If the trend in personal services is moving away from bundles, why aren’t more businesses doing it?
Today’s post is by Mark Davis; Vice President of Operations and CTO at SafeSourcing.
As I was watching football this weekend I paid special attention to a commercial by a leading Voice-Over-IP company who showed a couple getting robbed of everything including the kitchen sink to symbolize the hidden charges they were getting hit with from their current phone company “bundle”. With a message asking why consumers don’t unbundle their services, the same question could be asked of companies across the globe on why they continue to receive invoices for thousands of dollars with only one line item to go with it and no detail into what that bundle consists of.
Today we will be taking a look at some of the disadvantages when taking the “bundled” approach with any of your services.
Unknown charges – One of the biggest problems with bundles is that you don’t know exactly what you are paying for. Vendors often state the benefit of the bundle is that you get discounts for buying more features or services together. In reality, changes to any aspect of your bundle are at the mercy of your vendors because of the lack of detail you are seeing. Anything about your bundle that could save you money due to vendor improvements or process changes are difficult to recognize due to the lack of your visibility into what you are paying.
Comparing vendors – As inevitably happens in the sourcing world, the time will come when vendor offerings need to be compared against the market to ensure competitive pricing. Bundles make this difficult to do because of the lack vision into what is being paid for everything. Without these details there is no vision into where the incumbent is hirer or lower than other vendors on the market making your negotiations on those pieces almost impossible.
Multi-Award issues – Not every procurement project will lend itself to being awarded to more than one vendor (i.e. services vs. equipment), but without the breakdown of what is being paid for in a “bundle”, the potential to award pieces to more than one vendor, and in the process getting greater savings, becomes extremely difficult. Whether or not multiple vendors are used, having the vision into what each piece of your bundle costs is an important decision-making tool for the procurement team to have.
Most bundles are designed and presented in a way to save money for the customer, but the danger is when that bundle is actually being used to hide fees, charges and potential savings under a one line item payment. For more information on the bundles you are paying for and ways to examine whether unbundling those services is right for your company, please contact a SafeSourcing Customer Service Representative.