CASE STUDY

Addressing Proprietary Lock-in Situation and Reducing Procurement Costs by 33% for a Company in the IT Services Industry

Oct 9, 2019

IT Services Industry Overview   

The IT services industry encompasses a diverse population of companies. They deliver valuable and practical information to customers and often cater to specific markets. Companies do not provide physical products and therefore require no inventory. This does not mean companies in the IT services industry do not face any barriers. Besides suppliers of database information, services require a highly skilled workforce. Companies that maintain big databases and develop expansive information systems need to assess factors that may curtail the growth of the industry. They must analyze new security threats, data protection issues, and supplier risks to maximize ROI and keep pace with the latest technologies. 

Business Challenges Faced

The client, a leading IT services company in the US that had experienced strong growth in recent years was outsourcing database information to serve its clients efficiently. However, they were discontented with the quality of services and witnessing a surge in their spending patterns. Suppliers were failing to meet service levels and cost savings required by them, thereby increasing organizational spend. This created the need for the client to profile the most prominent suppliers and evaluate their overall performance. They also felt the need to analyze different types of supplier risks creating additional costs, service debasement, and operational inefficiencies. The client, therefore, approached SpendEdge to help them identify risks, profile suppliers, and gain better visibility on their business spend.

Key challenges the client aimed to address through this engagement were: 

  • Not enough visibility on spend.
  • Delays associated with the disruption in the supply chain.
  • Anticipate and alleviate risks associated with suppliers.

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Our Research Approach

To help the client identify risks and manage spend, the experts at SpendEdge made a detailed study on every attribute from the supplier’s financial stability. They gained detailed insights into the skills required by the appropriate suppliers and vendors to meet the client’s requirements. Based on insights, the experts classified risks into two categories, which were client factor and the transaction factor. Client factor involved risks that could lead to negative outcomes such as declining service levels, hidden costs and loss of control over costs due to lack of insights into supplier’s performance and activities. Transaction factor comprised of risks that could occur due to transition and management costs, and poor contract management.

The tailor-made IT services industry report offered helped the client to assess suppliers and transfer the service from one supplier to another supplier in case of service debasement. The report also helped the client to understand the loopholes in the IT services industry in terms of savings opportunities in contracts, varying prices, purchasing overlaps and unprecedented risks.

Engagement Outcome

SpendEdge’s supplier risk analysis solution offered helped the client to address proprietary lock-in situations without incurring any additional switching costs. Also, the supplier insights provided helped the client to effectively track poor response time, turnaround time, late updates of software, and applications that did not meet the requirements. This improved supply chain efficiency and reduced procurement costs by 33%. 

Associating with the right suppliers is imperative for companies to identify risks, reduced costs and keep pace with IT services industry trends. Subscribe now to enjoy free access to SpendEdge’s insights regarding the IT services industry. 

Challenges Facing the IT Services Industry

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