Client Profile
A Fortune 500 global manufacturing conglomerate was rethinking its application managed services (AMS) footprint, shifting to a “divide by applications” support model. The first, and most business-critical, piece of that transition was its SAP environment. Given how central SAP is to the company’s operations, the organization needed a provider with genuine thought leadership in SAP application transformation, not just a lower rate card.
The company ran a competitive RFP between two global systems integrators with existing relationships to the business, ultimately electing to renew and expand scope with its incumbent SAP AMS provider, Cognizant. UpperEdge supported the full lifecycle: RFP solicitation and evaluation, negotiation preparation and execution, and contract execution support.
Challenge
Application managed services renewals for mission-critical ERP environments carry outsized risk. The manufacturer needed to:
- Validate that Cognizant’s proposed fees and rate card were genuinely competitive, not just favorable relative to the incumbent’s own baseline
- Secure meaningful year-over-year cost reductions without compromising delivery quality on a system the business couldn’t afford to have falter
- Push for modern automation and AI-driven efficiency commitments, while ensuring the company, not the vendor, retained ownership of resulting work product
- Rebuild commercial protections (termination costs, volume discounting, SLA structure) that had gone stale over the life of the prior agreement
Approach
UpperEdge ran a structured, multi-phase engagement:
- RFP Solicitation & Evaluation — designed and managed a two-provider competitive process to create genuine negotiation leverage against the incumbent.
- Negotiation Preparation — built a fact base on market rate benchmarks, automation/AI productivity commitments, and volume discount structures to anchor the company’s counter-asks.
- Negotiation Execution — drove the commercial and contractual back-and-forth on rate cards, SLA frameworks, termination terms, and change order provisions.
- Contract Execution Support — carried the agreement through to signature and go-live planning.
A key focus throughout was translating Cognizant’s proposed use of its AI/automation platform into hard financial commitments, not just a marketing claim, but year-over-year rate step-downs the company could hold the provider to.
Results
This highly competitive deal achieved:
- ~16% reduction in contracted AMS fees over 7-year term (5+1+1)
- ~9% average AMS rate card reduction, worth several million dollars over the term
- Meaningful productivity improvement savings layered in year-over-year on top of rate reductions
- Volume discount (VDA) improvements tied to the company’s broader corporate spend with Cognizant, adding further multi-year savings
- App Dev rate reductions of roughly 13% onshore and 27% offshore
- Return on investment north of 40x on the company’s advisory spend with UpperEdge
Beyond the dollars, the company secured commercial protections that hadn’t existed previously:
- Termination for Convenience rewritten from a flat percentage-of-remaining-fees penalty to reasonable wind-down and amortized transition costs only
- New Sole Source Investment discounting for future project work
- Expanded SLA framework, including a larger at-risk fee pool and allocation pool percentage, to give the company more leverage over service delivery focus
- AI/automation ownership rights that ensure output created using the provider’s AI tooling belongs to the company, not the vendor
- Change order guardrails so the provider cannot issue change orders based on its own incorrect assumptions, and must give proper notice before seeking relief from an obligation due to the company’s noncompliance
Organizations approaching an SAP AMS renewal or re-competition should benchmark rate cards and automation commitments early, before a single-provider negotiation locks in unfavorable terms. A competitive process, even when the incumbent ultimately wins, creates leverage that a sole-source renewal cannot replicate. Facing an SAP AMS renewal or RFP of your own? Talk to UpperEdge about building a competitive negotiation strategy.
