avoid overspending on telecom and IT Procurement.
- Use procurement software to streamline and simplify the IT process; it’ll save you time and money. Ensure everyone involved understands how to use this software correctly.
- Establish internal procurement strategy and policy so that there are clear-cut guidelines for procurement. You can even program your procurement software to enforce standards and procedures.
- Never impulsively purchase telecom or IT products and services or make snap decisions during procurement. Always consider whether the purchase would align with your organization’s overall procurement strategy.
- Don’t make your procurement strategy so rigid that you aren’t open to adjustments and changes throughout the process. Allow for flexibility and adjust your strategy as needed.
- Involve all stakeholders in the process, including customers, employees, suppliers, shareholders, and even the public and the government in some cases.
- Establish KPIs to track throughout the procurement process so that you can evaluate your success later on.
- Measure procurement performance using KPIs such as compliance rate, purchase order accuracy, vendor risk management, vendor performance, product quality, supplier lead time, supplier diversity and sustainable sourcing, rate of emergency purchases, purchase order cycle time, vendor availability, cost savings, procurement cycle time, cost avoidance, cost per invoice and purchase order, spend under management, procurement ROI, and price competitiveness.
The RFP Process
- Think of RFPs and the resulting proposals as a method of deselecting all but two vendors.
- Send out RFPs even if you plan on staying with your current vendor. This can encourage your vendor to offer you a better deal.
- Keep an open mind during the RFP process, as you may discover that an unexpected vendor has a lot to offer your company.
- RFPs are generally more valuable than RFQs (Requests for Quote) in the telecom and IT industries. RFPs allow more room for creative and innovative solutions.
- Automate the RFP process with an online database or RFP software.
- The complexity of your project should directly correlate with the number of vendors to which you send your RFP; the larger and more complicated the project, the more RFP recipients you should have. Generally, a small and straightforward project may only need two or three RFPs, while a large and complicated project may need six to eight.
- Hold pre-RFP meetings to ask vendors about their product and service offerings, as well as what makes them different from their competition.
- Only send RFPs to the most promising vendors.
- If you’re having trouble identifying which vendors are the most promising, send out Requests for Information (RFIs).
- For telecom needs, potential RFP recipients could include incumbent local exchange carriers, competitive local exchange carriers, regional carriers, local cable companies, resellers, POTS aggregators, VoIP providers, hosted VoIP providers, bandwidth providers, and wireless internet service providers.
- Refrain from casting a wide net, thinking you’ll maximize your options and create a sense of competition. Evaluating even a single proposal takes a long time, and sending out RFPs costs your business time and money.
- Sending RFPs to every vendor in your area decreases your leverage by making it appear that your organization doesn’t know what it wants.
- Avoid consistently sending RFPs to vendors and then failing to give them your business. You may cause “vendor burnout,” and those vendors will likely stop sending you proposals altogether.
- Before composing an RFP, you need to know your company’s current state of telecom, current and future telecom needs, RFP recipients, and your overall procurement timeline.
- Always begin with an outline before jumping into the draft of your RFP.
- Within your RFP, include a table of contents, statement of purpose, company background and situation summary, telecom requirements, delivery and installation details, selection criteria, timeline, contact information, request for telecom proposal, vendor gift policy, spreadsheets, and traffic levels, and your contract template. You can also add an NDA and vendor compliance agreement.
- Focus on the “Telecom Requirements” section of your RFP–it’s the most important part!
- RFPs should be specific yet clear and concise.
- Don’t ask for too many types of solutions in your RFP, or it’ll appear that your organization doesn’t know what it wants or needs.
- Check your RFP’s spelling and grammar before sending it to prospective vendors.
- Consider your RFP from the vendor’s perspective to ensure it makes sense for the intended audience.
- Send out non-disclosure agreements with your RFPs to protect your organization, satisfy contractual agreements, and determine whether vendors are legitimate candidates. Mutual NDAs are preferred to unilateral NDAs because vendors’ legal teams are more likely to accept them.
- Remember to attach spreadsheets and documents to your RFP. These should include network Visio diagrams, your telecom inventory, taxes, and regulatory fees, and anything else that will help vendors get a feel for your needs.
- Attach your organization’s contract template to your RFP.
- Create a vendor compliance policy to be sent out with RFPs.
- Include a requirement that vendor proposals must remain valid for a specified period (usually 180 days).
- Allow vendors 30 days to respond to your RFP with their proposals.
- Use benchmarking to evaluate pricing during the RFP process.
- Consider running a reverse auction to lower prices. In a reverse auction, vendors compete to sell their products and services by pushing pricing down.
- Request multiple BAFOs to decrease prices and obtain as many perks and beneficial contract terms as possible.
Evaluating Vendor Proposals and Narrowing Down Your Options
- Scoring responses can turn the subjective evaluation of RFP responses into an objective one by assigning a numerical value to responses. You can use simple or weighted scoring, but RFP software is recommended for weighted scoring as it’s prone to manual errors.
- To avoid any biases, remove all vendor-identifying information from proposals. This is called “blind scoring.”
- Include your scoring approach within the RFP so vendors can tailor their proposals accordingly.
- When comparing vendor proposals, evaluate the following factors: products and services offered, the cost compared to your budget, customer service and support, reputation, flexibility, scalability, network security and reliability, customization options, demonstrations, experience with specific business types, resolution processes, transparency, minimum contract length, financial stability, and business changes.
- When you have a shortlist of vendors but need to narrow it down to your top two, invite your shortlist to have individual in-depth discussions with your procurement team. At this time, vendors can also give presentations to fully explain the solutions they plan to provide.
- Ensure vendors know your business’s negotiation position before meeting in person so that they can secure approval for important concessions and conduct an internal business case analysis ahead of time.
- Allow both your procurement team and the vendor to ask detailed questions during meetings so that everyone can fully understand each other’s goals and perspectives.
- Consider asking vendors about whether their network is fully converged and what type of protection is has in place, how they handle monitoring, whether they own their cloud system, their problem resolution strategy, how often their infrastructure goes down, the process to add new locations to the network, why others do business with them, what kinds of contract renewal options you’ll have, and what types of resources they will provide.
- During meetings with vendors, have a mug or pen with a competitor’s logo within view to let them know they have competition.
- Use meetings with shortlisted vendors as an opportunity to see whether their team members are a good fit for your organization. Remember, you could work with them for three years (or more if you renew your contract)!
- When meeting with vendors onsite, maintain your leverage by erasing your whiteboards so they don’t have any chance of accessing insider information.
Negotiation
- Know that negotiation is neither an art nor a science; it’s a skill anyone can master as long as they understand basic ploys and tactics.
- Be aware that negotiating telecom contracts consists of about 60% preparation, 20% timing, and 20% negotiation in reality.
- Prepare to go through several rounds of negotiation and redlining.
- Never assume that pricing is set in stone.
- Know that absolutely everything is up for negotiation, aside from mandated tariff taxing.
- Remember that a good vendor rep will look at your business relationship as a long-term partnership, promptly provide accurate information, and make recommendations regarding your needs rather than suggesting whatever would benefit the vendor.
- Always keep your company’s main objectives and procurement strategy in mind during negotiation.
- Focus on the short-term during negotiation; don’t sign agreements that last longer than 24-36 months.
- Avoid “tactic killers” like letting vendors know your organization’s budget, timeline, and project criticality, informing a vendor it has been chosen early on in the process, sharing organizational charts, and allowing inexperienced professionals with inflated egos to take the lead.
- Always insist on getting the names and numbers of vendor sales representatives.
- Research pricing for the products and services you’re negotiating for, and ask vendors about any rate variances.
- Familiarize yourself with vendor promotions and leverage the information to your advantage.
- Understand and negotiate any fees within the contract.
- Ensure you fully understand who will be held liable in various situations based on the contract.
- Learn about joint, several, and joint and several liability.
- Make sure your organization can change services as needed without being penalized.
- Thoroughly review all Service Level Agreements (SLAs), including provisioning intervals, outage resolution intervals, escalation procedures, and remedies.
- Learn about the Telecommunications Service Priority Program run by the Federal Communications Commission to determine whether your organization should receive preferential treatment.
- Ensure all contract ramp periods are reasonable so your organization can avoid paying unnecessary fees.
- Try to eliminate any Minimum Annual Revenue Commitments (MARCs) or Minimum Volume Commitments (MVCs).
- Negotiate for flexible scalability in the Terms and Conditions.
- Before engaging in a Proof of Concept (POC), talk through your required terms and conditions so that the contract won’t be held up if you like the POC.
- Always get everything in writing; don’t rely on verbal affirmations and agreements.
- Look out for commitments that grow over time, aside from those associated with initial contract ramp periods.
- Avoid primary provider and exclusivity clauses.
- Add contract language regarding potential mergers and acquisitions.
- Try to time the deal to close near the end of the year, quarter, or month, and use C-level executive “approval delays” if necessary to achieve this timing.
- Tell the vendor that you don’t have the signature authority to approve the deal at its current price and that it may take time to get approval. The vendor will likely not want to wait for the deal to be approved, so they’ll be motivated to lower their prices.
- If a vendor says that a deal will end on a specific date, use their aggression against them by pushing for various concessions in return.
- Never settle for the first price a vendor offers.
- If a vendor tries to bundle capital and operating expenditures, ask for a breakdown of CapEx and OpEx to improve your leverage.
- Calculate the Net Present Value of the deal if a vendor offers a multi-year prepayment option; this is a method of calculating your ROI for the project.
- Determine the vendor’s cost model by strategically asking about multiple pricing scenarios and reverse-engineering the data you receive.
- Try the good cop/bad cop strategy, but use it sparingly. It can buy your organization extra time to consider the agreement.
- Always have a clear and convincing Plan B so you can walk away from the vendor you’re negotiating with if it refuses your desired contract terms or pricing.
- Protect your business with an effective exit strategy that can be used if your relationship with the provider isn’t going well.
- Make sure you have a terminate-for-cause clause in your contract.
- For any terms and conditions or pricing your company wants, don’t be afraid to ask for escalation to a higher management level.
- Always ask for vendors’ BAFOs to allow them to improve their bids and encourage a sense of competition.
- Use silence to influence the vendor by staying quiet and waiting for them to speak, or employ silence as a counter-tactic to avoid sharing tactic-killing information like your organization’s budget, deadline, or project criticality.
- Don’t speed through negotiations; take things as slowly as possible to ensure you’re on the right path. Take your time responding to vendors to make them more desperate to close the deal.
- Just say no to vendors if they refuse to budge on contract terms and pricing; this may lead them to change their mind, or you may end up working with your Plan B vendor.
- Fill the contract with language that explicitly ensures vendor commitment and action.
- Use recitals to “tell the story” of the contract; they can come in handy during future disputes.
- Instead of using the phrase “gross negligence and willful misconduct” within the contract, just say “negligence and misconduct,” subjecting the vendor to increased liability.
- Always ask for a redline comparison document if the vendor wants to make last-minute changes to the contract.
- Generally, it’s unwise to include reciprocity as part of a telecom or IT contract.
- Make it clear that your procurement team wants to take on the task of putting together the revised draft of the contract after redlining so that you can remain in control. Your procurement team must know how to offset telecom vendor advantages and walk you to more profitable contracts.
- Whenever possible, use your organization’s contract template.
- Always negotiate with two vendors up until signing the contract. Knowing they have competition will motivate them to offer you a better deal, but if they already know they’ve earned your business, they don’t have any reason to make concessions.
- Some of the most common vendor ploys to look out for include empty promises, delay tactics, reneging, mirroring and impressing the client, hiding adverse terms in the SLAs, including an auto-renew clause in the contract, and requiring immediate action.
- Note that vendor ploys often appeal to your emotions by making you feel that you “owe” the vendor or are indebted to it in some way.
- If the vendor includes circuit commitments in the agreement, try to combine them into a single commitment, which is easier to manage and simpler to lower pricing for during midterm negotiations.
- Provide your own traffic estimates so that vendors don’t offer overly inflated ones that lead to higher, potentially unachievable commitment levels.
- Look out for vendors that go over the procurement team’s head to speak directly with executive management and undermine your efforts.
- Use delay tactics to your advantage by offering to close the deal near the end of the vendor’s fiscal year. This pressures the vendor to close so the sales rep can earn incentives.
- Look out for vendor contracts that include URLs to online Service Guides, as this is typically where adverse contract terms are hidden.
- Always remember that verbal communication from a vendor means nothing unless it’s backed up by official written communication.
- Make sure all negotiations are recorded in writing and clearly enumerated in the contract.
- Avoid non-stabilized rates and Calvo or staggered contracts.
- Don’t become a “Pop-Tart” that pops up to immediately respond to the vendor every time it reaches out. This can make you susceptible to a variety of vendor ploys.
- If the vendor shows up unexpectedly or attempts to schedule a last-minute meeting, do not meet with them and inform them that they must schedule meetings ahead of time.
- Know that vendors will use any information they can get about you and your team to influence you. Don’t engage in a “friendship” with a vendor rep, as it gives them the power to manipulate you.
- Always keep vendors at a friendly distance.
- Never drink alcohol with vendor sales reps, no matter how well you think you can handle your liquor.
- Remove personal items from your office so vendor reps cannot gain any personal insight.
- Write your vendor’s competitors’ names, along with random numbers, on your whiteboard, then lightly erase them so that they are barely visible. When the vendor rep meets with you, they’re sure to notice and be caught off guard.
- Vendors often misdirect and redirect conversations and meetings to avoid questions they don’t want to answer. Stay focused and return to the question until they address it.
- Don’t allow the vendor’s reps to outnumber your team in meetings; let them know how many of their representatives will be permitted at the meeting.
- Vendors may invite you to high-class dinners, sporting events, and impressive trips. Don’t attend during the competitive bidding process. Outside of this process, just be sure not to give in to the pressure to “return the favor” by making concessions that benefit the vendor.
- Vendors may attempt to speed up the process so that you don’t have time to investigate the competition, prevent you from uncovering issues and flaws with the vendor’s product and service offerings, or earn sales promotion incentive funds (SPIFs). Remain calm and collected and consider slowing down communications to panic the vendor and lead them to offer a better deal.
- If a vendor refuses a concession with the excuse that it would “set a precedent,” question them to discover inconsistencies regarding other precedents, then use this information as leverage.
- Any time a vendor asks about costs or money, even indirectly, they’re likely trying to determine how much you’re willing to pay for their products and services. If you pick up on this, offer disinformation to convince the vendor that your organization’s budget is much smaller than it is in reality.
- In the telecom and IT industries, a vendor who tries to act like they are the only one who can provide what your company needs is completely wrong. There are very few differentiators between telecom and IT vendors.
- Any mention of a GSA or SOX violation is a vendor ploy and not a legitimate violation.
- Demand that vendors send contracts and redlines in an editable format, not in a PDF. You can use a PDF cracker if the vendor refuses.
- Look out for words like “attempt,” “try,” “help,” “support,” and “make an effort” in contracts, as they don’t promise anything concrete. Replace them with words like “agree,” “deliver,” “guarantee,” and “generate.”
Reviewing and Signing the Contract
- Never sign a contract without reading through it thoroughly and having a lawyer go over it as well. This includes terms and conditions, SLAs, and all fine print, as well as the main agreement.
- Confirm that the contract contains all previously agreed-upon terms resulting from negotiations.
- Ensure no last-minute clauses or commitments were added to the agreement.
- Don’t sign a contract that lasts longer than 36 months.
- Avoid auto-renew clauses whenever possible; if you can’t eliminate the auto-renew clause, add contract language stating the vendor must inform you of the cancellation window ahead of time.
- Include three termination clauses: termination for cause due to customer breach (limited to non-payment only), termination for cause by customer specifying that your company can renegotiate or switch to a different provider, and termination for convenience (the termination fee should be as low as possible). Also, you should also include important terms and clauses of telecom contracts.
- Negotiate for a Most Favored Nation (MFN) clause, also called a prudent buyer, non-discrimination, or most favored customer clause.
- Add a pricing protection clause to fix the cost of products and services.
- Include a limitation of liability, confidentiality, and indemnification for both parties.
- Make sure the agreement lays out clear time frames and consequences.
- Include a clause covering business changes like outsourcing, internal reorganization, joint venture, divestiture, acquisition, merger, and loss of key customers.
- Specify that there won’t be a penalty for technology upgrades.
- Ensure that SLAs are clear and measurable.
- Include a billing and dispute management clause.
- Be aware of implied UCC warranties.
- Consider regulatory issues like the order of precedence, the federal detariffing push, cancellation in response to adverse conditions, and cost risk from regulatory charges.
- Obtain signatures via counterparts, faxes, or electronic signatures.
- Double-check payment provisions for reasonable grace periods, an acceptable amount of interest applied to late payments, and the ability to dispute charges.
- Try to ensure your payment date is tied to a verifiable online billing date or invoice date.
- Include a termination assistance services provided in the contract so that the vendor will be required to help your company transition its services to a replacement vendor.
- Include a clause that reduces your organization’s liability and avoids non-compliance risk regarding GDPR.
- Ensure any terms addressing data privacy don’t pose a risk to your organization.
- Remember to notify all of the vendors that weren’t chosen of your decision with personalized emails thanking them for their time. (Wait until the contract is finalized to do this.)
- Once the contract has been signed, create a document with a summary of the contract results, including benchmarks, timelines, milestones, and savings projections, and deliver it to the RFP team and executives.
Post-Procurement
- Don’t let your guard down immediately after signing the contract; keep an eye on your bills for the next few months to make sure they match the contract terms.
- To avoid missing any discrepancies between your contract and bills, make a checklist that covers the contract terms, pricing, credits, incentives, and waived charges.
- If you have a MARC or MVC, always check to ensure your organization receives credit for commitment-eligible revenue.
- To verify bill accuracy, use three-way matching (comparing the purchase order, goods receipt, and supplier’s invoice).
- Remain in contact with current and potential suppliers to be clued in on opportunities for innovation, potential savings, and new programs that could benefit your organization. Follow suppliers’ social media pages, subscribe to their newsletters, or reach out regularly to stay in touch.
- Reflect and learn from the procurement process by recording information about vendors, telecom contract negotiation tactics; both the effective and ineffective ones, your organization’s negotiation performance, your contract template ratio, contract quality and risk level, harmful and unwanted clauses, and the overall state of the marketplace.
- Look at the KPIs you established during the procurement preparation phase to determine the process’s success. You can obtain qualitative data through surveys, steering committees, and stakeholder assessments. Meanwhile, you can find quantitative data in various documents, spreadsheets, and reports.
- Use technology lifecycle management (TLM) to plan, implement, and manage future technology purchases.
Midterm Negotiations
- Take advantage of midterm negotiations to earn savings and improved terms.
- Remember that it’s less expensive for your provider to keep you as a customer than to find and sign a new customer, so you have quite a bit of leverage to work with in the middle of the contract term.
- Telecom prices have been trending downward each year, giving you the opportunity to negotiate improved pricing when the midpoint of your contract term rolls around.
- Work to create a mutually beneficial business partnership between your organization and your telecom and IT providers.
- Order services from a vendor other than the one who most recently earned your business to complete a “shot across the bow” and keep the original vendor on its toes.
- Determine the vendor’s perception of your organization. Where do you fit into its supplier preference model, and how can you improve this perception to increase your leverage?
- Arrange meetings with your vendor’s high-level executives to win them over so that you’ll have them on your side when it’s time to negotiate in the future.
- If an adverse event negatively affects your business, consider asking your vendor for rate reductions as an act of goodwill. This was a common practice during the COVID-19 pandemic when many companies asked for rate reductions and bandwidth increases at no additional cost.
- When approaching the CIO and board of directors, your team should act as the board’s trusted advisors, telling the board exactly what the organization needs while providing them with at least two options. Present information that’s sure to resonate depending on what the board cares about most, and keep the presentation around 15 minutes long.
- Utilize TEM and WEM services or software to save, regardless of where you are in the contract term.
Overall, success in telecom and IT procurement demands strategic planning, vendor evaluation, cost optimization, and ensuring IT governance best practices. Stay adaptable to market trends for a resilient and efficient infrastructure, ensuring your business remains connected and competitive. Hope our list of telecom and IT procurement tips will help you a lot. Check out our blog that covers all your telecom procurement FAQs and Answers.
Consider Working with Technology Procurement Group for Procurement Success
Our procurement specialists’ decades of experience and wealth of industry knowledge can help you achieve procurement success. With our assistance, you’re sure to accomplish your business objectives while earning cost savings through effective IT and telecom procurement.
We offer telecom procurement strategy consulting and IT procurement services as well as telecom expense management and wireless expense management, RFP management, wireless expense reduction, and telecom contract negotiation.
Ready to work with us, or interested in getting more information? Call us at 1-888-449-1580, email us at info@TPG-llc.com, or fill out the simple form on the Contact Us page. We look forward to working with you!
