Situation: This customer had a complex structure that was completely decentralized from a procurement standpoint, and had 19 individual business units that operated autonomously form the parent organization, though were still under management by the CIO.
Because of the decentralized nature of this customer, it was incumbent upon G2 to secure many months of invoicing information from numerous sources (portals, CD’s, paper, etc.) in order to construct the entire company’s profile. The data collection effort was time-consuming as the information was provided by the 19 disparate cost centers – each of which expected significant cost reductions.
Adding more complexity, the cost centers each had purchasing authority for telecommunications and were disjointed in their approach. Some entities secured modest contracts and others simply signed service orders without understanding the landscape of the telecommunications industry. Overall, in negotiating the entire scope of telecommunication services for this company, G2 dealt with 21 carriers simultaneously.
Unlike typical G2 negotiations that last 8-10 weeks, it was understood between the parties that the complement of these negotiations would take slightly longer to finalize in all respects due to the decentralized environment and existing carrier/contract mix.
Negotiation: Negotiations were very complex and involved many carriers and contracts at various stages of end-dates, and lacked the “buy-in” consensus needed from all 19 disparate cost centers.
Ultimately, G2 issued multi-carrier RFP’s bor both Wireline and Wireless services. However, due to a lack of complete invoicing information from local Carriers we issued a tiered negotiation document mandating all Local Carriers define their base of services, then required a response with revised pricing, terms, and conditions pursuant to a various term agreement.
Result: The major sourcing initiatives undertaken by G2 resulted in massive consolidation of carriers, while also creating a great integration of diverse entities into a comprehensive whole.
Previously, Wireline services were split between a major voice carrier and a major data carrier. The incumbent data carrier was superior for these services and usurped the incumbent voice carrier for a total reward. Wireline costs were reduced by 27.6%. Wireless services resulted in a 37.5% reduction in costs. Local services, the most difficult to negotiate, were finalized with a savings percentage of 22.7%. From an efficiency perspective, Carriers were reduced by half, greatly easing vendor and contract management.
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