Telecom Benchmarking Case Study
Fortune 500 company in Real Estate Industry utilized Telmac’s telecom benchmarking service to assess its existing vendor contracts prior to entering an end-of-term negotiation session. A review of these contracts revealed the following issues:
- Client was spending approximately $50 Million per year on its voice and data services.
- Pricing was 20% above market.
- Contracts were missing some significant contract language commonly negotiated by Telmac to protect the client. Carrier proposed eliminating local private lines as a contract contributory spend item while creating a separate sub-commitment for these services.
- Telmac’s benchmarking analysis showed Client how they could save up to $10 Million per year by negotiating some key rates.
- Telmac highlighted a vendor billing anomaly, which could be corrected via a contract clause change that could save Client up to $1 Million annually.
- Telmac identified and suggested a host of recommended contract language changes that would protect Client and improve their future contract negotiating leverage.
Engagement Type: Fixed price, with First Year Saving Guarantee, additional savings bonus incentive.
Savings Guarantee: 300% of fixed fee in first year.
- Telmac negotiated re-instatement of all previously contributory spend items while reducing previous contract overall annual spend commitment by 25%.
- Telmac negotiated overall annual cost savings of over 20%.
- Largest cost element of Client network was reduced by 30%, additional cost savings in other areas were as high as 50%.
- Services that vendor had previous indicated were off limits to rate reduction were also reduced by at least 10%.
- Language was negotiated to reduce carrier time to resolve billing errors by 50%.
- Late fee penalties were addressed by changing payment terms, which Telmac escalated to Carrier CFO for approval.
- Client ROI was 400% first year, and 1200% over new contract term, relative to Telmac’s fee.