A new procurement staff realized the wired and wireless telecommunications spend was excessive for like-sized enterprises. The new staff encountered long standing processes which slowed technology adoption and fought long entrenched relationships with the predominant carrier. Believing something was not right, they wanted to take-a-look and spend as little as possible to get it started. NSA always takes a no obligation complimentary review before engaging.
NSA conducted a no obligation complimentary review including; the state of invoices, contracts and spend. This process took more than 30 days, examining reems of incomplete PDF and paper invoices as well as information from various on-line portals. NSA presented their findings of the initial review to executive management: contracts were in conflict expired or approaching expiration; incomplete inventory information; MACDs were not completed by the carrier; and substantial dispute credits were uncollected. Annual cost reduction was important, but the accounting of the inventory, pursuit of credits for disputes and realignment of the vendor relationship was the immediate goal.
NSA was chosen for its investment by providing the complimentary investigation and its guarantee of cost reduction using an approved baseline of current services to new contracted rates with improved terms and conditions as a bonus.
NSA proposed a Right of First Refusal strategy, the client was comfortable with the vendor, and due to the long relationship, they were given the opportunity to match or beat market sensing provided by NSA or the client would pursue new vendors with a full RFP. Initial proposals met some of the market metrics provided, but those which did not were presented via RFP to new vendors. The misses cost the incumbent from participating in the RFP process.
The incumbent maintained approximately 50% of their previous business with the client. New vendors were chosen for the other half with considerable rate reductions establishing new market metrics. Optimizing wireless services uncovered malware abuse, monthly usage exceeding 13 TBs per month was reduced to under 6 TBs per month. Non-employees continuing to use wireless services were disconnected and the inventory reorganized for maximum benefit.
A market based first right of refusal was not met and resulted in a full RFP and negotiation. The RFP netted market results in all four categories up to 49% representing over $4.5M in annual savings and an overall reduction of 40% in total annual network spend. Savings to New Revenue Based on the client’s net profit margin, the engagement results would require over $31M in new annual sales and more than $94M of new retail sales revenue over the term of the negotiated agreement to produce $4.5M in net profits for the chain of retail locations.