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Can You Grow Network Services While Containing Costs?
It’s not uncommon for the enterprise to want to grow its network services, but it’s also not uncommon to want to keep a tight rein on the budget. Is it possible to achieve both cost control and improved services?
According to Alsbridge Network Services Group, an organization’s telecommunications services costs tend to account for three to six percent of all overhead, while also averaging more than two percent of total revenue.
Spending is increasing, however, which makes managing and controlling the total network spend more challenging. And, as the world is becoming more global, growth in the international telecom market tends to be focused on the enterprise customer.
Traditionally, enterprise buyers were able to build their telecom provider strategy according to a global/domestic breakpoint. They relied on one provider for domestic needs and another for their global initiatives. Today, however, there is a challenge to develop a fully-meshed, IP-based service on a global scale to support new innovations.
Most carriers lack the necessary capability, and the deployment of converged services continues to be slow as capital expenditure has been limited over the last few years due to the global economic challenges, and ROI in SIP and VoIP is difficult to attain due to the compression of pricing for the traditional TDM space.
As a result, only Tier 1 providers can meet the needs of the global buyers and international carriers are not pushing aggressively into the U.S. market. And, it is much more difficult for them to compete for international deals with companies that operate globally.
Likewise, emerging providers are hesitant in making acquisitions that would enable their global competitive advantage. To that end, change is anticipated as U.S.-based and international emerging market providers evaluate their global capabilities.
Two trends have been identified in pricing: the average price continues to decline, and the price point continues to decline. According to Alsbridge’s research, pricing gaps exist between the lowest price point for one service and the average price for that same service. The company believes these gaps are widening due to an inefficient market, and trending down price points.
Given these trends, the time is right to consider network cost management strategies and telephone expense management. Companies will do well to turn to consultants in these instances, allowing their expertise to put them in a better place to negotiate services and enjoy more competitive pricing.
To learn more about this topic be sure to check out tomorrow’s Webinar, “Stop Overpaying for Network Services in 2012.”
Edited by Amanda Ciccatelli