Steven Zolman

Jan. 31,2023 | IBM, Outsourcing, Kyndryl

As you may remember, in last year’s blog entitled:

Time to Defuse Your Kyndryl Deal BEFORE it Detonates

We illuminated a number of insights and outlined a number of recommendations to help clients disarm their Kyndryl deals before the ticking time bombs blew up in their faces. 

In the aftermath of the pandemic, many clients suffered from rising input costs and softening business forecasts, and when considering a somewhat gloomy macro-economic outlook and the expected coming headwinds, decided to cut back in discretionary areas of spend. In the process of canceling projects, delaying purchases, and making cuts in discretionary spending, many clients fully realized that their Kyndryl deal was not one of the areas where they could easily make cuts without professional assistance, even when demand had shrunk. In fact, clients are noticing that Kyndryl is one of the many suppliers who is aggressively pursuing its own cost increase agenda; the very thing that customers can afford the least, so this clash of competing values couldn’t come at a worse time. 

In 2023, extreme measures may be necessary to obtain the information needed to prevent your Kyndryl powder keg from igniting and causing a catastrophic event, yet Kyndryl is seemingly completely content to light the fuse.  

Clients are clamoring for savings in 2023, and Kyndryl deals in particular are:  

• Jam-packed with bloated costs 
• Crammed full of unnecessary solutions 
• Chock full of outdated legacy technologies 
• Looking to make punitive cost increases with no increase of value    

Kyndryl deals are therefore rife with opportunity to extract value with minimal business risk, and frequently include an opportunity to gain additional business benefits we well, creating a ‘no-brainer’ of sorts when it comes to considering (i) unilateral cost-savings strategies, (ii) viable market alternatives (that at worst put considerable downward pricing pressure on the incumbent solution), and even up to and including (iii) competitive displacements of part or all of a Kyndryl solution.  
 
How to Save on Kyndryl 

Here are the five most important things you can do: 

• Benchmark. Everyone should Price-Benchmark their Kyndryl proposal, agreement, and/or renewal. NET(net) can benchmark your Kyndryl deal in an accelerated fashion, and show you how much you can save. Market pressures have changed considerably in 2023, the business in this segment is highly competitive, and the desire to acquire new business in a competitive displacement is at a fever-pitch. Market realities will highlight vast inequities in your existing agreement and/or planned purchase, and the resulting downward pricing pressure will provide the ability to harvest value through market arbitrage.  
• Contract Review. Many IT Outsourcing (ITO) contracts have provisions that give customers options to renegotiate based on changing market conditions, and these should be explored as the market in 2023 has changed considerably. Clients may also have options to rightsize, resolution, and/or renegotiate for services where Kyndryl is chronically underperforming. In any case, we recommend a benchmark as the first step to help you determine the specific opportunity you have. Contact us today to learn more about how we can review your contract to see if you have provisions that may be able to be exploited for value harvesting.  
• Configuration Management. In most cases, there are solution configuration options and settings that can be changed which will result in lower costs. For example, using cloud computing and storage resources instead of physical servers can often result in considerable savings with minimal disruption and/or no discernable performance implication. 

• Consumption Management. In many cases, clients pay for provisioning and consumption costs of various solution components, and in most cases, we find that clients are wildly over-paying or paying for services that are outright unused. In fact, waste is a large and ever-increasing amount of the total cost, which is something that can easily be remedied with the right inspection and remediation efforts.  
• Engage NET(net) to help you (Re)Negotiate with Kyndryl. NET(net) has considerable experience negotiating some of the world’s largest IT outsourcing agreements with IBM, DXC, TCS, Wipro, Infosys, Cognizant, Kyndryl and others, and has helped clients save billions in this category. Kyndryl deals are intricate and extremely complex, with many moving parts, and if just one of the important elements is neglected, it can lead to catastrophic results. However, your Kyndryl deal may offer you a unique opportunity to reset what has otherwise been seen as an antiquated deal and a decaying relationship, but in order to capture value, you must move now. Sign up now for a Savings Cloud subscription, and we will get started right away. 

Two Client Case Studies (to illustrate the bloat that is IBM (and now Kyndryl)): 

A large financial services client of ours was facing a $928 million upgrade charge to their mainframe operating environment. We were able to help them secure the upgrade and dramatically shorten the time to value, for a revised cost of $350 million. They saved $578 million (62.3%) by:  

• Leveraging our Federated Market Intelligence (FMI) 

• Utilizing our industry best practices for the modern enterprise 
• Relying on the skilled negotiations expertise of our subject matter experts 

In another case, we were able to help our client lower:  

• MLC costs from $1.44B to $1.25B  
• S&S from $426.8M to $300M  

Resulting in a new 3-year IBM Software deal with $950.4M in Savings, but even though these savings amounts are extremely impressive, they actually dramatically understate the value achieved in the negotiation because, in addition to these hard dollar cost savings, our client also received a 45.5% INCREASE in its MIPS Capacity. This is yet another example of how clients can concurrently secure lower costs PLUS significant value improvements. More and better stuff for less money. Not bad. 

Since 2002, NET(net) has shaped over $2 Trillion of investment, captured well over $400 Billion of incremental value for our clients and partners, and has an 85% probability of achieving savings ranging between 13-53%.  

In 2023, NET(net) can help you minimize costs and risks, while maximizing the realization of value and benefit of all your technology agreements, investments, deployments, and relationships, so if you are looking to save money, improve operational efficiency, and/or modernize your organization, Act Now.  

About NET(net)  

Founded in 2002, NET(net) is the world’s leading IT Investment Optimization firm, helping clients find, get, and keep more economic and strategic value in their technology supply chains. Over the last 20 years, NET(net) has influenced trillions of investment, captured hundreds of billions of value, and has helped clients cost and value optimize XaaS, Cloud, Hardware, Software, Services, Healthcare, Outsourcing, Infrastructure, Telecommunications, and other areas of IT spend. NET(net) has the experience you want, the expertise you need, and delivers the performance you demand and deserve. Contact us at info@netnetweb.com, visit us online at www.netnetweb.com, or call us at +1 (616) 546-3100 to see if we can help you capture more value in your IT investments, agreements, deployments, and relationships. 

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