How to Land a Global Network Contract

The challenge is not the technology but agreeing on the terms There’s no doubt that the greatest enabler of the development of a global economy has been the proliferation of Global Wide Area Networks (GWAN). And the development of these networks has now entered a new phase, with its own distinctive challenge. When GWANs first appeared, the problem was to get the technology to work in a uniform manner across the world. Only in the 1990s, with the universal availability of Frame Relay services, could enterprises seriously consider implementing global networks to link all—or almost all—their world operations. The practice then was to have a number of regional networks often involving different carriers, who were usually operating different network platforms and protocols. Managing these separate networks involved inherent operational inefficiencies, difficulties in cost containment and onerous management requirements. All this was a significant challenge. Today networks based on MPLS (Multi-Protocol Label Switching) are the standard offering. Service providers are expanding MPLS coverage and enhancing services in order to hold their own in the world market for data networking. We still have to be diligent and creative in the design and implementation of a GWAN, but technology is really no longer the most important issue. The main problem for the user organization is how to craft a suitable contract to protect both you and your supplier(s) in a complex world of variable technologies, pricing and regulatory issues. Single Contract Is the GoalA primary objective should be to have one global contract covering all the services in all the countries. But there’s an obstacle: despite carrier claims to the contrary, there isn’t a single service provider in North America or Europe that has sufficient coverage, with enough POPs in all the different countries, to offer global access. Instead they have to rely on their partnerships with other carriers. In most cases, and particularly with Bell and Telus, these international strategic relationships are still in the early stages. Because of our market size in Canada, there is an unique Canadian problem to overcome. Many of you will have found that if you approach one of the Canadian carriers the pricing for the Canadian sites will be very attractive. On the other hand, their quoted costs for European or Pan-Pacific locations will be extremely high—often double or more the price obtainable directly from an overseas carrier. This has led some to conclude that it is more economical to have two or more separate networks, one in Canada or North America and the others for Europe and the rest of the world. From my perspective, this approach is contrary to all the basic concepts involved with global networking. I submit that in today’s environment, achieving a single global contract with a single carrier, with competitive prices in every regional market, is a realistic goal. In our experience, we have found that the straightforward way to achieve a truly global agreement is through a managed services contract with one of the primary international carriers such as Equant, BTInfonet, MCI and AT&T. Negotiating GuidelinesIn negotiating commercial terms and conditions for GWANs, we have discovered some ways to achieve one-stop shopping for a global MPLS network. Space limitations preclude an exhaustive review of all the "dos and don’ts," but here are some of the key points to follow: Never sign a standard carrier contract. In fact, guard against any potential conflicts by stating in your RFP that as a condition of submitting a bid, the bidder accepts that their standard contract will not be used and that a customized contract will be negotiated using the customer’s template. To avoid any confusion, you could include a draft contract as part of the RFP. Ensure that the main body of the contract terms and conditions is a concise, easy-to-read business document. Although many different countries will be involved, the governing law must be singular. For example, if the agreement is signed in Toronto, then the governing law will be Ontario law. If you have one or more locations in the UK, and given their long history of negotiating and interpreting international contracts, it would be worthwhile to examine the benefits of having the contract signed in the UK subject to British law. Some countries still require a separate agreement covering services in their jurisdictions. We have found the best way to deal with this requirement is to place such local agreements in a schedule to the main agreement. Similarly, some carriers require that you sign one of their standard order forms, which often include terms and conditions different from those in the main agreement. This demand can be treated in the same way. In both instances, such differences can be overcome by stating in the main agreement that any such terms and conditions that are in conflict with or grant any additional rights to the supplier compared to those contained in the main agreement shall be null, void and of no effect. The order of precedence shall be (1) the main agreement; (2) the schedules; and (3) any order form. It is imperative that you negotiate a coterminous date for contract expiry for all the services supplied under the agreement. This also includes services installed after the original implementation date. It takes a little creative writing and simple arithmetic to craft a suitable formula to ensure equity for both parties. Finally, and most importantly, a menu of fair and reasonable Service Level Agreements (SLAs) has to be included. This is where the most difficult negotiating takes place. For example, don’t accept availability and performance figures based on the carrier’s 7×24 measurement plan if you are only interested in what happens to the network during your operating hours. It’s also reasonable to ask for repair times not to exceed three hours in North America and five hours in the rest of the world. You should be able to arrive at an agreement with SLAs that are achievable but not onerous. Failure to reach these targets should result in penalties paid by the supplier. You should also consider agreeing to pay a bonus for superior service if the supplier exceeds the targets over a certain period, e.g. three consecutive months. It is best to have a minimum term of at least three years and include provision for extending the agreement. There should always be a benchmarking clause to ensure that you continue to receive fair value during the life of the contract. In our experience, we have been able to get annual benchmarking exercises to determine if the prices under the contract reflect current market competitive conditions. The process is usually undertaken by an independent third party, and its costs are shared jointly by both parties. Total Cost of OwnershipRemember, any contract is simply a tool to foster an ongoing business relationship and therefore has to be crafted in a way to ensure fairness for both parties. You also have to consider the total cost of ownership involved with your network operations including the skilled staff resources you need to monitor and manage the network. Managing global networks not only involves technology issues, it often requires the skill and insight usually associated with the diplomatic service. This -element alone is one of the biggest reasons for considering a managed services option in a global environment: Let the carrier worry about all the regulations while you look after your business. So do not reject out of hand the option of one-stop shopping for global networks. It’s true that the world’s carriers are struggling with the contracting issues involved. But there are plenty of precedents to prove that success is possible. Murray Robinson is managing director of Murray Robinson & Company Inc. (www.murrayrobinson.ca), an Ottawa-based telecommunications consulting company that has provided technical and management consulting services for private-sector and government clients in more than 40 countries around the world.

How to Land a Global Network Contract

News | 01/01/2006 5:00 am EST

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