Client Profile
An $11B Electricity and Natural Gas Utility Provider
Business Issue
- Company was leveraging a provider to support a major enterprise initiative and other non-enterprise initiatives with expected consulting fees of $75M — $100M over the next 3-5 years
- Believed opportunity existed to leverage these projects and related spend to renegotiate the commercial agreements (at the MSOW-level) with provider and the current MSOW was due to expire in under 3 months
- Believed provider rates were too high, and there was an opportunity to realign financial structures
Services & Results
Leveraging experience and its extensive base of market intelligence on this provider’s commercial terms and rate structures, UpperEdge took into account current and forecasted demand, and was able to exceed initial expectations and secure the following commercial and contractual concessions:
- Rate reductions valued at $7M over a 3-year term via reduced provider MSOW rate card costs
- Reinstated and improved on previously expired volume discount agreement terms representing $8M in reduced consulting services costs, as discounts escalated over term without an annual reset
- Savings of another $700K by securing a lock to the negotiated rate card for 22 months before being subject to an annual increase based on then-current CPI
- Support model flexibility – Achieved $60M commit over a 3-year term with no annual commit, representing approximately 45% of forecasted demand over the same period with agreement for $20M in new ISOW minimum spend in year 1
- Improved the shared risk structures (T&M, NTE, and Fixed Fee) of the provider/company relationship with both incentives and corresponding penalties tied to quality and on-time delivery
