Overview
This $26B energy company had a long-standing relationship with Accenture that included a current annual spend of $75-$100M. The client had not benchmarked its relationship with Accenture in some time and wanted to leverage its expiring MSA to negotiate improved terms. In order to accomplish this, the client engaged UpperEdge to do a benchmark assessment of its Accenture relationship relevant to the market.
Approach
UpperEdge secured copies of all the in-scope providers’ Master Services Agreements, sample active SOWs and related change orders to begin a comprehensive 4-part assessment process. The assessment consisted of the following:
- Contracts Assessment: Complete tear down and market comparison of expected, industry best practice terms vs. the contracted terms established at the Master and SOW levels for each provider
- Financial Assessment: Mark to Market provider specific benchmarking of rates, resource units, rate locks, COLA caps, volume discounts and productivity
- Service Delivery Assessment: Provider specific benchmarking of service level frameworks and individual service level terms
- Opportunity Assessment: Quantification of gaps to market identified in the prior 3 assessments that help generate real savings targets and negotiation leverage to secure concessions
As a result, UpperEdge empowered the client with fact-based intelligence on savings opportunities and supporting levers to facilitate negotiations to secure improved terms and reduced costs.
Negotiated Outcome
Based on an addressable spend profile of $225M over the next 4 years, UpperEdge helped identify $12.6M in savings opportunity based on current gaps in pricing to market. In addition to identified savings, improvements were uncovered to increase provider accountability, create a more balanced risk sharing profile and limit Accenture’s ability to raise change orders.
Specific Opportunity Details:
Improved Change Controls:
- Errors & Omissions: Prevent change orders due to estimating errors
- Notice & Cure: Requires Accenture to notify the client of missed obligations with time to fix it before raising a change order
- No Cost Change Orders: Accenture will not bill the client for time to investigate a requested change
Risk Sharing Balance:
- Improved Shared Risk Financial Structures:
- Holdbacks with Penalties: Applicable to savings identified based on rate reductions, improvements to volume discount structures, and removal or market rate adjustments
- Time & Materials Caps: Ensures that caps at the MSA level will always apply
- Deemed Acceptance: Provides recommendations to prevent auto-approval of deliverables based solely on silence
Improved Pricing:
- Rate Reductions: 17 of 251 rates are now at the low end of market with Cost of Living Adjustment Caps at the MASA level
- Volume Discount Improvements: Promote to MSA level aligned to discounts provided based on $225M spend
