I recently spend 22 months reviewing Telecommunication services agreements for a large company that went through a merger and subsequent entity changes and spin offs that left all their existing Telecom service agreements in disarray.  In dispositioning these agreements, I have learned that the big companies with well-trained sourcing staffs negotiate ensure the terms and conditions match the company’s business strategy and give them as much leverage as possible. Even with dedicated staff and training we still saw agreements that contained very problematic clauses or missing language that posed challenges in changing, transferring and avoiding costs.

I compare this with my experience with small to mid-sized firms where IT managers “do it all” including negotiating contracts for services their business requires. Most of the telecom services and managed services contacts that I have seen in this segment are full of vendor provided standard or missing clauses that leave companies with sub-par terms and conditions that cause negative business consequences and costs.  

The reason these disadvantaged agreements exist is the standard contracts provided by vendors are mostly one sided in their favor. However, everything is negotiable, but many IT managers have a difficult time knowing what should be added or removed to give their side the business advantage or at least balance.

So, what are the “Top 5” most common areas of shortcomings? ( there are more than 5) Here are very significant areas your service provider will become uncomfortable with when you come to the table prepared and ready to state your needs;

No. 1: No “out” clauses. The single most powerful clause in a telecom contract is the “termination without penalty” clause, invocable in a range of situations, which gives companies leverage when making requests from carriers.

No. 2. No business flexibility. What if your organization merges with another, or divests part of its business? Your contract should flex to accommodate changes in business.

No. 3. Missing service-level agreements (SLA). The purpose of a network is to get your traffic from point A to point B reliably, securely, and in a timely fashion. But too often, the carrier doesn’t commit to doing any of the above. SLAs ensure that they do — or suffer the consequences.

No. 4: Lackadaisical account management. An organization’s satisfaction with its telecom provider generally has more to do with the quality of the account management than with anything else. Yet, too few contracts provide any recourse for poor account management. Customers should have a say in how they’re treated — and by whom.

No. 5: Technology lock-in. Unbelievably, many contracts require termination penalties when the customer wants to shift from an older technology to a newer one (say, from TDM trunks to SIP trunking). Hello? So long as you’re buying services from the same provider, contracts shouldn’t lock you in to a particular technology.

Everyone has telecom agreements for services you rely on to run your business. When is the last time you looked at your agreement? These important documents, vital to your operation should be well documented, maintained and managed. Need help with understanding your existing agreements and protecting your business, we can help. Drop me a line at pete@premiertelecomltd.com for a no cost review.