Expense Management Case Study
Large Utility Management Company was having significant contractual, billing and service issues with incumbent vendor and engaged Telmac’s expertise to conduct contract negotiations for contract renewal. Issues needing to be addressed included:
- The past contract term was marked by numerous, ongoing, billing issues, late delivery of invoices, and reluctance to provide any additional rate reductions for Customers TDM based services.
- The Carrier refused to offer any billing error resolution language improvements or provide any relief from late fees incurred by Customer due to late delivery of invoices.
- The customer had many LEC based services, predominantly local private lines, to meet its business needs, which Carrier initially refused to negotiate any rate reductions for these services.
- Cost reduction for network infrastructure was a major driver for Client, but Carrier would only propose rate reductions for IP-based services that the Client was not currently using.
- Carrier proposed eliminating local private lines as a contract contributory spend item while creating a separate sub-commitment for these services.
- Carrier proposed a 10% increase in annual spend commitment, while eliminating $400K in annual contributory spend.
Engagement Type: Fixed price, with First Year Saving Guarantee, additional savings bonus incentive.
Savings Guarantee: 300% of fixed fee in the first year.
- 25% Annual Spend Reduction – Telmac negotiated the reinstatement of all previously contributory spend items, while reducing previous contract overall annual spend commitment by 25%.
- 20% Annual Cost Savings – Telmac negotiated an overall annual cost savings of over 20%.
- 50% Additional Cost Savings – Largest cost element of Client network was reduced by 30%, additional cost savings in other areas were as high as 50%.
- Services Rate Reduction – Services that vendor had previously indicated were off limits to rate reduction were also reduced by at least 10%.
- Billing Errors Resolved by 50% – 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.