Your company’s contracts for voice and data networking services should be one of the first places you check to cut costs. Two places to find savings: consolidating a number of contracts into fewer to maximize potential discounts, and negotiating service-level guarantees that include penalties for your provider’s service failures.The charts below illustrate in simple terms the savings you could find. Gartner compiled a set of factors it recommends information technology executives consider when negotiating service-level agreements for network availability, service quality and repair. Companies’ spending on these communications services varies, reports Gartner Vice President David Niel. But looking at the number of vendors you use and these service-level conditions could help your company’s overall cost-cutting efforts.Two Ways to Reduce Networking Expenses 1 Consolidate Contracts SUBSCRIBE TO OUR NEWSLETTER From our editors straight to your inbox Get started by entering your email address below. Please enter a valid email address Subscribe There’s money to be saved in eliminating duplicative network service provider agreements (see example at right). With commodity-type services, such as long distance or cellular voice communications, changing service providers is relatively easy. This option of changing providers can be held as a bargaining chip to encourage your primary network service provider to consolidate billing. Source: Gartner Research Note COM-13-2137 March 9, 2001Example Of Savings For a company with $1 billion in revenue Typical network Services spending: $2,000,000 Apply 10% discount by consolidating: x 0.10 Savings to bottom line: $200,000 2 negotiate Service-Level Agreements Here’s a list of recommended credits for network service providers’ noncompliance Service-level agreement Target Penalty Network availability 99.8-99.99% 10% to 25% Network latency (one way) 55-70 milliseconds 50% to 100% Mean time to repair 4 hours 25% to 100% Data delivery ratio 99.99% 50% to 100% Spending varies, but looking at the vendors you use and the service conditions could help your cost-cutting efforts.Best Practices 1. Strike a balance between too many and too few vendors. You don’t want to rely on only one network services provider (what if it has a severe outage?). But it’s a good idea to check all your contracts for redundancies, especially if your company has added many satellite offices. Savings can also come from using the same vendor for both data and voice networks. 2. Demand price protection. Include conditions in your contracts to lower your costs when rates go down. Communications prices such as long distance have dropped in the past few years. Make sure you’re not paying older, higher rates. Also look to include language that gives you room to grow as your company grows. 3. Strike a deal for service. Make sure your contracts include provisions that cover quality of networking service, reliability and what happens when something goes wrong. For example, Niel says, companies should negotiate a clause for “time to repair”?the time it takes a vendor to repair outages or other service problems. Vendors should agree to pay penalties for noncompliance.4. Review your contracts annually. Related content feature The dark arts of digital transformation — and how to master them Sometimes IT leaders need a little magic to push digital initiatives forward. Here are five ways to make transformation obstacles disappear. By Dan Tynan Oct 02, 2023 11 mins Business IT Alignment Business IT Alignment Business IT Alignment feature What is a project management office (PMO)? The key to standardizing project success The ever-increasing pace of change has upped the pressure on companies to deliver new products, services, and capabilities. And they’re relying on PMOs to ensure that work gets done consistently, efficiently, and in line with business objective By Mary K. Pratt Oct 02, 2023 8 mins Digital Transformation Project Management Tools IT Leadership opinion The changing face of cybersecurity threats in 2023 Cybersecurity has always been a cat-and-mouse game, but the mice keep getting bigger and are becoming increasingly harder to hunt. By Dipti Parmar Sep 29, 2023 8 mins Cybercrime Security brandpost Should finance organizations bank on Generative AI? Finance and banking organizations are looking at generative AI to support employees and customers across a range of text and numerically-based use cases. By Jay Limbasiya, Global AI, Analytics, & Data Management Business Development, Unstructured Data Solutions, Dell Technologies Sep 29, 2023 5 mins Artificial Intelligence Podcasts Videos Resources Events SUBSCRIBE TO OUR NEWSLETTER From our editors straight to your inbox Get started by entering your email address below. Please enter a valid email address Subscribe