How to cut network expenses

Five IT execs share their strategies

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Timing is key

Allen Gwinn, senior director of technology at Southern Methodist University's Cox School of Business, agrees that now is definitely the time to think counter-culture and to challenge vendors, especially on pricing.

"In normal times, the philosophy is that we can use collective buying power to leverage good prices. But unfortunately, that has led us to an economy where we're in restrictive, binding agreements that are bad for us," he says.

For instance, a few years ago, Gwinn researched the cost of a mobile phone upgrade through the university's chosen vendor, only to find that the bottom line was quadruple what he could get with a competing vendor. He had to convince the university's stakeholders to let him out of the sole-source contract so he could pursue the better deal. Today, the university has "discount pricing off of list" from two mobile service providers, but Gwinn is free to buy from any vendor if he has a good business case.

"Wireless is at the commodity level, so this is definitely an area where vendors should compete against each other based on price," he says.

The same applies to service contracts, according to Ben Hansen, assistant director for information technology at BendLa Pine Schools in Oregon. "What we're doing is examining every single service contract we have and making sure they are appropriately priced," he says.

Buyers should be savvy about vendors' business model, he says. "We turn up the heat on our providers toward the end of each quarter because that's when they need to show their investors good numbers and are much more willing to negotiate," he says.

Just as important is giving them insight into your business so they know your budget goals. "We tell them straight out that we have x amount of money to spend because of economic realities and this is what we need to get done. We also let them know that there is no exclusivity and they are competing against other vendors," he says.

So far, it has worked to his advantage, helping him significantly drive down telecom, hardware service and equipment costs alike. In the last six months he has been able to drive already low acquisition costs down by an additional 20% or more. "A year or two ago we didn't have that advantage so we're running with it now," he says.

And what happens to these trade-offs when the economy bounces back? "We may go back to a redundant router architecture someday, but for right now we're finding we can successfully go without," University of Connecticut's Vertefeuille says.

Copyright © 2009 IDG Communications, Inc.

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