Procurement of wireless services

Mobile communication and e-mail have emerged as two of the fastest changing technologies in the business world. Smart phones and price plans have become more affordable, allowing companies to issue mobile devices to a wider range of employees. The challenge for procurement managers is choosing the right service provider and plan.

With the launch of the 3G GSM network by major providers, procurement of wireless services requires more attention and thought. In Canada, there are three main vendors: Bell Mobility, Telus and Rogers Communications. But a fourth, Globalive (WIND) mobile and a fifth, Dave Wireless, are emerging though they may take an additional one to four years to mature.

The three major providers offer landline telecom, Internet connectivity and wireless, though regional coverage varies. In terms of wireless, Bell is available in most provinces, and Telus and Rogers cover most of the Canadian footprint.

In Canada, procurement of wireless services is a complex process as it involves not only price, but service levels and flexibility. Going for a less expensive provider and compromising on quality is a clear risk.

Buyers should analyze current and future needs of their business and the ability of service providers to meet them. Another critical aspect is choosing the right type of hardware to last the term or period of contract.

Consider the following criteria when looking at vendors:

1. Size of the business
2. Area of operation
3. Voice or voice and data
4. Specialized solutions
5. Hardware
6. Future growth
7. Service quality
8. Data
9. International roaming

Let's look at each factor in detail:

1. Size of your business: All three major service providers have small, medium and large business segments and their pricing varies accordingly.

For large enterprises, all three competitors offer great discounts to gain the business. But for medium and small businesses, it’s challenging to secure the best price and service, as procurement professionals in smaller companies may not have the subject matter expertise.

In most cases, the large corporate account is established with between 15 to 20 active connections. Sometimes, buyers don’t look into this, and they may end up taking, for example, 12 to 14 lines. As a result, their account is considered ‘smaller business’ and they pay a much higher fee while losing benefits such as per-second billing, which are offered to large corporate accounts. Per second billing can reduce utilization of airtime by 15 to 20 percent.

2. Area of operations: Analyze where the business is. Long distance calling over wireless is expensive and out-of-bundle rates can increase your monthly expenses much beyond your budget. If services are required in all provinces including Manitoba and Saskatchewan, you’ll need a vendor who covers all of Canada.

Vendors offer promotions, such as free Canada-wide talking between members of a group. Buyers could negotiate this for Canada and US talking if staff travel south of the border. If the company is in the transportation business, purchasers should look at Canada-wide talking for most of the lines and negotiate cheaper per-minute long distance or unlimited Canada-wide long distance.

These days, most service providers are willing to give extra discount and therefore, one must make a point to negotiate on long distance.

If the business requires a large amount of talk time in the US, buyers should consider a US line.  Wireless in the US is almost a third less expensive than in Canada. For frequent travellers, US talk time and a data bundle or North American-wide package is the better solution.
 
3. Voice or voice and data: Use of voice-only service is becoming more limited as an increasing number of organizations opt for voice and data combinations. Data plans boost the productivity of staff who spend time outside the office.

Most providers give extra discounts for voice and data services and in their language it’s referred to as “double ARPU” (average revenue per unit). Procurement professionals should look at the contractual obligations to maintain data services because in some cases, they may face additional charges if they want to remove data from some lines. The most commonly used and visible data device is the BlackBerry, though options also include the iPhone, Palm, HTC, Nokia, Motorola and Samsung data devices.

The data consumption of each of device is different and if one needs it in the US or outside of North America it’s critical to know the data charges for country-specific roaming.

While negotiating, always check the pricing and policies on minimum data service length, data price plans compatibility with different kind of devices, and roaming charges.
 
4. Specialized services: Here we’re looking at niche services such as Mike by Telus and 10-4 by Bell. With the launch of HSDPA (GSM) network, the life of such services will be limited as they operate under the old CDMA environment.

These services were intended to meet specific objectives, such as unlimited talking between members of the same group or service provider, ease of staying connected and no long distance charges.

With the special promotions offered by most service providers, such as unlimited calling between members of a group or subscribers on the same network, this service is suited for Canada-US travellers, since it saves on long distance and roaming cost.

The main beneficiaries of this service are long distance truckers. Others, such as staff in the construction industry, might use it as well. But with less hardware supporting these services, they may not last for long. 

5. Hardware: With the new network in place, hardware will play a key role in the future of this industry, as hardware can now be used across service providers. The market is shifting, so you won’t need a long-term contract, and will be able to use your hardware when switching from one provider to another.

GSM phones are much cheaper in the global marketplace and are readily available. Procurement professionals should ensure vendors are contractually obligated to add value to the monthly plans and not just a mere subsidy for hardware prices.

Users will be free to buy phones/smart-phones of their choice. They’ll simply take out the SIM card and put it in the new hardware.

Procurement professionals must consult their IT counterparts to check their long-term communication policies before deciding on hardware.

For example, what kind of e-mail server is in place? Is there a requirement for enterprise server software and client access licences to use e-mail on the phone? What is the cost of such software and licence?

If you need secure and reliable data communication with a remote network administrator, it might be best to use a BlackBerry device.

6. Future growth: Before locking in contracts, check the company’s ability to add more lines or reduce some lines as needed. Sometimes, service providers force customers to maintain a minimum number of lines in order to pay lesser charges, even if the additional lines are no longer needed.

7. Service quality: This is the most important aspect when negotiating a contract under long-term service agreements. The salespeople who negotiated the deal with the purchaser will vanish, and users will have no option but to complain to unknown people in customer service, who might provide difficult and unsatisfactory service.

Lower monthly price will be more expensive if the problem isn’t solved. What if your salespeople are not able to confirm pricing and delivery to their customers? The post-sales customer service is the most common reason businesses and consumers change their service providers. Points to consider here are:

• Can you reach your sales rep directly by phone or e-mail? If every time you call and a new person answers, you will have to spend more time on every service issue and there are no guarantees your issues will be resolved;

• Do you get access to a specialized customer care department dedicated for business? If it's the same service department assisting single-line and 50-line businesses, then you can't expect a consistently good service level;

8. Data: E-mails on smart phones are becoming a norm these days. Procurement professionals should consult their IT department to find the right solution. The hardware and solutions must integrate with the organization's requirements.

For example, if a Microsoft exchange server is used, the company must determine what hardware will work best with it. Choices include Palm & HTC, which use a Windows-based operating system and don't require additional software. But BlackBerry needs BlackBerry Enterprise Server (BES) and Client Access Licence (CAL) which come at an additional cost.

At the same time, the Blackberry has data compression and other services. One should look into e-mail requirements and IT administration along with other policies.

There are many add-on applications available these days, many of which boost productivity and offer a high rate of return on their cost of acquisition.

For instance, sales people can process an order while at the client location and send it over a wireless smart phone, using a data input tool. Similarly, there are solutions for tracking assets on the road. A courier company can locate the closest pickup driver in the area and e-mail the next pickup without requiring the driver to come back first. The system saves time, fuel cost and provides a better service level.

Among the latest gadgets is the wireless data modem known as the rocket or turbo stick. These devices connect to Internet services over wireless network. The user simply connects the device to their laptop's USB port. Newer laptops have built-in wireless modems.

The modems are heavily promoted these days and are available at affordable rates. Look for footprint of network and speed. Also check if they work indoors. With a CDMA-based modem you’ll have limited and slower connection and thus more frustration.

9. International roaming. With businesses going global and more international travel, procurement professionals should check roaming rates and policies before signing any agreement. These costs can be high, resulting in questions from your accountant.

With all these considerations taken into account, purchasers will have a better chance of finding a communication system offering value for money, good service and flexibility.

Sanjay Sharma has 14 years of experience in procurement and sourcing, and most recently worked at a major telecommunications company. He has the Certificate in Purchasing from the Ontario Institute of the Purchasing Management Association of Canada. He’s currently an independent consultant focused on strategic sourcing, and a council member and educator at Gerson Lehrman Group Consultants.