ISG assists a global fintech company in achieving over $33 million in cost reductions per year via consolidating its network suppliers.
A financial technology (fintech) company provides information and technology to the financial community. The company operates globally with operations in over 70 countries.
The company used network services from more than 50 providers with a total annual spend in excess of $126 million. It requested ISG’s assistance to review its network spend. It aimed to consolidate its suppliers as feasible and to reduce cost in both the short and long term.
Imagining IT Differently
ISG built a comprehensive service inventory, itemizing the cost elements for all network services being purchased by the company. We then developed a two-phased strategy to deliver on the its objectives. Phase 1 consisted of directed renegotiations and short-term extensions to the contracts of 5 of the largest providers. The goal of phase 1 was to drive immediate cost reduction while aligning certain contracts for phase 2.
Phase 2 was a competitive bidding event where most network services were put to bid through a global RFP. ISG worked with the company to understand requirements, wrote all contractual requirements documents, managed the procurement process for both phases, conducted all vendor interfaces, and negotiated final contracts for ultimate acceptance by the company.
Future Made Possible
Phase 1 resulted in new one-year contracts for existing services with AT&T, CenturyLink, IBM, Telefonica and Verizon (covering $68 million of the $126 million total spend). This resulted in a cost reduction of $5 million per year (approximately 7% on in-scope services).
Phase 2 encompassed a global RFP covering all services ($121 million after phase 1), which was distributed to 21 bidders and resulted in the selection of 10 primary suppliers and 11 niche providers (including 3 that were not invited to the RFP).
A total of 15 new network contracts were negotiated during phase 2.
Phase 2 cost reductions totaled $28 million per year (23%). Phase 2 reductions are additive to phase 1 reductions.