We often find clients have previously outsourced services to one or more 3rd party providers and that the contracts were established a number of years ago. Over the years, our clients’ organisations have changed, but the outsource contracts haven’t kept up. As a result, the service delivered is a core service with many additional change controls that don’t deliver maximum value. These contracts are in need of review and have accumulated a number of issues over the years. The service definitions no longer reflect what is being delivered, the service levels (SLAs) are often not a fair measurement or credit for poor performance, overall it is hard to benchmark the service and they give the supplier free-reign to charge for services. Through our structured outsource contract reviews, we bring service agreements up-to-date and, if necessary, help clients change provider. It’s appropriate to start this type of project 12 to 18 months prior to contract expiry, but often it can be carried out whilst a contract is part way through term.
In a recent ExcelSource project, our client felt they were paying too much for their contracted IT services. Furthermore, one service was underperforming but the SLA had no “teeth” and would not make the supplier wake up to the problems our client was experiencing. The client/supplier relationship was excellent in places, but poor in others.
Following our review, we were able to prove with high-level benchmarking that costs were significantly higher than industry standard. The supplier argues its’ services were significantly “specialised” to warrant the premium. However, following a two-stage tender process, ExcelSource were able to prove these specialised services in fact cost far less with the supplier’s competitors and the service was transferred successfully to a number of different providers. The resulting changes produced a 41% cost saving for our client and still offers an improved set of service levels.