Enterprise weathers the telecom storms
Published on July 15, 2002
Even before his company's telecom, XO Communications, declared Chapter 11 in June, TechRepublic member and IT specialist/administrator Stephen Friedrich had heard that the company was in financial trouble and knew he needed to move quickly to replace the vendor. At the time, XO was the sole provider of phone services and supplied one of three data lines for Friedrich's employer, a Chicago-based investment fund management firm.
It's not an unusual scenario today, given the current shakeout among telecoms-think Worldcom-for a vendor to leave an enterprise in the lurch, and as Friedrich knew from past experience, there was no time to waste to find a new partner.
Initiating the evaluation process
Friedrich had about a month to do his search, and, as a committee of one, realized he needed to do it as efficiently as possible. He began by identifying tier-one phone and data providers that would be the least likely to suffer from the anticipated crash of XO.
From there, he began contacting sales representatives until he met one who seemed reliable. Friedrich said that past experiences had proven that vendors don't always come through or provide pertinent information. During a past office relocation, one tier-one vendor failed to provide backup phone service while the company was updating international databases— the mistake meant that some international customers couldn't contact the company about investment accounts for two weeks. The poor customer experience was something Friedrich knew he didn't want to happen again, so finding a reliable contact was critical.
Establishing evaluation criteria
In the past, Friedrich judged vendors primarily on size and market dominance. This time around, he used different criteria. First, he studied vendors' financial picture to ensure economic stability. Then, he determined whether the vendor had direct access to the building. Direct access meant one less vendor to deal with in a chain of telephone service and data line providers. It also meant Friedrich would need to pay one less union-wage crew to do the wiring.
"However, none of the three vendors considered were very forthcoming about the complexity of switching over a company even as small as ours," said Friedrich, who is one of 25 employees at the investment firm.
As usual, Friedrich also checked the vendor's references. He contacted three references for each of the three tier-one vendors under consideration to determine the vendor's track record with rushed phone and data line transitions. During these calls, Friedrich learned the good and the bad from current clients.
The cost of performing the switchover also came into consideration-as this would be a rush job and would mean that vendor transition crews would be forced to work overtime.
Finally, the responsiveness and availability of account representatives also played heavily in Friedrich's evaluation. "We made sure we found people who were more service- than bottom line-oriented," he said.
Friedrich's first choice
Initially, WorldCom's MCI service appeared to be the best of the contenders when the evaluation phase concluded. References came in relatively clean, and MCI had offices directly across the street from Friedrich's firm. "So if something went wrong, we could physically go across the street to make contact," he explained.
Another plus was that MCI had a tenant lease on the building where Friedrich's company is housed. This essentially gave MCI the edge over other phone service vendors, as they owned the wire within the building.
"They technically had telecom ownership for the building, meaning that anyone else who wanted to come in here would have to lease lines from them," said the tech leader.
This monopoly on the building wire also meant that MCI could beat others' pricing. A contract with MCI would save Friedrich's company $5,000 annually over what they had been paying XO.
The decision not to switch
Despite its positives, the MCI move wasn't a done deal. Throughout the evaluation process, Friedrich had kept in contact with his XO rep to ascertain how long service would continue. He didn't reveal to XO that he was searching for a replacement vendor, and in the course of his conversations with the company, Friedrich learned that XO had received an influx of capital, which nudged the vendor away from the threat of immediate bankruptcy. (The company did file for debt reorganization and protection a few weeks later, however.)
While moving to MCI had obvious benefits, Friedrich's past experiences at transferring services prompted him to stay with XO. Although he had no way of knowing it at the time, it was the best decision, considering WorldCom's serious financial troubles. However, XO did ultimately file for bankruptcy about the same time.
"I guess MCI was in even worse shape than I had thought," said Friedrich. "Now with our current carrier declaring Chapter 11, it looks quite dim out there," he added. But the evaluation time was well spent, he noted.
"Alternatively, we are still in good shape with several backup measures in place. We're likely still going to see how our current carrier does and yet take an even closer look at other providers."