Situation
A Fortune 50 retailer needed to optimize IT costs and improve system integration capabilities and deployment agility to accelerate the realization of expected benefits after a large acquisition. The challenges were:
- Limited leverage due to reliance on one large service provider
- Lack of clear, objective market intelligence to verify that key suppliers were delivering optimal rates
- Concern that the financial structure of the agreement was not strategically aligned to deliver on core IT objectives
Action
UpperEdge was engaged to help negotiate new agreements and optimize rate structures for a range of IT services, including process and management consulting, system integration, and development and testing. Specifically, UpperEdge:
- Provided a fact-based assessment and market outlook of the large service provider under consideration
- Benchmarked and analyzed all onshore, offshore and landed resource rates for each service offering against a comprehensive database of supplier-specific and service-specific rates
- Developed precise recommendations to optimize master rate card and enhance overall commercial model, including volume-driven discount structures
- Prepared precise messaging and talking points for use by retail company executives during key meetings and negotiations with the service provider.
Results
Utilizing strategies, insights, market data, and the execution approach provided by UpperEdge, the client:
- Increased leverage over its key supplier in contract negotiations
- Streamlined the process and shortened the negotiation cycle by 30%
- Increased service provider transparency, accountability and focus on quality through clearer expectations and stronger alignment to key IT objectives
- Secured immediate and across-the-board rate reductions and a new volume-based rate structure for all services, presenting an opportunity for multi-million dollar savings across the IT portfolio.
