Large enterprises under shareholder scrutiny and mid-market companies financing growth via retained earnings or private equity funding have one agenda in common – optimizing the overall cost to run the business. Third-party spend can account for 30-70 percent of an organization’s cost structure. This means that its equally important to contain vendor spend as it is to manage retained costs.
Moreover, several organizations do not have a good grip on their true IT & Business Operations cost base, a situation that only gets exacerbated with acquisitions as costs get spread over multiple units in no clear, consistent, or centralized manner. Additionally, in-flight enterprise-wide transformation programs are seldom appropriately accounted, allocated, and forecasted.
We perform a comprehensive assessment of as-is retained and third-party costs and catalog it accurately under Capital Expenditures and Operating Expenses and create a true-up Total Cost of Ownership Model for IT and Business Operations. As hands-on practitioners, we understand that such cost assessments may be based on multiple and fragmented data systems and therefore may warrant several iterations / validations in lockstep with the client.
Often this first phase of cost true-up can uncover anywhere between 10 percent to 40 percent buried and unclassified costs. Once a true-up view of the client’s as-is retained and third-party costs has been firmed up, we proceed to benchmark each cost unit and build up optimization targets aggregated by categories, departments, subsidiaries, and/or third-party contracts.
We also commit to securing the identified opportunities by leading the downstream third-party contract negotiations, governing internal optimization programs, and / or deploying partner analytics tools.
The ether is perpetually fraught with spiel about next generation solutions while outsourcing contracts are still stuck in the past. Scores of outsourcing clients are yet to realize tangible gains from basic service delivery automation and several first-generation outsourcers are not geared to manage contemporary RFPs, bids, and contracts.
Our fairness opinion services portfolio offers point solutions to pointed asks ranging from RFP and Bid advisory to comprehensive Contract Health Checks.
We support enterprises with objective decision making across the spectrum of their Global Capability Center journey from initial Strategy through to Build / Set-up and to Optimize Phases. We can help structure a BOT transaction and for enterprises with limited capex appetite, we can also assist with ‘Virtual’ captives that operate purely on a Opex model.
We work with our clients to translate their business objectives and guiding principles into a service delivery model strategy along with clear and actionable downstream steps to facilitate execution. We also model our clients As-is and To-be costs to help them understand typical range of bottom-line impact.
The outcome of such an exercise is a a tangible opportunity and prioritization roadmap (both Optimize and Transform themes) for contract improvement that enables transparent and equitable negotiations between the two parties. Even well drafted contracts can come under strain over time as buyer-provider objectives begin to diverge and / or contracts don’t keep up with the evolving technology / innovation landscape. To mitigate this situation, Buyers can choose to undertake a holistic relationship assessment through our proprietary HealthCheck framework which is underpinned by pure deal data and insights.
Financial assessment of contracted vs. current spend trajectory’, TCO benchmarking (fixed fee, variable P*Q rates & volumes, contingent labor spend etc.), nomenclature standardization, revisit ARC/RRC & pricing modes, corrective actions on continuous improvements
Review key clauses that impact the business case. E.g., COLA, Forex, Service Credits, dispute charges and resolution, Continuous performance, Indemnities, termination etc.
Degree of alignment and progress towards goals / vision, governance leadership and communication effectiveness, perceived partnership, cultural fit, etc.
Benchmarking advisory support can be extremely helpful in understanding the current performance levels vs. the peers / market and therefore, drive / aid objective decision making / negotiations strategy.
Our Benchmarking Advisory team is staffed with highly seasoned sourcing practitioners and modelers who lead business case creation and negotiations themselves. We can provide holistic advisory support across the go to market lifecycle and can provide point solutions based on specific scope elements that you need assistance on.
Integer nec odio. Praesent libero. Sed cursus ante dapibus diam. Sed nisi.