Well, hello everyone, I am really delighted to welcome you all today to TNC's latest podcast on the topic of "How Best to Procure Your Future Network & Telecom Services". Should you renegotiate with your incumbents or use competitive tender processes? I'm John Waterhouse, CEO of TNC, and I'll be your host for the next 20 minutes. As I'm sure everyone joining knows, TNC is the UK is largest independent network and telecom strategy and sourcing consultancy, supporting over 280 major UK multinational companies, helping them to get the best possible commercial, technical and operational results from all of their network and telecoms solutions. So I'm really delighted to welcome our special guest today, Karl Walton. As I'm sure many of our viewers or listeners will know, Karl is one of the highest profile IT Procurement professionals working in the UK and he's leading in that area at the moment for the AA, having previously worked at Arcadia, Centrica, Qinetiq, and De la Rue. During that time, Karl has led the development and execution of some really market leading procurement strategies across a really broad range of IT Network, Telecoms, and Mobility services, and faced into an awful lot of technology and operational transformations, and of course - every procurement person's favourite thing - delivering lowest lifetime TCO.
So Karl, it's a pleasure to talk with you today. Would you like to say hello?
Karl Walton 1:28
Hello, everyone. Pleasure to be here as well. Thanks for the invite, John.
Glad you got the white shirt memo.
Karl Walton 1:33
Yeah, yeah, had to do that. Absolutely nothing on underneath that!
Perfect - me too. So today's topic, it's a cracker. As I said, "How best to procure your future network and telecoms services," and critically, "Should you be looking to renegotiate with incumbents or use competitive tender processes?" So not only is it a really interesting topic, but it's also really timely. You know, as our regular viewers or listeners will know, at TNC we've been talking about a revolution sweeping through the network and telecoms market - there's really transformational technologies coming into the markets: we're talking SD-WAN; we're talking SASE; we're talking 5G; we're talking Cloud-based contact centre and telephony services; and these are racing into the market to meet some really fast changing demand for services to enable and support business change. And, of course, these new revolutionary technologies and the use cases they're arriving to meet, they're coming at a time of unprecedented economic challenge, hey, let's mention the pandemic at this point as well. So, yeah, you know, for a lot of organisations, a really strong focus on cost, and at a minimum, ensuring transformation is is achieved within budget, very often delivering cost savings. So with all of that context, it's no surprise that developing the most effective procurement strategies is absolutely critical to addressing these objectives. So that circles us right back to where we are today, and why we're so pleased to have Karl join us. What we really want to get into today is how to develop those most effective procurement strategies - how as an organisation, can you work your way through some pretty challenging questions to reach those sort of optimised objectives? And luckily, we have Karl on hand to guide us. So we're going to look at three questions. The first question we're going to look into is the main pros and cons of the different approaches available re negotiation, re tender etc. We're going to look at the key steps organisations should take when developing the strategies, and then go finish up with some takeaways for our viewers and listeners.
So Carl, I've done enough talking - if we may look at that first question. What do you see is the main pros and cons of renegotiation, retendering services when you're facing into a complex technology procurement process?
Karl Walton 4:08
Sure John, so the first thing I would consider in this very situation is - your business and the services that your business is consuming - you're considering renegotiating with an incumbent vendor, or going to tender, or going to market, and also the type of business you are - because if you're a privately owned business versus a public sector business for instance, you may have different policies, processes, things that you have to do and have to comply with that means that actually a straight renegotiation and direct reward with your incumbent is off the cards before its even begun. So, you know, again it's very situational. Just before we get into the pros and cons, what I would say is, it's always good to create both options for yourself. And what I mean by that is - make sure that you've got a good plan in place that's been discussed and that you're not leaving it to the last minute to go out to your incumbent vendor and renegotiate, or equally looking to do a tender in three months that actually should be taking you six to nine months. So first thing, make sure it's on your category plan, make sure it's socialised well in your business, make sure you understand and you've identified your SMEs and the people that you rely on to make sure that that process is successful, and that they're on board with you.
Yeah, it's really interesting. I sense the phrase "stakeholder management" heading quickly towards us; presumably this isn't something as a procurement leader, you can just sit at your desk and make those decisions, you've got a lot of stakeholders, you've got to align around your strategy?
Karl Walton 5:40
Yeah, and what I'd say is, every business is on a big transformation of some kind at the moment: digitalisation, data, there's lots of really, really big, key challenges - technology challenges - that every business is facing into at the moment, never mind the pandemic for a second, so everyone's time poor. So you've got to think about what the most efficient thing is and I think, talking about pros and cons of a "renegotiate versus a tender", well, tenders take time, and they take costs. And they need a lot of feed in from key SMEs, whereas renegotiating can be a much quicker three to six month process rather than a six, nine, maybe even 12 month process, depending on the size of the service that you're negotiating.
And presumably, when you are talking about that category planning, no procurement professional listening to this podcast has got time to retender everything. So you've got to make some tough choices about what you've got time to go after, and where you're going to get, presumably the most bang for your buck? Is that is that the top line? Question?
Karl Walton 6:49
Yeah, I'd say it's about where, - you know, a lot of procurement teams, particularly Greenfield procurement teams are very lean - so what you're going to do in-house versus what you might outsource, for instance, you need to look at the best way of executing and getting the best outcome that you can for your business for that particular procurement. So this is for me, - and by the way, I'm absolutely not sponsored by TNC - this is where companies like TNC come in very useful from my personal experience, because for one thing, you can give us market rate instantly. Because you're leveraging lots of different data sources and servicing lots of different companies in different sectors, I can come to you and if I'm in a "renegotiate" situation, I can get the benchmark I need without having to go through all the rigmarole of a tender. So that's really, really powerful.
Yeah, you talk about that sort of planning question and thinking about market rates and potentially getting SME engagement; I presume, one of the challenges when you're creating your category strategy is, if you knew at the start, what you knew at the end, you might plan things a little bit differently? Hey, if you'd known there was 20% to come out of that contract, or or a real transformational solution outcome, you'd have definitely prioritised tendering that service? Whereas another one, you know, you thought perhaps there were more benefits than turned out to be there. So is that SME input helping you bring forward some of that intel, so you can plan more effectively?
Karl Walton 8:24
Yeah, I think even if you do just go down a renegotiation route, you've got to do that bit of due diligence, and that analysis internally to understand exactly what the business has in store for those services, those technologies, because what you don't want to do is just enter into another three year deal on a like-for-like basis, and then you find out 5G is gonna revolutionise your business! So you need to have that market insight and that operational insight from wider stakeholders than just IT. So if I took the AA - where I work now for instance - we've got two kinds of devices in our road patrol vehicles, from ruggedised devices, to mobiles: the data network is absolutely critical to the operation of the business. And thinking about changing vendor, there's lots of complex things that you have to consider, like if you were to swap SIM cards out, it's not just as easy as posting a SIM card out to your patrol at their home address, and then plugging it in. Unfortunately, it can mean taking that vehicle off the roadside for the day, or for a few hours, at least, and disrupting operations.
That's a really interesting point. And presumably therefore, just thinking about how that sort of feedback loop works with your stakeholders because I'm guessing, (I don't want to put words in your mouth), but as the procurement leader, you've got to take your stakeholders with you on the journey, but you've also got to bring intel to them and help to guide them through the right thought processes? So, presumably, you can't take a service to tender that the stakeholders don't want to take to tender, but equally you can't just renegotiate something they want to desperately get rid of. So how do you square that, that that particular circle?
Karl Walton 10:11
I think again it's the situation with your business, because hopefully the business that you're working with, and the stakeholders you're working with, have a technological strategy, so hopefully they understand what they want from this service and they're thinking, and they're doing the market analysis alongside, at the point that you've put it into the category plan. And, what I'd say about category plans is you don't just plan them at the beginning of the year and then just go off merrily and execute them, you're constantly talking about them, and they can change - it's absolutely fine. No, absolutely dependent on resource availability, and key activities and strategies of the business and objectives of the business, you need to be able to flex and adapt to that. But certainly with technology, it just moves so fast.
Well, I was going to say, one of the bits of feedback we're continually getting from customers - yeah, you're absolutely right - the technology is moving at a really amazing rate, far faster than it ever has done, but also business circumstances are changing incredibly quickly as well, I mean we're seeing, at the moment a spate of private equity buyouts; we're seeing obviously, the pandemic changing business models; you mentioned - digitalization; there's so many waves of change hitting businesses, that that category plan, that's got to be a living document - right? That's got to be pretty dynamic strategy?
Karl Walton 11:33
Absolutely, yeah. So it has to be flexible, and it has to continuously evolve and essentially, you have to keep talking about it and you have to be reassuring, and restating to your key stakeholders - your senior leadership - that those things are still a priority. They're the things we're going to project manage the heck out for you; these things - we're going to outsource these things, we're going to talk to you about these next year, because they're not as much of a priority, they're not going to deliver us as much value.
Can we talk about a slightly duller topic for a second, but I know one that's close to your heart, given it's one we've spoken about many times, - not just my dress sense, which of course is magnificent, right? Possibly? (Or is it my rubbish headset? One or the other!) Data - so you know, the criticality of data? Again, thinking about those strategies, thinking about those plans, you know - even something simple - you talked about Greenfield procurement teams earlier - even something as simple as knowing what's out there, knowing what your contract landscape looks like, and so on., that's presumably a pretty challenging environment for a lot of procurement people?
Karl Walton 12:43
Extremely yeah. And it comes down to what's fed and watered I guess, before you get there because things like your Starters/Leavers process - if that isn't integrated with things like your Telco Ongoing Operational Billing Management Services and what have you, it can put you into a whole world of pain because you have no idea what you're cancelling, or what you're switching on - all of a sudden you've got 15,000 connections and SIM cards, but you've only got 8,000 employees! So lots of companies get themselves into that mess, and then on top of that, just to lay off things is very difficult. I don't want to speak too ill of the telco vendors out there, but their billing is questionable at times - so there's obviously lots of opportunity there, going over historic billing and stuff like that. So to me, it's always the first thing I'll come into a business and think about and look at, and just understand, - to do my own assessment of maturity on what their asset logs look like, have a look at some of the billing data, and then just perhaps even bring in TNC just to have a bit of a sniff test and say, "Well, does this look right? We've got 8,000 employees - does this stuff look right, how are we using it? And no, often is the case. All these things are zero billing, and we're not using the new payment connection every every month, so...
You're absolutely right, and having that strong foundation to work from, if you haven't got that data out on - well, 'What are we spending?' or 'Where are our contracts up to?' You can't possibly do any of the other things well, without that firm foundation?
Karl Walton 14:27
It's your requirements isn't it, essentially? So you can't go to market, you can't credibly go into a negotiation if you don't know what you need. So for me, the challenge isn't negotiating with a vendor and getting the best deal. It isn't going out to RFP and managing all the data that's coming back and necessarily managing the SMEs. The biggest challenge is making sure you're going out with credible information, you know what you want. That's always a challenge. And it's not just a telco service thing, it can be in software , it can be in hardware as well. It's making sure a business has enough time, and has put enough thought into what it is they want, and what the outcome is, and what they want to achieve. And rather than being - you know, there's always a term in procurement around... you've got almost like a prescriptive or performative Statement of Requirements, versus a performance based - and actually, it's good to lean towards those performance based ones, because then you're actually challenging your stakeholder to say, "Well what's the outcome you want?" Is it reducing your...? Go on, what were you going to say?
Yeah, well you're just hitting some really interesting topics. We talked earlier on about, you know, how as a procurement leader you've only got so many hours in the day, so there's only so many things you go after, but presumably the same is the case - as these technologies are becoming more complex, you're not an army of one, you need your stakeholders around you, they're the ones bringing the technology requirements or evaluating the solutions, or whatever it is. So you've got to take into account their absorption capacitie as it were?
Karl Walton 16:06
For me again, it comes back to having that plan, and having that good stakeholder management and making sure that that's a constant topic of discussion, because you shouldn't get to the point, where you say 'We're going to kick this off on the first of July', as of the first of July and then your stakeholder says: 'Well, I don't have capacity to do it'. If you've got to that point at the first of July, when you're planning on kicking off, then you haven't spoke to your stakeholder enough. And so, again, it's coming back to that, constantly having conversation, making sure that's regular, make sure it's a quality conversation, and you'll get into the nuts and grips of this stuff early. You're fleshing out what the expectations are, and what you need as inputs to do a good job.
That's really interesting. So I feel like we obviously started off on the sort of pros and cons and, the next question is around those key steps you should take when developing that procurement strategy? I guess we've touched on some of those, in terms of having the data to drive the plan, the stakeholder relationships and engagement and so on. What would you say if you try and summarise the key steps you would go through when developing that strategy around a particular service, what do you think would be those sort of key steps?
Karl Walton 17:24
Well like you say, first thing was was your data - well first thing sorry, was even planning it, so making sure that it's on the roadmap, like we've spoken about a few times; making sure that you've done your data analysis; you've engaged with your stakeholders; you've formulated that project team - you've assigned roles and responsibilities in that project team so everybody was very clear on what they're contributing and what they're responsible for. Making sure you've got regular cadence and check ins with that project team to make sure that things are moving forward and all riding the same wave. I think when you've got to that point, you've got to a point where you've got a skeleton of requirements together, you need to think about the governance that goes behind those requirements, and that's probably a good time to start engaging with senior stakeholders to get them to poke and challenge those requirements to make sure that the scope is correct, and the underlying assumptions are correct and aligned to business thinking and strategy, because sometimes that stuff doesn't filter down to the people that obviously work on it. So absolutely. Have some stakeholder challenge, be open to that and be willing to take some of that, I guess.
At that point, it depends on whether you're going for a tender or or renegotiate, but if say, we go for a tender for instance, briefing your suppliers is absolutely key. You know, there's nothing worse for a supplier I don't think, than a cold RFP landing on their desk, out of nowhere. They've had no context, you haven't warmed them up. These guys are just as busy, if not busier than you, so you know, be empathetic to that point. Also, ask them for some feedback before you issue it. You know, you can put a timetable together in your RFP, ask the suppliers, what's credible, ask all of them the same question... "I've got six weeks and it's over Christmas?" "No, it's not credible". I can guarantee you're going to hear that back from multiple vendors. If you've got an unreasonable timeline, it's good, just to front into that problem at first, and it can help you manage your stakeholders who could be chomping at the bit to get the thing across the line, trying to rush it rather than actually getting the right outcome.
Do you find you get that sort of quality feedback from the bidders? Do you get good engagement with those sorts of questions?
Karl Walton 19:35
Yeah, yeah, absolutely. I think they appreciate it. Again, I don't know, it's my method of procurement around that Win/Win and the relationship, and managing supplier relationships is key. I think you're always going to get a better outcome if you've got a good relationship, and part of having a good relationship is being understanding and empathetic to their challenges, and seeking - truly trying to seek - a Win/Win for both organisations. I think it's got it's got to start there. These guys are going to be working, day and night sometimes to meet these deadlines in your timetable, cancelling holidays and things like that. And I think nodding to that, and being understanding to that, and being accommodating to it, is key. I think it's just a good way to kick off that relationship.
Yeah, that's really interesting. That's really interesting. Oh, and when you're working with your stakeholders - thinking about the sort of specific question around tender and renegotiation - it sounds like that's a kind of quite a fluid question? Like you wouldn't arrive at your stakeholders to say:, 'Today we're talking about this service, and we're going to renegotiate it'. Presumably, that's a bit more of a dialogue: 'This is the service What are we thinking...?'
Karl Walton 20:50
Yeah, we'll play through those pros and cons, I guess. Perhaps there's a strategic review board or something you've got set up in your procurement function, where you can go and play those things to senior stakeholders to get the thinking and get the buy in? Because nobody wants to go and do a tender for tender's sake. If you if you can go out and renegotiate with the current vendor because they're performing well, the relationship's great, and you're going to get market rate, why wouldn't you? Tenders are expensive, they're time consuming, and there's plenty of other things - let's face it - for us procurement teams to focus on. So that for me is always the first question - actually, can we? What the state of the relationship is. Could we credibly just renegotiate directly with this vendor if we're happy with the service we're getting? I guess some of the cons to that, what you do have to think about though, is that you could be quashing innovation, or you could be - you know, you could get something even more sublime than market rate because a particular vendor wants to buy your business, they want your brand, basically it's good marketing for them. There's other upsell opportunities and cross sell opportunities, or joint marketing ventures and things like that. So you know, you are kind of stopping yourself from from seeking those kind of innovative ideas. You can still request innovative service ideas from from the vendor that you're negotiating with, but I think you'll get a better view for what's happening in the market, and change, and all that kind of stuff if you if you were to go to tender and open your doors.
Yeah, yeah, absolutely. Yeah - opening your doors is exactly the phrase, isn't it? You're opening yourself up to innovation, and you're letting people come to you with ideas. And I guess speaking of that, do you find - I suspect the answer to this has got to be it depends from organisation to organisation, team to team - but do you find you also get stakeholders coming to you to say: 'Hey, Karl, we should do this; we should retender this; we should negotiate this; we should do something different?' Do you get that? Or is the traffic a little bit more the other way around?
Karl Walton 23:01
I'd say you're spot on, and it's completely dependent on the organisation you're in. Again, if you're in the sort of an organisation where it's not heavily mandated that you do engage a procurement team, then it is a bit like being, picked last on the football team, and you have to make sure you're at the frontline, in front of mind, to make sure that you're engaged, and you know that can be a task in itself. If you're mandated, fully mandated by the senior exec, your procurement policy is written, understood and practiced while in the business for good reason, then they will be coming to you. You know that's the ideal situation you'd be in, is that stakeholders are coming to you and asking you when you can plan. Coming from a Greenfield scenario, it doesn't just happen overnight, it can be a year, two years, in the making to change that culture and get the buy in, because you've got to prove what a procurement function can do, and what the values are. Before you know, you can expect your stakeholders to come and call in your services. It's almost like being a supplier yourself, isn't it - an internal supplier?
Yeah. It's a really good analogy, actually. Presumably therefore, the stronger the relationships you can build over a period of time, the better that process is going to work. Fantastic, right. As always I starting to get conscious of time and so on, and we've promised our viewers and listeners some takeaways. I have one I'm going to chuck in at the end, but I'm cheating, that's because we talked about this beforehand. and there was a point you made that I really hope you make it again. I've got it noted down!
But what, you know if one of our listeners, grabbed you over a beer and said: 'Hey, look, Karl give me give me a couple of nuggets here'. What would be your sort of key takeaways, for someone facing into a complex procurement process for one of these sort of highly value added services? What two or three things would you perhaps guide them to do in terms of the planning and...?
Karl Walton 25:01
Yeah, so say its requirements and stakeholder engagement, firstly - those plain stages - if you don't have the right data to hand, and your requirements aren't true and accurate use, you're going to set yourself up for pain further down the line when you're negotiating with a vendor, and they've given you a rate for 8,000 units, and you only need 4,000 units and then, you just start losing credibility throughout all that, and it adds a lot of time and wastage, quite frankly, of money to the to the whole process.
But you can't avoid that, right? I mean, at some point, you're gonna need the data, ideally you'd have it before you started, you're certainly gonna need it by the time you're writing the contract, so presumably, you just got to bite the bullet...?
Karl Walton 25:47
Yeah, you're in a dangerous place, because you could either over-purchase or under-purchase, and neither of those things are going to put you in a good place. You know, you over-purchase, and then you've got a minimum commitment that - some of these vendors do have in their contracts - that you're never going to meet. You're gonna be stuck with them for 10 years instead of five. And if you under-purchase, and then yes, you can always purchase more, but you've probably lose the ability to negotiate a better rate for those things, so it's not not a position you ever want to be in. There's always - when I'm seeing the stakeholders internally, I always say, use the RFX process as a way of defining your requirements as well, that's absolutely fine. It's why we have things like RFIs...
That's interesting. So you get some of that market insight [KW: ...before you go to tender] and then you can you can bake that into the onward process.
Karl Walton 26:39
But I think we should know within 80% at least tolerance, what it is we need, and then it should just be fine tuning, perhaps around those technology innovations, or things we just don't know about. Or perhaps our data is in such a bad place that actually, we'll use one of these vendors to do some data cleansing for us as part of process. You've just got to go into it with your eyes open.
But that sort of open engagement model, that sounds like that's a bit of a signature move for you, that you're almost co-opting the the bidders to help you get not just a bid, but to help you get to that optimised result, you're getting them to bring some ideas or even some some resources to help you optimise the process?
Karl Walton 27:25
Yeah, and it's in their interests again, you know - opening your doors - I'm just saying, to a degree so that you're not showing your hand too much - but these are things we struggle with, it's not going to be new news to them, they're going to have come across many businesses, which have had the same struggles and nine times out of 10, they've probably got solution to it. So, as long as you're not showing them what's on your bit of paper whilst doing that and putting yourself in a worse negotiation position, then you should share that.
It's probably quite an interesting addition to your evaluation criteria of: 'Hey, well, I went out and talked to four bidders; these two were pretty disengaged from the whole process; these two, or this one here, they were fantastic. They came with ideas and innovation, they're willing to you know, jump in the trenches with us to help us do this, that and the other. Presumably, you're learning a lot about your bidders through that process as well?
Karl Walton 28:16
Yeah, I think you are. I think you've got to again, err on the side of caution, because in that process, you could have a really bad sales and bid team, but then you'll have a fantastic service management team when you're in. That's what matters is as soon as you're in, making sure you've got a good service wrapper, and you've got a good account team, because services - you can go and engage with big technology providers, but if you've got a rubbish Account team around you, you're going to think the service is rubbish, and you're not going to have a good impression on our business. It all starts and stops from the service point of view with the account management and the service management on the other end. I would think about that graph that you just see in procurement where we sort of see the engagement from the supplier going up and then as soon as you sign a contract it dips. And a lot of that's down to, putting the contracts in a drawer not looking at it yourself, and not managing the supplier or managing that contract. So that's that's another day. I think that!
Absolutely, we will drag our listeners back for another round on that! There's one last thing I was just going to get you to talk about quickly because this is the takeaway I want to add in, based on on some of the things you were saying earlier on, about timing, and I know from TNC's point of view, if we could say one thing, to anyone listening, watching, today, so often organisations leave this stuff too late. When you leave it too late the best strategy in history isn't necessarily going to get you the best results. I know you've had experience of that, I know it's something you care about, probably just as much as I care about it. Yeah, but timing is key, right?
Karl Walton 29:53
It is and unfortunately, I have been on the bad end a number of times where I'm asking vendors to extend contracts for three to six months before we go out and competitively benchmark their services, and it's an embarrassing place to be, but you are where you are, at that point - you've got to adapt to it right? But the key is to make sure you're not in that position, you don't want to be at a disadvantage. You know, you've got to plan for these things: they can be big; they can be complex; they can be time consuming - even a straight renegotiation. So, you've got to plan for this stuff. You've got to have your stakeholders warmed up, and you've got to have the market warmed up.
Karl, as always, magnificent! Really, really interesting, and yeah, loads of interesting points in there but unfortunately, we've run out of time. In fact, I suspect we've gone slightly over time, but my stop watch has stopped. So you know, but I guess we have...
Karl Walton 30:55
Time to go on your holiday,!
Exactly, time to go on my holidays, this is the last thing - for the pleasure of our viewers and listeners - this is last thing I'm doing before getting in the car. So yeah, though, it's been really, really interesting. Thank you so much for joining us today.
Karl Walton 31:08
Thanks for the invite. It was great.
Yeah, no, a great pleasure, and you shared some great stuff. I'm sure our viewers and listeners will find lots of nuggets in there. So yeah, thank you to everyone for watching and listening. Please do let us know any questions you may have about this or any other network and telecoms topic. You can get in touch with us through our website: networkcollective co.uk or any of the usual social channels, and we look forward to talking with you again soon.