IT outsourcing renegotiation
Client Requirement
The client had been through significant management and business change which, by autumn 2024 meant that the existing IT outsourcing deal did not meet their needs. Going to market was a high-risk option because of the limited time left on the deal, and the potential cost increase that could result. The client team needed experienced advice to develop the alternative options, together with a renegotiation strategy and plan to secure improved terms, resolve issues and establish a platform for future IT developments.
OUR ROLE
The retained client IT team was a small number of senior people, facing a huge workload, partly resulting from the overhead of managing the legacy IT deal. They needed Arundel’s experience and knowledge to manage the renegotiation. Specifically, we:
- Analysed the options for re-tender, extension or renegotiation and recommended renegotiation of pricing, service levels and governance
- Created and managed the renegotiation plan to successful conclusion
- Modelled the current and new pricing, to create a justification for maintaining existing pricing levels
- Created a revised commercial deal shape including joint incentives to manage costs and drive value-added developments
- Wrote the new pricing schedule
- Assessed the existing service level agreements (SLAs), worked with the client to define and agree the required new SLAs and amended the schedule
- Re-designed the governance model and re-wrote the governance schedule to streamline and simplify management of the deal, and reduce the operational workload on the client
- Analysed and created responses to supplier positions on terms, pricing and schedule
Business Outcome
- An entirely new pricing mechanism, linked to the business requirements, and providing pricing predictability to the client
- Improved service levels and governance processes, to match the business requirements
- Resolution of outstanding commercial issues
- A 2-year extension to enable focus on strategic development priorities
Completion date : April 2025
