Case Study #6301 - Contract Review : Financial Service Provider

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The Situation

The Client was in the middle of their outsourced IT infrastructure facilities management contract, and wanted to conduct an independent review of the contract and the sourcing strategy they had adopted.

Cherub consultants were engaged to review the Client’s strategic sourcing approach and strategy, and to work with their senior executives to develop a high level sourcing strategy, which could be applied to future IT infrastructure outsourcing contracts.

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In addition, they conducted a review of the existing contract arrangement to determine if there were potential avenues for re-negotiating aspects of the arrangement that reflected the Client’s current commercial position.

The Client recognised that at the mid-term of the contract, they were unhappy with their Service Provider’s performance, and were unsure of what options were both available and practical for them to undertake.

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Our Approach

In reviewing the current contract, Cherub consultants considered the contract in relation to similar deals in the marketplace and our best practice materials to determine whether there were any re-negotiation opportunities.
This included reviewing service levels for opportunities for tightening up “in-scope” versus “out of scope, therefore it becomes a project” issues, and improvement in basic provision of support processes such as configuration management, capacity planning and asset management.

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They also reviewed the contract to determine what the Client’s commercial options were for termination.
Later, Cherub consultants worked with the Client to review the existing sourcing arrangement to establish:

• The Client’s internal service delivery capabilities; and

• The strategic value the Client places on the service.

 

They then conducted a series of workshops with the Client to establish the integral elements of the sourcing strategy. These include consideration to:

• Deal Type required;

• Sourcing Model to adopt;

• Sourcing Governance required; and

• Pricing Model to use.

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Client Benefits

Following on from this work, the team worked closely with the Client executive to determine what their strategic and tactical options were and a practical “roadmap” for facilitating a short to medium term sourcing strategy for the Client to move forward.

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As an example, our consultants concluded that some services currently outsourced may be better sourced in-house, whilst also concluding that outsourcing application services (development, support and maintenance services) may present further opportunities to the Client for cost savings and for accessing new skills and resources.

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This advice was tempered by the caution that a thorough analysis first be undertaken to identify benefits to the Client and risks and mitigation strategies associated with the initiative.

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Further Information

For more information, please contact our lead Director for this engagement.

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