ISG’s contract fairness assessment drove efficiency and savings to modernize a legacy contract for a global healthcare organization.
Opportunity
A large, multi-national healthcare company faced challenges with an existing IT contract that hindered efficiency, transparency and cost-effectiveness.
The contract was overly complex, with hundreds of resource units and inconsistent service delivery requirements. The legacy contract included outdated service level constructs, a decentralized delivery model, high costs and poor perceived business value.
The company sought to modernize the contract to streamline operations, reduce costs and align it with industry standards.
Imagining IT Differently
ISG partnered with the healthcare firm to conduct a thorough IT contract fairness assessment, involving a review of the current contract structure to identify areas to modernize and optimize.
Key areas assessed included the contract’s service delivery model, commercial model and pricing structure, service level methodology and targets, terms and conditions, and a price benchmark to market using ISG Inform™.
Future Made Possible
- A 30% annual run rate reduction led to significant cost savings, enabling the company to allocate resources more effectively.
- Rationalizing resource units and simplifying pricing structures streamlined governance requirements, reducing complexity and improving transparency.
- Consistent service requirements and commercial terms streamlined IT operations and provided a cleared delineation of responsibilities.
- Optimized global delivery: The new global delivery model allowed for a more efficient shoring mix, optimizing service delivery across locations.
