The ABC of Managing the Telecommunications Commodity Group: What you need to know – Part 2


This is the second in a series of articles brought to you by SmartProcurement dealing with the ABC of managing your organisation’s telecommunications costs efficiently. Areas to be covered include:

  • A – Awareness:  Being fully informed on this complex and highly technical services commodity group.
  • B – Business Communications:  What are the requirements for your organisation?  Does your present ICT infrastructure meet the bill?
  • C – Cut the Cost:  Are you getting enough ‘bang for your buck’, or are you being over-charged due to the inefficiencies and confusion that are rife in this industry?

In the first article we dealt with the concept of ‘Awareness’ wherein we discussed exactly what telecommunications as a commodity consists of, how this will impact on the management of your organisation and what the options are in terms of auditing services.  In this article a closer look will be taken at ‘Business Communications’ and how you can make the various options work for you.

Business Communications – ICT Infrastructure Requirements

The rapid development of ICT (Information & Communications Technology) hardware and software is at the forefront of the knowledge economy.  In order to ensure that your organisation is adequately resourced, it is crucial for you to understand what is available.

By way of background:

  • Telephony is an important Business Communications mechanism and thus an integral part of employee productivity.  As a result, telephony is an ever-changing commodity group and contains substantial short- and long-term cost savings opportunities for procurement departments.
  • Hardware and usage costs are very high within the telecommunications commodity group and incorrect decisions can therefore pose significant risks, e.g. investments in PABX’s in the short-term could leave an organisation with old technology that becomes redundant.  This area of costing is usually not a core competency, however, expertise is required to maintain its strategy.  In fact, it is an ideal area for outsourcing, such as the renting / leasing of equipment, or use of call centres.
  • Always bear in mind the transmission shift:
      • Analogue (volts / amps) signal transmission is traditionally slow and noisy, resulting in a swift migration to data packet (binary zero’s & one’s) transmission of communication information.  Over the last decade the speed of data transmission has increased ten million fold.  With the ease of managing and storing data on computer networks & computer telephony, using headsets and soundcards have become state-of-the-art communication applications.
      • Mobile communication connects to a specific person, allowing guaranteed contact with a subscriber, wherever the subscriber travels, rather than connecting to a geographic address of a traditional Telkom analogue number.
Telephony Product Analysis – What is happening now?

New innovations include Voice Over Internet Protocol (VoIP) (e.g. Skype), Convergence, Wireless (e.g. WiMax and hotspots), DSL (SOHO and domestic use) and CDMA2000 (a code division multiple access protocol that is offered by Neotel).  To explain some of these, the following points can be mentioned:

  • VoIP, Zero Cost Calls:  VoIP is a technology that converts voice calls to data, enabling the call to be carried over the Internet at significantly reduced costs.  This is especially popular for intra-company telephony using IP phones.
  • DSL on landlines:  Digital Subscriber Lines (DSL) is a data communications technology that enables faster data transmission over copper telephone lines than a conventional voiceband modem can provide.
  • Wireless:  MTN and Vodacom offer EDGE and 3G.  These are both more expensive than ADSL offerings, but also much slower.
  • WiMax:  Connects Wi-Fi hotspots with each other and to other parts of the Internet.
  • Hotspots:  These are areas that offer Wi-Fi access.  The public can use a laptop, Wi-Fi phone, or other suitable portable device to access the Internet.

From the above information it is clear that we are dealing with a highly complex and diverse set of interlinking technologies.  Because of this it is essential that your organisation stays at the forefront of new system developments in order to ensure a sustainable competitive advantage in the marketplace.  Thus, the question is:  Does your organisation have the required infrastructure of systems and equipment to meet the needs of all your end users at optimal monthly costs and call charges?

If you need any help with the management or shaping up of your telecommunications, SmartProcurement can initiate a process of connecting you with a reliable specialist telephony auditor.  This would entail a detailed needs analysis of your organisation as well as an audit of your existing systems’ monthly bills.  For more information on this, or any other enquiries, simply e-mail

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