Situation: This three-state energy provider made the strategic decision to consolidate carriers across all local, long distance, wireless voice and paging. The majority of its long distance services were exactly mid-way through a three-year commitment with a Tier-1 carrier as part of buying consortium. All other services were procured under various terms and commitments through upwards of 30 different providers.
G2 built a comprehensive solution to fulfill this client’s requirement to maximize consolidation through the discovery of significant carrier leverage and appropriate and aggressive negotiation strategies. The client expectation for savings was set at 15% to 18% combined across all services.
Negotiation: G2’s negotiation methodology was to immediately eliminate all minor carriers and focus negotiation efforts for those Tier-1 incumbents currently under agreement. G2 found negotiation leverage and carrier weaknesses that enabled a fully developed “threat of loss” for all vendors.
G2 conducted multiple carrier RFP’s with 19 carriers. The client was willing to transition carriers as part of their consolidation efforts only if such a move was financially justified. A strict timeline of events was planned and adhered to resulting in an 8-week negotiation – a nearly 70% reduction in cycle time compared to this client’s past efforts.
Since a large wireless and paging transition was in the offing, the client and G2 conducted extensive wireless testing, to include many outer lying areas found in this energy company’s service footprint. Coverage is primary over wireless cost reductions; therefore testing was critical in eliminating those carriers who could not provide proper coverage.
Result: The consortium was eliminated because G2 was able to negotiate significant savings outside of this buying arrangement. All incumbent carriers provided new agreements with 50% consolidation on long distance and wireless and 75% consolidation on paging. As expected, local consolidation was a challenge with a resultant merger of less than 10%.
Average total savings across all services was 37.5% – representing greater than a 200% increase over client expectations! Terms, conditions and service level agreements were improved to reduce carrier liability and provide for appropriate mid-term contract revisions.
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