Punch Above your Weight with your Existing Suppliers and Modernize Your Supply Chain
Author: Steven Zolman
Suspend your disbelief!
You are likely significantly overpaying your current technology suppliers. In our history of helping our clients rationalize and renegotiate their legacy spend, we help clients punch above their weight and capture 20-30% savings on average.
In helping our clients modernize their supply chain by sourcing technology deals for new spend, we help clients modernize their supply chain and average 30-40% savings. Combined, even with a roster of world class client brands who all thought they were pretty good at managing suppliers and buying new stuff, we have helped clients capture over $200 billion of incremental value, and are generating savings in excess of 35% on average.
There are many reasons why clients overpay, and many of these reasons aren’t fully their fault. The cost of technology is supposed to go DOWN over time, yet many of our clients see steady year-over-year cost increases largely resulting from market conditions that are exacerbated by business process flaws in the strategic sourcing and/or supplier performance management business processes. These subtle mistakes converge to create ever-widening gaps between optimal market conditions and the client situation, often resulting in significant needless over-payment.
One client was proud to tell me of the excellent pricing discounts he just locked in with his new 3-year deal with his enterprise storage supplier. I winced as I considered the ramifications, and then asked if he realized that he was holding costs steady in a negative CAGR market environment, which meant that if he went to acquire more capacity under that agreement in the subsequent years, most assuredly, he would be buying at artificially inflated prices above market values. In this case, we were able to negotiate in an extra clause that allowed the client to ‘go to market’ during the term of the agreement, and if variances in excess of a certain value were found, they were able to renegotiate. After the second year, when the client was considering another large purchase, they asked us to do a market assessment and we found that market prices had halved. Good thing the client wasn’t forced to buy off the old agreement, because they would have paid double for the capacity they needed at that point. This is not an uncommon process. One of the ways we constantly test market value is to ‘blind RFx’ the disruptive supplier community so we are constantly aware of the market value of a host of different technology categories including hardware, software, services, cloud, SaaS, telecommunications, and outsourcing among others.
Another client explained how they were engaged in a purchasing project and were taking the top 3 suppliers in Gartner’s magic quadrant for the next round of negotiations. Again, I shuddered as I considered that the high value / low cost suppliers that are in client acquisition mode are generally considered niche players, or more often, not even represented in those magic quadrants. These ‘disruptive suppliers’ generally don’t get a chance to bid for business in the larger accounts that utilize this process, and as a result, an unofficial cartel forms between the ‘finalist’ suppliers whereby the value of competition is severely eroded with a limited field of high cost suppliers, often not resulting in the kinds of commercial incentives we otherwise see in a managed competitive landscape inclusive of disruptive suppliers. In this case, we were able to bring forward several new suppliers, one of which the client ended up selecting at a small fraction of the cost of the traditional finalists, but also with a higher demonstrated value to the organization. It’s not uncommon to see this. We now actively maintain detailed information on about 6500 disruptive technology suppliers in virtually all cost categories, and can provide our clients with information about these suppliers, including our professional assessment on them, unfiltered peer, product & service ratings, etc. These suppliers are also available in our federated market intelligence database on WIN(win), and our platform is available for client use for market, solution, supplier, and product research among many other uses.
Consider for a moment that between your existing cost structure and your new purchasing plans, you could be overpaying by 35%. What would a 35% savings in these costs mean to your organization? What would it mean to you and your career?
There is no reason to continue to suffer. Clients that utilize NET(net), save 35% on average, increase organizational profitability, realize other business benefits by directing the recapture of this needless over-spending to other important areas, improve the valuation of their firms, and increase shareholder value.
Call us today and let’s get started!
NET(net) is the world’s only fully technology-enabled consultancy exclusively specializing in full service IT Investment Optimization. We help clients Find, Get and Keep more economic and strategic value in their Agreements, Investments and Relationships. With clients around the world in nearly all industries and geographies, and with the experience of thousands of field engagements with hundreds of suppliers, we have helped clients capture billions of incremental value. NET(net) is a global disruptive industry force for good. We have the expertise you need, the experience you want, and deliver the performance you demand to help you save money, improve value, and enhance supplier relationships. Contact your NET(net) representative, email us at firstname.lastname@example.org, visit us online at www.netnetweb.com, or call us at +1-866-2-NET-net today to see if we can help you capture more value in your technology supply chain.
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