The art of doing the deal

One of the benefits for IT managers of renegotiating is that vendors may suddenly find cost savings which didn't exist before.

One of the benefits for IT managers of renegotiating is that vendors may suddenly find cost savings which didn’t exist before.

Waipa District Council IT manager Mike Hesseling says putting your telecomms services up for tender is a good move, even if you’re reasonably happy with your current provider.

The council, which serves the western Waikato, put all its services up for tender 18 months ago.

“It was a good way for us to look at what service we were being charged for but weren’t using,” says Hesseling. “The tender process made us sit back and look.”

Merely renewing a contract may mean a less rigorous review, he says.

The council opted to retain Telecom as its landlines provider but switched to what is now TelstraClear for internet and mobile services.

Hesseling says that in its tender bid Telecom identified cost savings it had not previously not told the council about.

“We thought ‘great, but why didn’t you tell us about this while you were managing our account?’ ”

Something like that can make going to the market worth it, Hesseling says.

When switching mobile providers, the hardware cost should be negligible, he says. “The cost to us was nothing.”

Something to watch out for is being locked into hardware contracts for mobile phones.

“If you lose a phone or have a new staff member join during the term of the contract, make sure the new term ends at the same time as the corporate contract, otherwise you’ll have problems with different expiry dates.”

Finer details such as the need to print new business cards if mobile numbers change should be taken into consideration, he says.

At the macro end of things, “you need to spell out the clawbacks if the contract is to be terminated early — you need to work out the out clauses”. If handsets are provided free or subsidised as part of the contract, and the customer terminates it early, the provider may want some kind of recompense, he says.

The Waipa Council wrote a pricing review clause into its contracts, he says. “There’s a clause saying pricing can be reviewed at both parties’ request.”

Hesseling says it is important to check that once the contract is in place, you’re being charged the rates specified.

“Don’t assume they’re charging the correct pricing. Check it out after a couple of months.”

Renegotiating a contract may be a way of moving on from a troublesome past.

New Zealand Insurance renegotiated a landline, mobile and data contract with Telecom 18 months ago. Renegotiating meant getting rid of “years of bad history and vibes” between NZI and Telecom, says NZI strategic procurement manager David Fletcher.

“The relationship was quite bad and it was the fault of both parties.”

Fletcher says there’s an art to putting a telecomms contract together.

A contract has to be fair for both sides,” Fletcher says. “If it’s heavily weighted one way, the relationship won’t work.”

If it’s fair, a telecomms contract is something that should be signed then put away in the bottom drawer, he says.

“The moment you have to pull it out, the relationship has failed.”

Under the present contract, NZI meets with Telecom weekly to discuss things at an operational level, monthly to talk at account management level and twice a year to thrash things out at executive level.

“At the executive meeting, we discuss what’s happening in the market, go over the previous six months and do pricing reviews.”

He says he is very satisfied with the service NZI is getting and an important thing for anyone who is in charge of telecommunications in an organisation is to have just one port of call in the event of something going wrong.

“If something is wrong, the account manager gets it sorted — one phone call, one person sorts it out.”

Fletcher says he has “an escalation plan” if that doesn’t work, “but I haven’t had to put it into action yet”.

Yelling and screaming when your provider makes a mistake can be counterproductive, he says.

“Rather than point immediately to SLAs, I say ‘why did you do that and can we learn something from it and move forward?’”

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