A recent study conducted by Forrester Consulting on our behalf produced some genuinely interesting findings. We had a fair amount of anecdotal evidence from our own observations that sourcing of telecommunications and network services (TNS) doesn't go to plan. But when the research findings came in we were taken aback at just how widespread the problem actually is.
The independently conducted study found that eight out of 10 TNS sourcing projects are not nearly as efficient as they should be. In fact, the average large firm was wasting the equivalent of 20 per cent of spend for each contract. In total, this wastage adds up to an annual estimated loss of £12 billion. And that's just from the top 500 global companies. Add in smaller businesses and who knows what that figure would be?
Part of the problem seems to be that TNS doesn't get the respect it deserves. According to the research findings, enterprises are spending around 20 per cent of their total IT budgets on TNS. But the amount of time, talent and resources allotted to TNS strategy, sourcing and contract governance doesn't come anywhere near that figure. As a result, businesses end up spending too much money to get too little service from their service providers.
There are, however, enterprises doing it right and we can learn from their experiences. And there are a number of best practices that organisations can follow.
The first key point may sound simplistic but it is far too often overlooked. It is vitally important to formulate a TNS strategic plan that identifies your present and future TNS needs and determines what technologies and services will best meet them. This strategic plan needs to align closely with your IT strategy, which, of course, must align with the overall business strategy. Forrester found that just 54% of organisations pay significant attention to defining their TNS strategy, suggesting that almost half of organisations currently fail to fully align their TNS needs with the future needs of the business.
Next, you need to develop a sourcing strategy. There's far more to this than simply selecting a vendor. In fact, multisourcing, whilst potentially more time-consuming and complex, generally produces better results at lower overall cost than single-vendor projects. The independent research found that most businesses greatly under-estimate the time it takes to undertake a major TNS sourcing project. That can be a huge mistake as there is a clear correlation between under-resourcing and negative outcomes.
The final tip is to bring in external expertise when and where you need it. Naturally, as the CEO of a consultancy, you'd probably expect me to say that. But the independent research backs this up. As Forrester state in the report, "With enterprises typically negotiating a major telecoms contract once every 3+ years, it is unlikely that internal teams will have the necessary experience, skills and tools to manage the process as efficiently as possible. The engagement of external specialists is key – their fees will be more than recouped due to the lower charges and better quality of service achieved." To this point, the research showed significantly higher levels of satisfaction when external help is retained, particularly when assistance was sought in the areas of service level agreement design, RFP processes, contract drafting, pricing and business case modelling, short-list selection, and negotiation.
Adherence to the basic principles highlighted above will go a long way towards positioning you in the group of enterprises who are getting it right. And getting it right has never been more important. With the convergence of voice, data and mobile services into a single unified enterprise-wide infrastructure, the reality is that to neglect the network is to neglect the business.