CAUTION – Carrier Conversions Can be Hazardous to Your Bottom Line

Everyone wants to save money and improve the bottom line.  Depending on your business, telecommunications (telecom) costs can be an area where this seems to be an easy target; after all, deals abound.

Telecom service providers, both wireline and wireless, thrive on offering phenomenal deals if only you’ll convert to their latest service offering or discounted service plans.   These deals may indeed work out to be exactly as advertised, especially if you have the wherewithal to:

• Analyze the offer in depth
• Coordinate the conversion
• Manage through conversion issues that may come up
• Confirm the savings and resolve any post conversion billing issues

Our experience suggests that even those who have the requisite knowledge, numerous contract and conversion nuances need to be closely scrutinized in order to realize the expected result.

So what’s the problem?  Is it that the offers are questionable, is the conversion process flawed, is it all just marketing hype?  It’s certainly not the latter.  The deals are out there and the conversion process, while rife with pitfalls, can be managed.

Like a lot of things, the devil is in the details.  The details in any telecom agreement can be voluminous and confusing.  In addition to the complexity of the contract, the host of local, state and federally allowed fees, surcharges and other such add-ons can easily obfuscate the difference between what you thought you should save and what you actually save.

Obviously, the stakes can be high for achieving your desired bottom line results and, perhaps, even your career, depending on your position in the company.   Here are just a few generic examples of conversion expectation shortfalls and identified causes:

Example 1.  Recurring savings fall far short of expectations.

Cause 1 – Supplier never properly implemented the new contract rates.
Cause 2 – Proposed services are insufficient and require the installation of supplemental services.

Example 2.  The proposed contract rates were implemented but the overall costs went up.

Cause 1 – The displaced were never officially eliminated/disconnected.
Cause 2 – The new carrier applies fees and surcharges that weren’t being charged by the displaced carrier.

Example 3.  Other one-time costs negate or minimize savings.

Cause 1 – Internal or carrier caused conversion delays.
Cause 2 – Extended overlapping service requirements.
Cause 3 – Equipment considerations/capital investment not identified.
Cause 4 – Greater than expected staff time necessary to support the conversion.

These and other similar situations can turn what looks to be an easy way to improve your bottom line to the complete opposite.   To avoid disappointment, here are a number of precautions that you should take before considering a carrier conversion:

1. Develop a detailed demand set;
   • What service do you need?
   • Where do you need them?
   • How many of each do you need?
   • Will the demand change over the course of the anticipated contract term?

   Don’t rely on what the carrier thinks or suggests you need.  They have no incentive to help you optimize your services.

2. Even though you may have been approached by a carrier with the deal of the century, consider employing a competitive bid process, if for nothing else, to confirm the competitiveness of the offer. This process can be conducted in relatively short order as a formal Request for Proposal (RFP) or a less formal Request for Information (RFI).
3. Perform a detailed contract review. There is a lot of fine print and some of it can make all the difference between success and failure.
4. Plan and contractually agree with the perspective carrier a detailed conversion plan. This is the only way to identify potential internal and/or carrier related impediments to success.
5. Don’t rush into anything. As the buyer, time is in your side considering the highly competitive nature of the telecom market.

Whether you are a small or large user of telecom services, there certainly are significant saving opportunities that can be realized through a carrier conversion.   We have seen situations where a 30+% cost reduction is easily achievable.  In some instances, such savings could be realized without a conversion.  By understanding your needs, the current telecom market landscape and trends, you might be well served by opening discussions with your existing carrier.  They may have alternative pricing options that can be implemented without the need for a conversion.  However, going down this road does not mitigate the need to take many of the precautions noted earlier.

Minimizing and potentially eliminating the hazards can be accomplished by doing your due diligence.   Detailed pre planning and a well thought out execution plan can do the trick and help you maximize the bottom line results.