ISG helps a financial technology company cut over 30% in savings through consolidating and competitively sourcing its network services.
Opportunity
A financial technology company provides information and technology to the financial community. The company operates globally with operations in over 70 countries.
It used network services from more than 50 providers with a total annual spend in excess of $126 million. The company requested ISG’s assistance in reviewing its network spend. It wanted to consolidate its suppliers as feasible and reduce costs both in the short and long term.
It used network services from more than 50 providers with a total annual spend in excess of $126 million. The company requested ISG’s assistance in reviewing its network spend. It wanted to consolidate its suppliers as feasible and reduce costs both in the short and long term.
Imagining IT Differently
ISG built a comprehensive service inventory itemizing the cost elements for all of the company’s network services. We then developed a two-phased strategy to deliver on the company’s objectives. Phase 1 consisted of directed renegotiations and short-term extensions to the contracts of five of the largest providers. The goal of phase 1 was to drive immediate cost reduction while aligning certain contracts for phase 2.
Phase 2 was a competitive bidding event during which most network services were put to bid through a global request for proposals (RFP). ISG worked with the company to understand requirements; wrote all contractual requirements documents; managed the procurement process; conducted all vendor interfacing; and negotiated final contracts for ultimate company acceptance.
Phase 2 was a competitive bidding event during which most network services were put to bid through a global request for proposals (RFP). ISG worked with the company to understand requirements; wrote all contractual requirements documents; managed the procurement process; conducted all vendor interfacing; and negotiated final contracts for ultimate company acceptance.
Future Made Possible
- Phase 1 resulted in new one-year contracts for existing services with AT&T, CenturyLink, IBM, Telefonica and Verizon (covering $68 million of the $126million total spend). The company received a cost reduction of $5 million per year (7% on in-scope services).
- Phase 2 encompassed a global RFP covering all services ($121 million after phase 1) which was distributed to 21 bidders and resulted in the selection of 10 primary suppliers and 11 niche providers (including 3 that were not invited to the RFP).
- It negotiated a total of 15 new network contracts during phase 2.
- Phase 2 cost reductions totaled $28 million per year (23%), additive to phase 1 reductions.
