Many organizations put themselves through 6 to 8 months of overtime in preparation for contract negotiation. Then they ink the agreement, throw it in the drawer and let it sit there for a few years. The whole process is too much of an ordeal to relaunch any sooner, despite the savings that could surely be achieved by more frequent renegotiations.

The hard facts are that industry consolidation, technology developments and changing market dynamics all make the sourcing process more difficult, complex and time-consuming for buyers-yet these very same factors increase the need for companies to be very precise, fast and flexible in their negotiations.

Some 80% of telecom services today come from the top two providers, who have markedly improved their negotiation capabilities. Vendors are using this increased leverage as well as creative pricing tactics (including penalty pricing for slow adopters) to push new IP-based services before most companies have been able to determine the incremental value they deliver. And these new services will make the process even more challenging for buyers, since converged networks will support a plethora of applications, which will multiple the number of line items and parties (while dispersing accountability) encompassed within contracts.

For companies that continue to source alone, the job is going to get much tougher.
› top