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IT Purchase Process / Telecom Glossary

Exploring the Different Means of Telecom Procurement

Telecom procurement is a convoluted process which is made more complicated by the various avenues you have available in order to buy your services. 

If you’ve ever procured Internet connectivity, wide area networking solutions, or other networking products for your company, you know the pain. 

If you’ve found this blog before your first foray into telecom procurement - godspeed - but fear not… This post is here to explain the different means of telecom procurement, discuss the benefits and considerations of each, and provide guidance on how to best kick off a telecom procurement project. 

Different Means of Telecom Procurement 

First, let’s review the three primary means of telecom procurement: direct to provider, agents, and aggregators/resellers. 

Direct to Provider Procurement 

The most obvious form of telecom procurement is buying telecom services directly from telecom carriers themselves. When you go this route, your IT team is in charge of managing the entire procurement process from RFP to contract renewal. While running processes internally might give you a sense of control, there’s downsides to this approach as well. 

Like any procurement process, you’ll want to procure quotes from as many providers as possible in order to ensure you are getting the best price. This is a timely process, and a big part of why other means of procurement exist.

Additionally, your network could and should include multiple telecom providers to ensure network resiliency. This comes with the downside of dispersed network management platforms/logins, invoices, and contracts - all of which will need to be managed internally. Most IT teams we’ve spoken to do this using a good ‘ole spreadsheet; this is a time consuming and error prone approach to network management. 

Telecom Agent Procurement 

A popular form of “indirect” telecom procurement is through an intermediary channel partner, commonly referred to as a telecom agent. Agents are established partners of the telecom providers themselves who will intake your telecom needs and source quotes on your behalf from multiple providers, saving you time on sales calls and quote retrieval. 

This means that working with an agent comes with the added benefit of centralized quoting, but invoices and contracts are still spread across multiple vendors and need to be tracked internally by your team. 

Most agent services are free to use as they earn a commission from the telecom provider for the sale, rather than charging the end user a fee. Does this mean it is cheaper to buy telecom services directly from the telecom provider?  No. When you buy directly from the provider, that commission still exists and is paid to your sales representative rather than the agent. 

The issue with agents lies in that your results are only as good as your agent (which is hard to vet). We discuss this further in the next section, as well as in this post: Telecom Agents: The Good, The Bad, The Ugly

Aggregator / Reseller Procurement 

And finally, you can also buy telecom services indirectly through an aggregator or reseller who is buying network services on your behalf from the providers.

Similar to the agent model, your quoting is centralized in the aggregator/reseller procurement process. Taking it a step further, aggregators/resellers also typically provide your services in a single packaged deal, which centralizes your invoices, contracts, and network management portals. Sounds pretty good, right? 

The downside here is that working with an aggregator or reseller adds multiple layers of paperwork, communication, and points of contact between you and your actual network provider, resulting in a lack of control and transparency into your network. 

Benefits & Considerations of Telecom Procurement Channels 

Direct to Provider Procurement 

Benefits

  • Maximum theoretical control over network and procurement activities (“you get out what you put in”)

  • Ability to conduct a truly exhaustive RFP

  • Ability to make internal tech decisions with limited outside influence

Considerations 

  • Manual and time-consuming RFP process

  • Difficult to keep track of vendors and contracts in-house without lots of effort

  • Lifecycle management is a resource intensive process, and rarely done well

  • Vendor discovery and optimization is hard

Telecom Agent Procurement 

Benefits

  • Centralized bid process with 'easy' to conduct RFPs (just email your agent!)

  • Easier vendor discovery and ability to stay on top of tech trends

  • Install and issue help from a third party, IF they provide it

Considerations 

  • Misaligned incentives / lack of transparency – agents sometimes optimize for their own commission

  • Agents tend to be regional in nature – it is hard to find a single vendor that addresses every single need

  • Tendency to want to “keep it all billing”

  • Everything depends on your agent’s capabilities, and these can be hard to audit

Aggregator / Reseller Procurement 

Benefits

  • Centralized bid process and no need to conduct RFPs

  • Billing, contracts, issue ticketing, and more are all with one vendor

  • Global and multi-service capability to help with things depending on the vendor you work with

Considerations 

  • You will pay a premium for convenience

  • Vendor consideration is rarely exhaustive (and it's unclear where vendor relationships don’t exist)

  • Multiple layers removed from actual network operations – will lead to issues on  installations and trouble ticketing

  • Very difficult to make technology and vendor transitions

Recommendations for Choosing a Telecom Procurement Partner

In our opinion, the benefits of working with a channel partner such as a telecom agent outweigh the downsides. So, here are a few recommendations for how to best select a channel partner for your next telecom procurement project. 

  • Validate customer base (are there customers similar to ours? Can we chat with a reference? Are there customer case studies?)

  • Validate vendor and geographic coverage – ensure they don’t work with a tiny suite of “preferred” vendors, that they operate across US or globally, and that they have deep vendor relationships / ability to escalate

  • Ask them about how they engage on the full lifecycle of telecom services (not just quote, but installation, renewal, issue resolution, and more)

  • What is their approach to getting you good pricing? Do they leverage data and best-in-class tooling or just eyeball it? Are they transparent in their RFP process?

  • Do they have sales engineering internally and can they help you architect a solution?

  • Do they follow key technology trends to ensure you’re up to speed?

  • How do they charge? Free or engagement fee?

Telecom Procurement is now Automated 

After reviewing the pros, cons and caveats of telecom procurement partners, you might be thinking... isn’t there a better way? 

We agree, and that’s why we started Lightyear

Lightyear built a free software that entirely automates telecom procurement and network management processes. We use data to ensure that you’re getting the best price on your services and provide a single pane of glass for your network management. 

Customers are saving 25%+ on telecom cost and 75%+ of their IT team’s time by working with Lightyear. If you’d like to learn more, schedule a demo here!

Want to learn more about how Lightyear can help you?

Let us show you the product and discuss specifics on how it might be helpful.

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