Internal feature article on a big savings win

A year-long CompanyValue* effort saved CompanyName $750K annually

 

Catered Coldstone ice cream with dollar bill garnishes was the reward for a cross-departmental effort between Finance and Product that saved the company $750,000 USD annually.

The situation

CompanyName had a $840K yearly contract with VendorName, our content delivery network provider, which enables the delivery of internet traffic for our web application and external website. It achieves high availability and high performance by distributing CompanyName’s application spatially relative to end-users. It also enables to react and keep our application and website up in the instance of DDoS attack.

“In other words, they protect us from hackers and make our pages load more quickly across the globe,” explained Bob Bobson, Cloud Engineer on the Infrastructure team.

Joe Joseph, Manager of Strategic Sourcing, reviewed the VendorName contract and determined the price point was uncompetitive. He attempted to renegotiate midway through the two-year agreement. 

VendorName refused to budge on price, stating they knew that CompanyName had hard technical constraints that would stop us from moving to a competitor.

“Our contract with VendorName had a data cap on it that was far smaller than what we were actually using, so we were paying extremely high rates for overages,” explained Bobson. “The contract was up for renewal, and the vendor thought they had us with lock-in to their features.”

The strategic approach

The teams got creative to force VendorName’s hand. 

“We decided to do a quick roundup of other cheaper providers to see if they provided the features we need,” Bob said.

After some trial and error, our Infrastructure team stood up the necessary framework through a competitor’s platform, proving to VendorName that they were indeed able to function without them.

Bob added: “In a rapid prototype, we found that the other vendors were on par with VendorName for our needs, so Joe was able to use this along with his great negotiating skills to drop the annual contract to almost a tenth of what we’d been paying, and to include not only enough data, but also some consulting with VendorName to get us onto their newer platform.”

The resolution

After further rounds of negotiation, VendorName dropped their price to $99,600… down nearly 85 percent from the original contract price of $840,000. 

From start to finish, the process took 14 months. 

“I’d like to thank Michelle Michael’s Infrastructure & Ops team for all the work they put into going through this process with me and demonstrating our ‘Win Together’ value,” said Joe. “Especially Ashley Asher, Alex Alexis, James Jameson, and Bob Bobson. Without them it would have been difficult to create the competitive environment we needed to achieve these results.” 

*Certain details, including names of involved employees and companies, have been changed (admittedly without much creativity) for confidentiality purposes.

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