Dialtone provides an accurate and independent telecommunication contract lifecycle management service that can radically improve the management and cost of your voice (fixed and mobile), wireless, WAN communications and managed services.Dialtone consultants have over 20 years experience in telecommunication expense management projects through New Zealand and Australia, is based in Auckland and is one of New Zealand’s leading telecommunications procurement and cost management specialists.The Dialtone customer base represents all business, government and tertiary sectors. This provides us with a view that is updated monthly of current usage, cost of ownership and technology solutions in NZ and Australia. Our independence is important, and we receive no benefit from any third party other than our direct customer. Dialtone works with all carriers and proactively tracks all service offerings. We are carrier agnostic, which means we work for you.Over the last six months, telecommunication market pricing has come under increasing pressure from the reduction in mobile termination rates, data rates and also the offer and the adoption of SIP trunking technology by an increasing number of reputable organisations. These factors need to be considered to understand the telecommunications pricing landscape as it relates to to the benchmarking client.
Overview of Scope – Benchmarking
Dialtone Benchmarking services includes all telecommunications services in relation to price and services levels (including service credits and service credit thresholds). More specifically these services include:
- All voice and data carriage services;
- All voice and data usage;
- All mobile voice and data services; and
- Management and Monitoring services for in scope equipment (routers, switches, firewalls etc).
For a benchmarking project we aim to include rates from a minimum 5 peer organisations. Each of these organisations will be comparable in size and industry to the client businesses, and selected from Dialtone’s customer database of over 50 large organisations .
The services and pricing from capable major telecommunications providers are used in conjunction with the peer comparisons.
Adjustment of On-Net Mobile Calling
Two of the major telecommunications fixed line vendors also provide mobile services through their own network. As part of their pricing offering, the price of calling to their own mobile networks is significantly reduced. For benchmarking to be accurate it is necessary to take this into consideration.
Key Benchmarking Parameters
To provide an accurate and fair benchmarking assessment it is important to consider four key parameters:
- The price of each component part that makeup the services.
- The usage of each service and how they combine to make up the total price.
- The stage that the client is in its supply agreement (e.g. two years into a three year contract).
- The available support and character of organisation and how this impacts on the procurement of its telecommunications services.
The first two considerations are straight forward and require no explanation.
The“Contract Life Cycle” is an important consideration because vendors consider the overall value of a contract to determine its initial price. The term of the contract is one of the main parameters a vendor uses to build a business case around that price.
Invariably market prices drop during the course of a contract which can undermine the vendor’s business case and the client’s procurement selection decision. To provide a fair and accurate benchmarking picture contract life cycle must be reflected and considered as part of the benchmarking process.
The final consideration is the support and character of an organisation. It is possible to gain the most competitive pricing from “cherry picking” services from multiple vendors, having short term contracts, and being an early adopter of selected technologies. This approach to telecommunications procurement is not particularly favoured by larger mature organisations. This is because of the hidden costs in additional support and downtime. It also impacts negatively on the business and support relationship between the parties. The DAS model takes these factors into consideration.
The DAS Benchmarking Model
Dialtone employs the DAS model since it incorporates all four key parameters, for fair and accurate benchmarking .
The model is based on plotting the results of the various prices applied to the client’s usage and rental configuration on a normal distribution curve. The curve is then split into four quadrants, that reflect the nature of any organisation, its approach to service delivery and procurement. To remain competitive with the larger mature corporate organizations, the telecommunications vendor needs to offer a pricing model that fits inside the second quadrant.
By its very nature, as the contract life cycle progresses, the clients costs will increase relative to the market and it will move slowly to the right of the curve.
Therefore the DAS Model concludes that a client who is a mature organisation is competitively and fairly priced when they lie in the “Second Quadrant”. Where they are positioned in that quadrant is also likely to be determined by their progression through the contract life cycle.