Healthcare Services Industry Results
An Organization Learns to Control Supplier Spend and Vendor Relationships
Challenge
A statewide company with technology expenditures of over $40 million per year needed to better understand and organize its information technology contracts and vendor management operations. Stakeholders of contracting and IT purchasing were spread throughout the department and did not follow many standard procedures. Apart from its law department, the company had no centralized repository for signed agreements or processes and procedures enabling disparate departments to make sourcing decisions strategically, and little insight into cost drivers. The company was undergoing a major transaction processing system conversion, so IT personnel were distracted. Numerous outsource professional services vendors experienced little oversight. The company’s budget for consulting services was already stretched.
Solution
A principal of The RoMa Group worked with the client’s IT leaders to obtain buy-in for an approach that centralized a new departmental function within IT and developed foundational policies that were to support and drive a contract and vendor management infrastructure. RoMa Group consultants worked within a limited but plausible budget to create written procedures for every stage of the contracting process that were suited to the organization’s level of maturity. RoMa Group consultants then worked with stakeholders in IT and other departments to refine use the guidelines, including scheduling periodic update sessions with every vendor. The RoMa Group facilitated the use of tools, handbooks and instruction (including participation in negotiations) to enable client employees to effectively generate tailored RFIs and RFPs, negotiate deal points based on written requirements and establish metrics for vendor relationship management. In addition, the RoMa Group created a flexible contract database that included trigger dates for license renewals, and trained existing client staff on managing the information and the new “Vendor Management Office”, where copies of every agreement could be located.
Outcome
The client was able to achieve an immediate savings of $2 million by identifying and terminating redundant or obsolete agreements, and by gaining leverage for upcoming negotiations.
An IT Department Applies a Custom Methodology to Derive Savings from Annual Software/Hardware License Renewals
Challenge
An international company with annual license costs of $25 million needed to rapidly and consistently find savings and renew maintenance and license agreements in a transparent manner. The culture of the client company leaned against process-heavy solutions. Ownership of individual vendor relationships was unclear.
Solution
RoMa Group consultants put all annual hardware, software and professional services renewals on a calendar, aggregated by cost and function relative to company core business strategy. Consultants then interviewed functional and technical stakeholders to match the products and services required by each with the conditions of the pending renewal. If the needs no longer matched the contract, RoMa Group negotiation specialists met with vendor representatives to obtain changes to the terms and conditions of the contracts and license arrangements.
Outcome
Savings attained $3 million in a single quarter, meeting the program’s objectives. In addition, RoMa Group developed a “Renewal Analysis Tool” that included criteria for assessing every upcoming renewal as well as a worksheet and checklist enabling client stakeholders to consistently and systematically obtain savings from hardware and software licenses pending renewal.