Bay Area Digital Executive Dinner Series 

Register for the event by completing the form below.

Farallon | 450 Post Street | San Francisco, CA 94102
Wednesday, May 1 at 6pm PT

ISG Partner, Prashant Kelker will present
Implementing & Tracking a Digital Operating Model

TOPIC:  Implementing & Managing New Digital Operating Models

WHY ATTEND:  This session will focus on understanding what others are doing to establish and govern digital operating models in the new world.  We will be speaking to the challenges they face, and how some companies have overcome these challenges – the key topics we will address are:

• How should the organization structure adapt/change to address new digital models, and how have the leading companies executed change management?

• How will the design and execution of technology transformation programs inform and build its required target business capabilities iteratively using an evolving provider ecosystem?

• How do you ensure a solid digital backbone and operating model is established and maintained to scale and ensure quality in your transformation programs?

• How do you harness emerging technologies and bring them to mass scale usage within your enterprise (automation, analytics, ML, cloud, blockchain, etc.)

AGENDA:

  • 6pm PT Networking/Happy Hour:  45 minutes
  • 7pm PT Dinner:
  • Appetizer:  Implementing & Tracking a Digital Operating Mode
    Presented by Prashant Kelker, ISG Partner - Digital Strategy & Solutions
  • Dinner:  Open Q&A
  • Dessert:  Future Topics & Networking

This is a great opportunity to network and learn from peers. Feel free to bring a colleague!

Upcoming dinners:

Date TBD - Palo Alto: Blockchain Reality & Impact

Date TBD - San Francisco: The Automation Journey Conundrum

Pulling the Renegotiation Levers

Of the many factors that come into play during sourcing decision-making, financial drivers within the existing contract are critical.

Companies must decide whether to renegotiate their contract with their current provider (re-source), choose a new service provider, or bring the services back in house (in-source). Several clients that I worked with over the past couple of years made a conscience decision to renegotiate with their current service provider based solely on the overall financial implications of the deal. 

Service levels, client satisfaction surveys, balance of trade issues, and executive relationships all had an impact in renegotiations, but the most important factors for these clients were based on the NPV (net present value) and profit margins over the term of the deal.

History shows that most companies with outsourcing agreements will undergo significant restructuring during the term, a majority within the first 3 to 4 years, and most (75 percent) with the incumbent service provider.  Furthermore, most of the remainder is re-sourced rather than in-sourced, and only a very small number are in such trouble that litigation is pursued.

When renegotiating a contract, companies should consider financial flexibility and control as part of the overall process.  Providers may not like this approach, but it will pay significant dividends in the long-run for the client.  Examples of financial leverage include eliminating exclusivity restrictions, reducing termination for convenience costs, rights to use third parties, benchmarking rights and lower minimum commitments.

Service providers might be reluctant, especially when financial benefits are reaped by their client, but they know financial drivers are not the only factors when renegotiating a contract.  Other dynamics must be considered, such as increased service incentives, ability to add or change service levels (increased revenues to the supplier), and the potential for a healthy relationship that fosters and facilitates future growth or international expansion.

Renegotiation should be approached as a normal and necessary adjustment to changing conditions.  Financial flexibility and effective management of the supplier relationship are key to the long-term success of a deal.