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Case Study

Governance savings

A strong governance structure delivers cost savings and retains value for a utilities client.

Opportunity
Opportunity

Our gas and energy client was a first-time outsourcer looking for innovative, best-in-class applications development and maintenance, contact center and cloud services. Many of their 1,200+ legacy contracts contained no service-level agreements, weak discounts and termination clauses. Without a framework to assess contract effectiveness and value leakage, business losses were a constant problem.

Imagining IT Differently
Imagining IT Differently

ISG designed a governance solution with tier stratification, point-to-point and contract databases to manage the sourcing-to-pay lifecycle. The solution established strong scorecards for real-time spending visibility, proactive monitoring of contract renewals, renegotiation support post assessment and strong renewals.

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Future Made Possible

  • Cost avoidance of US $150,000 during contract review
  • Avoided leakage of $100,000 by capping time and labor expenses at 15 percent of contract/statement of work value
  • Annual contract price increase capped at three percent
  • Service-level agreements designed to penalize supplier for any breach
  • Operating expenses reduced by adding an early payment discount, and capping support fee and late fee
  • New framework created for change requests, multi-source agreements and all fixed prices to ensure consistency in data reporting
  • Termination clauses changed to convenience client rather than suppliers