Since deregulation of the South African telecommunications market, the landscape has begun changing rapidly and the market has opened up to new players. Added to this is the wider adoption of technologies such as Voice over IP (VoIP) as a result of improved bandwidth, which is driving new providers and services into the marketplace.
"As a result, South African businesses now have access to a range of new opportunities which they can leverage when it comes to telecommunications," says Steven Woods, South African country president at Compass Management Consulting. "However with this comes the challenge of choosing the right service provider and managing contracts with various providers.
"Adding to this is the constant evolution of technology, which changes the way people and organisations communicate. This evolution creates concern about the long term sustainability of solutions and whether or not they will quickly become outdated."
In order to address these challenges, a threefold approach is necessary to ensure that the complexities of telecom service contracts are dealt with adequately and that an effective management strategy is put into place.
A comprehensive knowledge of the market, of vendor capabilities, price trends and service alternatives is an essential starting point for an effective telecom services strategy.
Organisations need to have a basic understanding of the dynamics and characteristics of the telecommunications space. This includes basic rates for key services and technologies, the relative maturity of various technologies, the average length of terms and commitments, service level expectations and objectives, the impact of changing technology, and the capability of various carriers including their geographic coverage.
Vendor capability is also important. Organisations need to consider which vendors have established capability in the geographic regions in which they operate, the strengths and weaknesses of the vendor and how these align with the needs and objectives of the enterprise and so on.
"These factors all need to be considered within the context of ever changing business requirements. Technology in particular is a critical choice, as it needs to meet changing and expanding needs, and businesses need to decide whether to gradually phase in new systems or conduct forklift upgrades," Woods adds.
Benchmark analyses help to assess the price and quality of a set of services, and compare the assessment against a reference standard of similar service bundles from competing service providers.
"This helps organisations to identify areas of strength with current service providers and competitors, as well as identify opportunities for improvement in terms of service levels, pricing, processes and so on," says Woods. "The outcome of this analysis offers a foundation for defining and implementing a change plan to achieve benefits in terms of cost effectiveness and service quality."
Benchmarking exercises should not be limited to a rate comparison, but should include service level agreements and a strategic component that addresses key business objectives. This ensures that service providers can be selected based on their fit with the needs of an organisation in terms of more than just price. These exercises should also be conducted at the right point in time, for example before an agreement or contract is signed, or before the termination of an existing contract to give businesses enough time to terminate the agreement should this be the desired course of action.
"Service Level and Business Level Objectives as well as Service Level Agreements (SLAs) are also essential components of contract management. These need to be linked into the overall business strategy to understand the impact of service levels. For example, if services are not available, are problems resolved quickly and with minimum impact to a business?" says Woods.
Contract management is an essential component of an effective telecommunications strategy, and relies heavily on the first two steps, namely market knowledge and benchmarking. It requires terms and pricing structures to be mapped so organisations can understand their impact.
With so many changes taking place in the local telecommunications market, and new service providers and services constantly entering the market, it is essential for businesses to proactively manage their telecoms resources to maintain optimal fit and benefit to the organisation.
"Making sure an organisation is getting the right services in the right locations at the right price is an important aspect of ensuring that telecommunication services work for the business effectively," Woods concludes. "The three steps outlined above will help enterprises to understand the market and ensure they get the most out of their services and providers."