Small Telephone System Purchase Guide

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1 Small Telephone System Purchase Guide Looking to make informed decisions and avoid some common mistakes? Then this guide may be useful for you.

2 Overview This guide aims to provide information for the non-expert in telecoms to allow them to avoid some of the common and expensive mistakes when it comes to buying telecom systems or services. In many businesses the task of procuring a new telephone system or service can often be given to someone with little or no real experience of business telecommunications. To compound the challenge you sometimes have very little time to make a decision that can impact your business or organisation for many years. As a result this can lead to businesses often buying systems and services that do not meet the communication needs of their company. Without the appropriate knowledge it can lead to an organisation paying more than they need to, getting tied into long contracts with suppliers that don t offer good service or any reasonable return on investment. Whilst the timeframes you would work to can be different between a large business and a smaller/sme business, the fundamental considerations are the same. Choosing the right communications system for your business is probably one of the most important decisions you will make. We believe that voice communications are vital for any business or organisation it s direct, it s immediate and it s personal. It says a lot about who we are. It s also how you reach your customers and it s how your customers can reach you. Undeniably, it s the first call when your customers get that first impression of the type of business or organisation you are. Therefore the importance of getting that part of your business working efficiently should not be underestimated. This guide will hopefully help save you and your business from some of the pitfalls many others companies have fallen into, and help you make the right informed choices for your business. If after reading this guide you wish to find out more, contact us at sales@porthlas.com or telephone us on

3 Probably the largest and most expensive mistake small businesses make when purchasing a telephone system is being tied into long term contracts that result in them paying more than is necessary. One method of selling to small businesses is the practice getting the business to sign up to 5 or even 7 year contracts. This can work really well for the telephone companies but on closer analysis is less beneficial to the purchasing business. It is based on a lease agreement and incorporates the supply of the telephone system and handsets and includes taking over the billing of your lines and calls. At first sight this seems like a good deal, it is easy to recognise this approach as the quotes are often presented as comparison with your current monthly telephone bills. You are shown that once everything is taken into account - supply of a new telephone system and new call charge package - it will seem as if you will be paying just a small increase on your current monthly call charges or it may even show a monthly saving. Why is this not always a good deal? Whilst for some businesses leasing is a viable option you need to ensure you have all the facts. Often the telecom supplier has made a number of assumptions about your present arrangements, future call patterns and they often rely on the fact that you are already paying more than the market rate for your call charges and line rental. They use this to hide the price they are actually building in to the quote for the telephone system. If they are charging me the same or even less than my present monthly call charges and I get a new telephone system does it matter? Well it may not be such a good deal if you consider the following:- You may already be paying above the current market rate for your present telecoms services. There may be lines and/or services you no longer need or use but are still paying for with your present provider. The new quote may be based on unrealistically high call volumes. If you are tied into an existing contract with your current provider you may not be able to change and benefit from the new lower suggested call charges. The long term lease costs far out way the actual cost of the telephone system. Maintenance costs beyond year 1, i.e. years 2, 3, 4 etc. may not be detailed or priced into the contract.

4 All this can lead to you and your business paying more than is necessary for telecom equipment and services. The key point is many small businesses are paying more than is necessary for their telecommunications. If your business or organisation falls into this category, you can benefit from significant savings irrespective of whether or not you purchase a new telephone system. Among some telecom companies it seems to be becoming common practice for them to try and use these savings to fund your new system. In doing so, it may be presented to you that you are getting the system for next to nothing, or in some cases NOTHING. The complete opposite however may be true you may as a result of this type of proposal end up paying as much as 10 x the going rate for your new system. The following is one example showing how this method of selling works. A Hypothetical situation You have 7 staff and require voic , call queuing and music on hold Your current call costs and line rental 175 per month You have an old fully paid for telephone system that is showing its age and you would like to replace You pay 195 a year for your existing telephone system maintenance Therefore you are paying per month ( 190/12 months) = The suppliers look at your bills, they notice you are paying for services that you no longer use which is costing you 35 per month. They also find you are paying higher than the current market rate for your call charges and line rentals. In reality you could change to a new provider and reduce your existing bills down by 70 a month to 105 per month but this information is not presented to you. The Proposal A proposal is presented that doesn t highlight the services you no longer use, or show you, you are paying call rates above the current market price. Instead it simply points out your current monthly telecoms spend of (Telephone Bill plus annual telephone system maintenance). The proposal continues to explain the great news that you could reduce your telecoms spend to per month and have a brand new system. So the proposal is saying you could have all the benefits of a new system and reduce your monthly telecoms spend it seems to be a really attractive offer!

5 If you are tempted and agree to go ahead you could be presented with a 5 year lease for approximately 85 per month and you ll be advised that the other 105 will be billed monthly for call charges and will replace your existing BT bill. It may also be presented as part of the proposal that the first year s maintenance on the telephone system is free. What you would have just done, if you signed up, is to pay 5, ( 85 x 60 months) for a system that could have cost you less than 1, It could be worse than this if you find that you are tied into a contract for your current services and are not able to move over to benefit from the reduced charges! So you will have a bill for 85 a month for the telephone system and a bill for 175 a month with your old service provider. To compound the pain the following year your new telephone supplier may very well announce that your annual maintenance (remember it was free for the first year) is now 220 per year. So your monthly bills have now risen to a month from the a month you were paying, before that salesman walked through your door. Is this really what happens? Unfortunately this is the reality of what is happening to businesses all over the country, every day of the year. The link below tells of how a Chairman and employees of a Telecoms Company were jailed for hugely overcharging small businesses, schools and charities for their telephone systems. What can you do to avoid falling into this very costly trap? In order to make an informed decision you need to be able to accurately compare pricing from suppliers. To do this you must ensure that: 1) All quotes are based on the same requirement - apples with apples. 2) Make sure the capital costs are included - what does the equipment actually cost? 3) Ensure you have requested pricing for all the elements you need (see below) hardware, software and services. In order for a telephone system to work you need to have looked at the following essential items that MUST be considered for a traditional Telephone System: 1. Telephone System and Phones 2. Cabling 3. Telephone Exchange Lines 4. Call Charge Rates 5. Maintenance not just for year1.

6 Finally If you take the following approach you will be able to clearly see which supplier is offering you the best deal. First compile a list of everything you need your new system to do and choose at least 2 suppliers to approach for a quote. Then ensure that your tactical approach replaces theirs by Telling each supplier to quote a capital price for the installation and training of a system that meets all requirements on your list Ask them to add leasing options ONLY if you do want to consider a lease and as an addition to the capital price Checking customer references is important, make sure you ask all suppliers to provide you with contact details and ring as many as possible for feedback Take the time to look up the system being recommended and check the internet for reviews If you do not have any cabling in place then request a cabling quote, if you do then request written confirmation that what you have in place is adequate for the new system Confirm both first and subsequent year maintenance costs Always check whether you are tied into a contract with your existing billing provider for lines and calls Lastly, if you are not in a contract ask each supplier to provide you with the following information 1) Monthly line rental charges 2) Pence per minute for local, national and mobile calls 3) The length of contract you are signing in to (call rates are dropping at such a pace that it is advisable to keep this contract period as short as possible, 12 months is ideal) When you receive this information from all of the suppliers you will be able to easily compare quotes. If ever a supplier starts to give you reasons why they cannot quote capital costs, BEWARE!!! There really is NO valid reason for them not being able to give you this information other than they don t want you to see the cost. If you are looking to upgrade or replace your telephone system, want to see if you can get a better call package or just want some telephony advice call us on or us at sales@porthlas.com