Ask the Expert - Telecoms

Telecoms is one of the top 10 indirect costs for many businesses and unsurprisingly a category where PEPCO's expert consulting team are often brought in to support clients with their procurement process.

Jeremy Bowley, PEPCO's Head of Delivery and an experienced CPO, shares a few insights and recommendations around telecoms procurement.

What Savings are Available?
This is somewhat akin to asking the length of a piece of string! Of course it very much depends on current infrastructure, maturity of procurement and, equally important, your future telecoms strategy. But, in general, we see savings of around 20% for projects supported by PEPCO, with a few larger examples below.

Market Dynamics
The first thing to consider when looking at your telecoms strategy and buying decisions is that telecoms is essentially two different markets:

Landline
- Heavily regulated
- Strict rules on charging for access to the fixed line network so providers are limited in what they can charge
- Technology pace of change fairly static
- Fewer technology considerations – you don't usually rent your tech from the phone company
- Bundled services and technology can support most significant savings

Mobile
- Highly competitive and technology driven
- Fast paced technology change
- Provider supplies you with airtime and data services AND the handset technology
- Commercial structure needs to incorporate paying down the tech costs
- Need to define a strategy appropriate to your corporate profile

Whilst the natural assumption would be that combining these spends will deliver the best commercial terms and service, this is often not the case. It's ok, and probably sensible, to consider a discrete approach for each.

Buying Considerations
So the market dynamics drive different buying considerations.

With fixed line basically you need the right number of lines and the right bundles of services over these lines. There is little differentiation on the actual "product" so it becomes more about what's important to you from a value add or services perspective. The main thing to consider will probably be billing. Which supplier can present the bill in the right format and most efficiently for the needs of your business?

- Look for a competitive supplier with the right services for your needs
- Structure a good commercial deal - costs are relatively easy to assess on pence per minute etc.
- Value added services and relationship
- Efficient billing to meet your needs

But with mobile people really DO care what phone they use and the choice of network matters more. Most people have never lost a connection on a fixed line call but a mobile is quite a different matter. And of course we can take our mobiles abroad too so suddenly international calls become a variable. So commercial evaluation of your mobile phone service is more complex, you need to consider:

- Network availability and service
- Roaming charges for calls and data
- Technology funds and credits
- Speed of handset refresh
- Different roles needing different performance / functionality from handsets
- Usage and care of handsets – there is a marked difference in handset condition after 2 years across a group of employees!
- Handset contracts are not coterminous as people are joining all the time which makes changing suppliers more difficult
- Scale of your tech fund – the per handset price per employee across your business could be a significant amount
- Mobile device management – are apps permitted, which ones, for whom? Can your supplier support this to the level needed by your business?

Process is just as critical. Take the example of "ghost mobiles" - mobile phones that you cannot associate with an employee. You don't know where they are or who had them. Some are still running up bills. Some have left the business and never been switched off. Some are sitting in drawers from employee leavers. In an organisation of 5,000 people extrapolate these monthly "ghost" mobile charges over 5 years and you get the picture.

The rate of change
One of the biggest pain points though is the rate of change and how people are using phones. According to Ofcom the average monthly mobile data use per active SIM in the UK increased by over 1,000% between 2011 and 2016. The usage figures leaped from 0.11Gb per month in March 2011 to 1.26Gb per SIM by June 2016. By the end of 2017 the average volume of data consumed per subscriber per month was 1.9GB – an increase of 46% year on year.

So if you look back just two years and then base buying decisions on that - would that be representative of what we are going to be doing in two years' time? Probably not in mobile. So if you haven't reviewed this for a few years you WILL be out of date. Paying too much for the wrong services.

PEPCO value
When we engage to support clients with mobile telecoms reviews we regularly deliver savings of 20-30% and in fact have seen savings of up to 50%. Our category experts have negotiated in excess of 100 mobile deals and our market knowledge means we can eliminate uncertainty around costs and deliver significant savings through aggregation, centrally negotiated terms and expert planning and implementation services. Importantly our expertise means the time to value cycle is dramatically reduced. Providing data is available we can typically deliver value to the business within 90 days.

For further information on this or any areas where we can help please contact Mark Russell: 0203 008 7585 or mark.russell@pepcoservices.com