Today’s organizations depend significantly on networks and systems; they are the lifeblood of smooth operations and business continuity. According to Gartner, the average cost of network downtime is around $5,600 per minute, translating to approximately $300,000 per hour. For larger organizations, including Fortune 1,000 companies, costs can reach as much as $1 million per hour.

A reliable network service supports cost management by avoiding these potentially significant financial losses from network failures or security breaches. Additionally, a well-managed network drives operational efficiency between employees and departments, enabling greater collaboration, productivity, and seamless access to resources and applications. The network should scale with the business to support growth and will allow the company to respond quickly to market changes.

Procurement can help manage costs and ensure a reliable network by conducting a comprehensive cost analysis and identifying opportunities for savings. Procurement ensures that the company maximizes its return on investment by evaluating the total cost of ownership (TCO) and negotiating cost-effective solutions.

As businesses’ technology requirements grow in an increasingly tech-savvy world, more often outpacing budgetary increases, so does the need to optimize your technology spending. Technology leaders are driving value through their network service in three key ways:

1. technology transformation

Embracing new technologies is crucial for staying competitive, and networks are no different. Assessing current infrastructure and planning for future network improvements, technology leaders must consider the potential benefits of technologies such as 5G, SD-WAN, and cloud-based services along with the management and delivery approaches such as NaaS (Network as a Service).

Industry leaders are thinking outside the box, finding scalable and flexible solutions to adapt to business changes. This requires a long-term vision of your technology roadmap and asking questions such as: How can I improve network performance? Does SD-WAN suit your evolving requirements and support customer demands? Do all sites require dual and symmetrical connections? How can I alleviate internal resource time and automate processes while keeping the network secure? Is there a better way to be proactive in our overall network lifecycle management?

The trick is not to overcompensate or settle for ‘cookie cutter’ solutions – standardize and right-size locations to gain better control of spending and drive down costs. Procurement can provide the outside perspective needed to identify over-spec solutions allowing for more strategic investments to be made.

2. contractual flexibility

Effective contract management ensures a company can adapt to changes especially as market trends and technology landscapes evolve. Procurement can ensure network contracts support the company’s growth and technological advancements by negotiating terms that provide scalability, protection during business downturns, and access to necessary improvements without an added cost.

In practice, this might look like negotiating flexible terms that align with the business now, and for future operational changes, consider:

• Negating auto-renewals and minimizing renewal notification windows
• Forthcoming merger and acquisition activities and how to leverage
• Building in business downturn clauses to address unforeseen requirement changes (the US retail sector is trending towards more closures as retail’s physical footprint shifts to serve as fulfillment and distribution centers)
• For more strategic and high-dollar contracts, request the right to benchmark and assess pricing throughout the term of the contract
• Ensuring a migration plan allowing for technology improvements and change without liability

3. using suppliers to ensure business continuity

Maintaining strong collaborative relationships with suppliers is crucial for ensuring reliable service delivery. Procurement can facilitate regular communication, performance reviews, and issue resolution with suppliers, fostering partnerships that support the company’s enterprise network needs.

Approximately 45% of large enterprises use a single global provider for their WAN and network telecom services to ensure consistency, streamline management, and potentially reduce costs* . On the other hand, 55% of companies opt for a mix of regional and local providers to leverage local expertise, flexibility, and potentially better service levels in specific regions.

By leveraging market insights and conducting thorough evaluations, procurement can help identify suppliers that offer the best value, are financially sound, and align with the company’s strategic goals.

Don’t put all your eggs in one basket. Consider what your geography landscape looks like and what mix of global, regional, and local providers best suits. You might also want to split your connectivity, management, and hardware/software providers; they don’t need to be single sourced. Leverage suppliers who can provide a total cost of ownership support model, incorporating all spend categories, and those who are investing in their own growth to obtain the best value for money.  

Competition within network providers has become more viable; costs are coming down, and opportunities are available.  

 *Global Telecom Services Market Report, Share & Growth [2023 Report]https://www.technavio.com/report/telecom-services-market-analysis

While these considerations are critical, don’t forget your network’s ongoing monitoring and management. Developing better relationships, selecting the right combination of technologies that align with your business strategy, and contracting best-in-class cost-effective terms and conditions now puts you in the best position for the next renewal and future technology transformation considerations—leverage procurement’s ability to alleviate challenges, improve network performance, and drive optimal results.

For more information on how our procurement consultants can help your business address the challenges of changing technologies and optimize your network operations, get in touch today.