Information Technology — Contract Negotiation Assistance
Client Business Issues:
Our initial work establishing an IT Contract Management Office for a large national organization resulted in the identification of several vendor relationships where the renegotiation of contracts would result in significant savings and improved terms and conditions. On an annual basis this IT organization manages over $250 million with over 300 vendors. Specifically this client requested our assistance to prepare for and to conduct negotiations with several large software and telecommunications vendors. The annual contracts with these vendors are in excess of $80 million.
Our Approach:
The specific objectives of this project included the design, development, and analysis of negotiation strategies and assistance with conducting specific vendor negotiations. For each of the identified vendors the Arc Partners team assisted with:
- defining desired contract goals,
- documenting and assessing current contract compliance, historical spend for capital and operations (license and maintenance),
- preparing negotiation and scenario strategies,
- conducting negotiations,
- crafting responses to vendor changes, and
- developing models supporting the financial analysis of vendor proposals including comparisons to defined goals and current state.
Drawing on our experiences and knowledge developed by assisting other clients and leveraging our wealth of contacts, the Arc Partners team was able to provide both contract negotiation and vendor specific history and experiences to support the client’s contract negotiation efforts.
Value Received By Client:
Over an eight week period we supported this client in the evaluation and renegotiation of three key vendor contracts which resulted of combined reduction of capital and operational expenses by $40 million over a five year period. Immediate first year saving are expected to be $4 million.