Cost or quality challenges can create enormous pressure on CIOs to seriously consider changing IT suppliers. In these situations, incumbent suppliers have typically established barriers to exit over the course of the relationship to make it extremely difficult to switch suppliers. UpperEdge provides the following components of when advising clients in supplier switching scenarios.
IT Supplier Switching Cost Calculation
Switching costs can be difficult to calculate. Typically, the incumbent supplier has put a strategy in place which increases their customer’s perception of both tangible and intangible switching costs. Studies have shown if the perceived costs of switching are too high or too difficult to calculate, incumbent suppliers obtain margins on renewals that are above market expectations. UpperEdge assists companies with the building of switching cost financial models so they can fully understand the levers to pull in order to switch or to enhance the effectiveness of renewal negotiations.
We highly recommend Dave and his team to other organizations given their high level of professionalism, supplier intelligence, and subject matter expertise. They empowered us to achieve significant cost reductions while mitigating downstream financial and project risk
Director of Enterprise Applications, Manufacturer, Consumer Goods
Building Leverage & Mitigating Risks
Supplier tactics for building intangible switching costs typically involve establishing anchors in two areas; knowledge capital and asset leverage. UpperEdge assists clients with proactively identifying these anchor points. We provide guidance in the establishment and execution of plans and tactics to reduce the perceived costs of switching and reduce the risk of operational discontinuity.