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Sourcing, Procurement and Contract Management
AOTMP, March 2011, Pages: 26
Sourcing and procuring service providers along with on-going contract management activities play a significant role in overall telecom environment management. For example, if a selected service provider does not ultimately meet the business requirements of the organization, the company must deal with the ramifications for the remainder of the contract. In addition, if a contract is poorly negotiated, the enterprise is placed into a disadvantageous position. Poor service levels provided by service providers with no negotiated performance agreements places operational and technical stress upon the enterprise. Contracts that are not well managed from an on-going perspective could leave the enterprise paying for services that were not originally purchased.
Executive Summary
Sourcing and procuring service providers, along with on-going contract management activities, play a significant role in overall telecom environment management. For instance, if a selected service provider does not ultimately meet the business requirements of an organization, the company must deal with those ramifications for the remainder of the contract.
Furthermore, if a contract is poorly negotiated, the enterprise is placed into a disadvantageous position. Poor service levels provided with no negotiated performance agreements places operational and technical stress upon the enterprise. Contracts that are not well managed from an on-going perspective could leave the enterprise paying for services that were not originally purchased.
Benchmarks identify several interesting statistics around the contract negotiation process:
- When negotiating contracts, enterprises that focus most on terms and conditions realize a 200% gain in savings compared to those who spend most of their time negotiating price.
- Enterprises consistently achieve over a 200% gain in savings when utilizing a third-party to assist in the negotiation process.
- No significant additional FTE requirements are required to negotiate contracts frequently (every 1-2 years) versus those who negotiate infrequently (every 3-5 years).
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