Beware of the Tipping Point. Telecommunications services procurements do not always yield the targeted results. This typically arises when a non-incumbent carrier concludes the incumbent is going to retain the business. This can and does occur when the customer signals—intentionally or not—that the RFP process is just a formality.
It can also arise in connection with a well-executed RFP process. This can occur after a successful procurement in which substantial business was awarded to an aggressive non-incumbent. If, in the subsequent procurement cycle, the longstanding provider believes growth or future business is unlikely, the customer may be surprised by the longstanding carrier’s indifferent response to the RFP. At this juncture, the customer’s business has reached the carrier’s “tipping point.”
These outcomes are going to occur from time to time. From an economic perspective, the customer can respond by migrating more business from the longstanding provider; sometimes the longstanding carrier controls access at customer locations, preserving a lucrative, albeit smaller, revenue stream. The ability to migrate traffic also may be trumped by the customer’s interest in the maintaining diversity in carriers. Diversity has a price. Anticipating this possible outcome helps set reasonable expectations for upper management.
Seize the Opportunity. Recent experiences have confirmed the virtue of a practice we have followed over the years: When entering into an agreement with a services provider for the first time, or after a noticeable hiatus, push for as many changes as possible to the carrier’s one-sided standard agreement. There never will be a better time.
Two reasons underlie this recommendation. First, the “new” services provider wants the business. This tempers carrier intransigence to substantive changes to their standard agreements. Second, carriers are far more inclined to amend existing agreements with new pricing schedules and other changes to the original agreement. Carrier account teams would rather not re-visit all aspects of a negotiated agreement if at all possible.
Timeliness Makes a Difference: New or amended services agreements typically implement new services or improved pricing or both. Realizing these benefits quickly is a central objective for the enterprise. While “keeping the process moving” is essential throughout the procurement process, as the terms of the deal are set out in the new agreement or amendment, the customer’s team (enterprise staff, consultants and counsel) should complete their review and provide their inputs as timely as possible. Providing comprehensive revisions as opposed to piece-meal edits is the only approach. A timely, comprehensive response motivates effective carrier account representatives to bring together their offer managers, subject matter experts, and counsel to conclude the process quickly.