A $40B global oil & gas company established a corporate initiative to perform independent, third-party benchmarking and opportunity analysis for three of their strategic partners in IT services.
The client needed to assess the competitiveness of their strategic provider’s commercial terms, rates, and discounts while also providing insights into strategies to increase efficiency. This included identification of share-shift opportunities to rebalance their portfolio and maximize return.
UpperEdge secured copies of all in-scope providers’ Master Services Agreements, sample active SOWs and related change orders to begin a comprehensive, four-part assessment process. This process included:
- Contracts Assessment: UpperEdge completed a teardown and market comparison of expected industry best practices terms vs. the contracted terms established at the Master and SOW levels for Accenture.
- Financial Assessment: The client received mark-to-market provider-specific benchmarking of rates, resource units, rate locks, COLA caps, volume discounts and productivity.
- Service Delivery Assessment: The client also received provider-specific benchmarking of service level frameworks and individual service level terms.
- Opportunity Assessment: From the prior three assessments, UpperEdge identified and quantified gaps in the market that generated real savings targets. UpperEdge also identified negotiation leverage to secure concessions.
As a result, UpperEdge empowered the client with fact-based market intelligence on savings opportunities and supporting levers to facilitate negotiations that ultimately secured improved terms and reduced costs.
Based on an addressable spend profile of $85-$95M in annual spend across all providers in-scope, UpperEdge identified savings opportunities between $4.75-$11.5M (6-12%) annually.
Provider-Specific Opportunities Identified:
- $2-$5M in savings identified with respect to rates above market
- Added a volume discount structure
- Identified negotiation levers including an expiring agreement, willingness to extend agreements to co-term, and willingness to provide early renewal support
- $2-$4M in savings identified relative to reducing rates and increasing commitment to productivity improvements
- Identified negotiation levers including an expiring agreement and willingness to entertain proposals for early services term renewal
- $750K-$2.5M in savings identified based on rate reductions, improvements to volume discount structures, and removal or market rate adjustments
- Identified negotiation levers including an expiring agreement, competitiveness to peers, and incentives to gain market share from CGI or IBM