Telecom Industry Overview
Companies in the UK telecom sector are facing strong financial pressures owing to rising operating costs and shrinking commercial margins. This has increased the pressure on procurement departments to deliver strategic values and address challenges such as falling profits and decreasing ARPU, huge demand for OTT services, and heavy CAPEX spending driven by mobile and IoT proliferation. Consequently, it has become crucial for companies to develop an effective telecom procurement strategy to drive innovation in the market and reduce the risk of dependency on individual vendors.
Business Challenges Faced
The client, a leading company in the UK, was planning to invest in network development and 5G consumer services. However, the external spend – OPEX and CAPEX accounted for 40% of the client’s revenues and was making it difficult for them to enhance their purchasing performance. Moreover, the lack of diversity across the telecom supply chain was increasing dependency on few suppliers and posing a range of risks to the security and resilience for the client’s network. The client, therefore, decided to engage with SpendEdge to leverage their expertise in identifying vendor risks and addressing New Telecoms Security requirements (TSR).
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Our Research Approach
To help the client tackle their challenges, the analyst team at SpendEdge developed a robust telecom procurement strategy to improve the diversity of the purchasing portfolio. The solution offered provided necessary insights to shift gears in terms of procurement optimization through advanced practices, products and services redesign, and margin engineering on resale. This helped the client to overcome existing silos between procurement and other parts of the company.
The telecom procurement strategy further enabled the client to analyze the profitability of aggressive entry deals offered by emerging vendors. The proprietary buy-as-you-grow model developed by SpendEdge helped the client to optimize their TCO. SpendEdge’s customized telecom procurement strategy also empowered the client to subject vendors to rigorous oversight through procurement and contract management and adhere to the new TSR.
The new telecom procurement strategy formulated by the experts at SpendEdge helped the client yield over 400 basis points in cash flow. It also helped the client to manage security risks posed by suppliers and identify faster growth opportunities. The enhanced supplier relationship helped the client to adhere to the new TSR.
Yielding basis points in cash flow is not an easy task. Request a free demo to gain insights into the telecom industry growth rate and devise an effective telecom procurement strategy.
Steps to Develop an Effective Telecom Procurement Strategy