• Commit to increased use of new vendors and partners for architectural components.

• Create a level playing field for small vendors. Dedicate a small team to ensure that smaller vendors receive the same “air-time” as the larger vendors but be diligent not to waste their time. Help them navigate internal telco organizations so that a lack of existing contacts doesn’t prevent them from reaching the appropriate decision-makers.

• Help small vendors to win business without forcing them to partner with a large vendor or partner (who would likely prefer to squash them). Set up an onboarding process. If partnership is necessary, pay an appropriate patent or intellectual-property license directly to the smaller partner.

• Reduce compliance requirements for smaller vendors with <$100M run-rate business (for instance, ISO9001), unless required by law.

• Allow vendors to publicly reference progress within telco accounts to encourage traction for them in their markets.

Procurement

The time allocated for vendors to respond to large and complex telco requests for proposals (RFP) is often very short and may span holiday periods, creating an almost impossible hurdle for smaller vendors to navigate. Assuming the vendor can meet the technical requirements of an RFP, the terms and conditions and pricing requirements are often the killer, which renders a response from a smaller vendor impossible to contemplate. Telcos should:

• Create suitable contracts for small vendors with relatively small deals. Don’t negotiate with small vendors for a $2M deal in the same way as a $2B deal.

• Eliminate over-negotiating with small vendors in telco procurement organizations. Winning a 30 percent additional discount from a start-up kills their ability to provide support and grow.

• Pay software licenses and support agreements up-front. Count consumption across the network or move to an enterprise agreement quickly. Don’t try to enforce better terms from start-ups than from larger vendors.

• Commit to recurring-revenue models for software purchases (SaaS in particular), which provides higher valuation returns to investors.

• Create simple agreements that allow smaller vendors to transact up to $5M a year without a master services agreement or similar.

• Pay invoices on 30-day terms for vendors with <$100M revenue without negotiating extra discounts or forcing them through a partner banking relationship.

Conclusion

This article is intended to trigger industry debate on how to increase telecom innovation by eliminating barriers for smaller vendors. We have recommended a number of actions which we believe are essential to achieve this goal. However, we are realistic about the prospects for these changes to take place in a timely manner due to the entrenched culture. We believe that external pressure from regulators and regional and national governments is also likely to be needed, both to act as a catalyst, and to foster discussions around the broader changes needed to create a healthy telecom innovation ecosystem longer term.

If you have any questions or wish to participate in our activities, please visit our LinkedIn page or email us at enquire@telecomeco.org.