10 Ways to Get Better VoIP Deals During the Downturn

Updated: April 30, 2009

The natural reaction of businesses to economic downturns is to focus on the challenges, such as how to keep revenue coming in at a reasonable rate. But recessions can also present opportunities, including the ability to get more of what one needs while spending less. That applies to VoIP systems and services as well as other products. The crucial point to remember is that vendors are dealing with the same revenue challenges as everyone else. Their natural tendency may be to offer better bargains to keep the cash flowing. You can take advantage of such tendencies with these tips.

1. Be sure to do competitive bids or RFPs (Request for Proposals). In an environment where sales are scarce, it's almost cruel, not to mention foolish, not to let vendors battle one another for your business. Instead of simply talking to the vendor with the most attractive product or sales pitch, put out an RFP and let the cutthroat environment do the rest. However little you manage to pay the winning bidder, it will still represent money they wouldn't otherwise have had. "Since all vendors will be hungry for the incremental revenue, there should be some aggressive pricing," said Marty Parker, principal at UniComm Consulting LLC. And don't think RFPs are only for huge purchases. They're useful even when buying phone systems for few as 100 seats, claimed Robert Harris, president of consulting firm Communications Advantage Inc.

2. Don't put out just any old RFP, though. The wrong RFP can be worse than none at all. Allen Sulkin, president of TEQConsult Group and well-known RFP guru, provided a detailed look at what makes a good RFP at the recent VoiceCon conference in San Francisco. His recommendations included practices that should be common sense, but too often are not. For example, he noted that performance specifications should be specific, defining all terms that are not in general use and avoiding misleading and ambiguous statements, while shunning generalizations as a whole.

Sulkin also warned that vendors who cannot satisfy requirements will attempt to obfuscate their responses, giving positive answers but with convoluted explanations or referring to attachments many pages long. Sulkin's ultimate recommendation is simple: try to hire a consultant who can help guide you through the thicket of vendor verbiage.

3. Sign a multiyear contract for software or maintenance. If you're expecting to grow after the downturn ends, think long-term in your purchasing. Parker of UniComm Consulting recommended going for a volume discount for purchasing software or maintenance services over three, four or five years, but only paying for the licenses as they are deployed. The advantage of this strategy is that you'll be paying the most later, when (presumably) your business is doing best. But try to make sure that your optimism about growth is at least partially justified, as Parker warned that you'll still have to purchase a minimum number of licenses in the contract time frame.

4. Try to get extra features and functions bundled in your purchase. If you're buying an IP PBX , there are several extra capabilities that cost the vendor little or nothing to provide, if it means the difference between making or losing a sale. UniComm Consulting's Parker thinks you should try to get UC (unified communications) functionality bundled with the basic package if it doesn't come bundled on its own. Overall, the most likely candidates for free bundling are applications and features that run on your own servers, he added. That means they don't use of any of the vendor's resources the way a hosted application, for example, might.

5. Come to think of it, why not try to get other things free as well? You might think that when vendors are under pressure to boost sales you could get a lot of other products or services free or at a discount. How about all those services that would cost your vendor little except the time of its employees, such as pre-installation testing, installation, maintenance contracts, tech support and training? Though it sounds logical, it's not something you should count on, said Harris of Communications Advantage.

For one thing, Harris noted, vendors have probably already laid off as many workers as they can, and the ones that are left are stretched thin. In addition, services are such a crucial source of revenue that suppliers often discount hardware and software just to sell the services that go with them. The only thing it makes sense for vendors to give away is software, according to Harris, because making an additional copy costs them nothing.

6. If you're upgrading or adding to an existing system, refinance the entire system. If you're leasing equipment, you may have some period left to pay on the original lease even while you're adding new equipment. If so, Parker recommended adding the remaining payments to the lease of the new equipment and financing the whole package together. You'll stretch what's left of the original balance over a longer period, thus lowering your monthly payments. "In more extreme cases, you could imagine the company buying a minimal amount of new UC solutions and getting even a 50 percent reduction in annual expense," he stated. "So in the right cases it would pay to buy UC.'" Leasing companies only make such concessions if they're selling a "new" lease, Parker added. He also noted that although this option is always available, customers tend not to use it in good times.

7. Be ready to buy now. When business is slumping, vendors need sales now, not in six months or a year. They're willing to make concessions to get those sales on their books, according to Harris. They're giving concessions, too. Harris said that Cisco System Inc .'s discounts, for example, were greater overall in 2008 than in 2007, reflecting more such concessions. The important thing to remember, Harris warned, is that when a special offer has a deadline, it's not just sales hype. The offer will end when the vendor says it will, so buy in time to take advantage of it. The deadlines are often result of pressures to produce good numbers for quarterly or semiannual financial reports, Harris explained.

8. Consider a hosted or managed version of the technology. Hosted VoIP is of course the main alternative to buying an IP phone system. Parker noted that the big advantage of going hosted is that there are no up-front fees. You can even amortize installation costs in the ongoing monthly payments, he added. The main drawback is that phone calls typically have to travel at least part of the way from the hosted provider to the company's premises over the public Internet, which means there are no quality guarantees. Still, leading hosted VoIP providers have spent considerable time and effort developing the infrastructure and technology to minimize such problems.

9. Be ready to change providers, especially for services. Communication service providers are more interested in gaining new customers than in keeping existing ones, according to Harris. As a result, if you're merely trying to renew a contract, good deals are scarce. "They're not in a hurry to make any less money off of you," he explained. On the other hand, they offer great deals to win new customers or to win back ones that have left. And therein lies a clue as to how to get the best deals from them.

The main problem is that providers know switching vendors can be a pain. According to Harris, the most direct way to deal with that issue is to buy at least one service, preferably your most expensive, from a different provider. Alternatively, do an analysis of how much changing providers will cost, mainly in terms of employee time required to reconfigure your systems. Then show your analysis to your current provider. That'll let them know that you've thought the matter through and are ready to make the change. Either way, you'll get their attention.

10. Be a showcase for an emerging technology. This was a lot easier in the early days of VoIP, Harris noted. Vendors wanted to get the word out about the relatively unknown new kind of phone system. As a result, they often provided it at a steep discount in return for the right to publicize the deployment. This approach works best if you have a corporate name people widely recognize and respect, since it makes your endorsement all the more valuable.

Although VoIP is now familiar, Parker noted that many vendors are still trying to get in the door with UC applications. As such, he recommended asking about trial pricing for prototype products from UC vendors.

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