PracticePeople In PracticeFDs overspending on telcoms

FDs overspending on telcoms

Nine out of ten financial directors cannot take advantage of favourable conditions in the telecommunications market because they are tied-up in uneconomical and inflexible long-term agreements with single carriers.

This was the finding of a study conducted by international networking company Vanco, which found that 90% of UK companies were paying twice the market price for single carrier contracts, despite the availability of far-cheaper alternatives.

The study identified a 45% to 50% reduction in the costs lines between many European and UK locations during the year last year, but found most FDs were left in the dark regarding current minimum costs.

Furthermore, the study found most telecom networks, whether in-house or outsourced, were highly inflexible and made little provision for the addition of new sites, mergers, acquisitions or for additional systems that would require more bandwith.

Vanco CEO Allen Timpany said: ‘The cost of operating a business-critical network is an increasingly large component of the IT budget, but money is being wasted through poorly thought out agreements.’

Timpany said one reason for the excess costs was the lack of accurate bandwith testing resulting in a ‘one-size bandwith’ provided for an entire network with varying traffic. He added that FDs needed a constant supply of cost critical information if they were to budget more efficiently.

‘As a result, requirements are often over-estimated and therefore companies pay more than they need to,’ he concluded.The report recommended FDs avoid long-term price lock-in contracts, have constant access to the lowest market costs, have fixed-price agreements for moves and changes to the network and ensure the network is designed to handle variable bandwith demands.

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