Energy/Utilities Case Study 2

CLIENTS: Energy/Utilities (Example – Chemical)


SERVICE PROVIDED: Outsourcing contract re-negotiation


The Business Situation

Our client, a large international chemical company with offices and plants in 54 countries, operating in 13 languages had engaged a large computer manufacturer to provide outsourcing services for their entire desktop community and the application and network servers. This 10-year contract, arranged through the company president was into its 3rd year and service to the front lines was woeful. So many vendor promises had been unmet, that further extension of the service was being stalled.

Control of the contract had seriously lapsed to the point that changes were being made via email on a daily basis. Some of the operating companies were in revolt, refusing to allow further implementations. The cost of the service (in excess of $200 million per annum) was increasing each year. The service was a constant topic on the executive agenda. Dissatisfaction ran high. The CIO had been replaced.

We were asked to help mitigate the sad situation.

What We Did

First, we needed to separate fact from emotion. Clearly, emotions were running high and staff felt forced to use a substandard service, not wishing to undermine the president’s decision.

Through a careful, documented assessment of actual delivery metrics against the contracted commitments, we were able to prove to a disbelieving vendor that they were seriously failing in their delivery. We implemented a Service Catalog

Then, the challenge became to encourage the vendor to make the needed changes. Initially, they were unwilling to admit their failings and strove to bluster. We tested the market with other potential vendors to seek an alternative in case the incumbent vendor could not (or would not) seek to change.

We benchmarked the cost of services against industry comparables to find that the bad service was costing far beyond average.

Once the vendor admitted their failings, we implemented a strong customer-focused service management regime with scheduled remediation plans across the spectrum of services on a risk-rated priority arrangement. The critical items got early attention. We arranged for a full replacement of the vendor management team with a new team that was interviewed and selected by the client.

The Business Outcomes

All further expansion of the contract was suspended until the current population of services was remedied. The new vendor management team was engaged in regular, fact-based, service level oriented meetings and projects designed to get the services to the contractually committed levels.

Control of the contract was repatriated to the Service Management group and tightly bound to business support.

The cost of services under the contract was negotiated down by over 10% and an ongoing benchmarking mechanism was implemented to ensure costs would track industry averages in the future.

The company executive team heartily endorsed these changes, allowing them to get refocused on business strategy instead of complaints about technology.