Negotiating network service contracts with WAN carriers

Here are 10 tips that describe how to negotiate network service contracts with potential carriers that provide wide area network (WAN) services. To find the best provider for your network and get the most out of your service-level agreement (SLA) while appeasing your company, view this tip.

For most WAN managers, negotiating network service contracts with carriers ranks right up there with getting a root canal. WAN managers mistrust carrier sales folk—often with reason—and fear they’re being taken advantage of or jerked around. On top of that, senior management often has unrealistic expectations about provisioning times, reliability and cost.

So how can WAN managers take the pain out of negotiating network service contracts? Herewith, the 10 commandments of carrier negotiation:

1.      Issue an RFP. No matter how minor the network service contract, take the time to craft and issue a request for proposal (RFP). Competitive bids ensure the lowest rates, and the process of constructing the RFP helps ensure that WAN managers truly understand user requirements. Even something as simple as an employee cell phone contract can have nuances: Is it desirable to pool minutes? What about data services, like EV-DO and AirCard? Is texting required? Should providers be able to wipe sensitive information in cases of loss or theft? Addressing these questions—and more—internally can ensure that the network service contract ends up meeting users’ real needs.

2.      Assess current and future requirements.  A big mistake many WAN managers make is to scope network services to the current state. Since most contracts last for multiple years, a WAN that’s sized to today’s requirements may be inadequate by the time the contract ends. Think about today’s capacity requirements—and then plan for increases (or decreases) based on initiatives such as server and data center consolidation, deployment of virtual desktops or video conferencing, and growth (or decline) in number of users and sites.

3.      Matching network service contracts to WAN requirements.  One-size-fits-all thinking is another big mistake. Many WAN managers focus so hard on a specific technology or service—such as Multiprotocol Label Switching (MPLS) or SIP trunking—that they neglect to consider alternatives for different applications. WANs may require a mix of service offerings for different applications, such as metro Ethernet for data-center interconnects, MPLS connectivity for branch offices, and wireless data services for remote users.

4.      Consider as many carriers as possible. Nobody wants to review proposals from a dozen or more providers. But sometimes, that’s exactly what’s required if the goal is to achieve the best rates and most competitive services. Ask for bids from as many providers as possible, then winnow down the decision to a shortlist of players that can be brought back in to discuss proposals in greater detail.

5.      Start early. Deadline pressure is a big reason many WAN managers skip the important steps above. This is a bad idea. Instead, start the RFP process early—ideally, a year or more before the current contract expires. Set reasonable deadlines, and stick to them.

6.      Request and receive SLAs. Service-level agreements (SLAs) are commonplace in virtually every carrier contract these days. Expect them, and ask for them. The exact parameters depend on the service being procured—for WAN data services, latency, jitter and packet loss are common, but others matter as well. It’s also wise to get guarantees around provisioning and repair times.

7.      Eschew credits in favor of no-penalty out clauses. What happens if an SLA is not met? Carriers love to offer credits on the next month’s bill—but often, those credits take so much effort to receive that it negates the value of getting them in the first place (i.e., spending $1,500 worth of an engineer’s time to obtain a $1,000 isn’t a good tradeoff). Moreover, credits rarely compensate for the impact of an outage or provisioning failure. Instead, ask for the opportunity to exit the contract with no penalty.  

8.      Set expectations with senior management. Notwithstanding all the above, circuits do fail, and provisioning and deployment delays do occur. Before you start, level-set expectations with senior management, based on a solid benchmark of industry performance. For example, if carriers typically take 45 to 60 days to install a circuit, don’t promise your boss it’ll be up and running in 30—no matter what the carrier salesperson promises you!

9.      Be honest with carrier sales folk. WAN managers have a tendency to fear and distrust telecom sales folk—not without reason. But any successful, experienced salesperson has learned to focus on obtaining a “win-win” deal. If you’re honest about what you can and can’t live with, you’ll typically be able to reach an acceptable bargain.

10.      If it’s not a win-win, go back to the table. It’s unfortunate, but the most competitive rates and terms are achieved only after two or more rounds of bargaining. Don’t settle for less than you think you want—keep asking the carriers for concessions. If the proposed deal isn’t a true “win-win,” bring the provider back to the table. If you can’t arrive at a win-win deal, consider another provider.

The bottom line is that negotiating a WAN contract may never be a day at the amusement park—but it doesn’t have to be painful. Follow these 10 commandments to ensure a smooth negotiation (and hopefully, a seamless deployment).

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This was first published in September 2010

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