A major North American travel and transportation company was approaching the expiration of contracts covering IT services outsourced to a tier 1 Service Provider with which it had maintained a long-term contractual relationship over a period of 10+ years. Faced with evaluating a stagnating long term relationship with an outsourcing provider, the client turned to WGroup to ensure they were receiving the most value at up to date market competitive prices. WGroup helped rejuvenate the contractual relationship with the client and their provider.

1. Opportunity
A major North American Travel
and Transportation company was
approaching the expiration of contracts
covering IT services outsourced
to a Tier 1 Service Provider with
which it had maintained a long-term
contractual relationship over a period
of 10+ years.The scope encompassed
roughly all areas of infrastructure (i.e.
mainframe, help desk, distributed
systems etc.).The contract was due
to expire in a year and a half and the
client wanted to ensure that they had
sufficient time to conduct a thorough
analysis of their IT environment.
As part of the analysis, they wanted to
complete an in-depth assessment of
the contractual relationship, and ensure
they had sufficient time (if necessary) to
develop new contract(s) with a best-
fit service provider(s) to support the
company’s business and IT strategy in
a changing economic, regulatory, and
technology environment while lowering
costs, improving service delivery, and
avoiding early termination liabilities.
Approach
WGroup collaboratively developed a
best-fit sourcing strategy that aligned
the client’s sourcing activities toward
key business outcomes, with an
emphasis on cost improvement, best
practices, technology optimization and
transformation.The client wanted to
extend its relationship with the Service
Provider as it would lower the risk and
costs associated with any transition,
but only if the Service Provider
would transform the IT environment
and put in place a robust IT Service
Management (ITSM) foundation,
at a market-competitive price.The
initial revised bids from the Service
Provider did not meet this criteria.
WGroup presented a detailed critique
of the bids with clear direction on
how they needed to be improved.
In parallel, WGroup began the work
to competitively bid the services
to other vendors by analyzing
sourcing alternatives for the client
with corresponding discussion of
the pros and cons for each option.
Additionally, WGroup created a
client specific financial case based
on market driven service costs that
would be used to determine the true
savings of any submitted bids. As
part of this analysis, WGroup also
looked at some of the balance of trade
fundamentals that were inherent in
the relationship to create a true picture
of the spend and services between
the client and the Service Provider.
Drive Your Business
Innovative Sourcing Transformation
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Travel & Transportation | IT Infrastructure Sourcing Strategy
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Faced with evaluating
a stagnating long
term relationship with an
outsourcing provider, the
client turned to WGroup
to ensure they were
receiving the most value
at up to date market
competitive prices.
WGroup Transforms Incumbent Provider Relationship
While Suggesting Innovative Solution to Create Value
for Both Provider and Client

2. The combined impact of these analyses
changed the negotiation dynamics and
information asymmetry from being, as
is typical, more favorable to the sole-
sourced Service Provider to being more
favorable to the client.This realization
by the Service Provider resulted in the
presentation of a solution that was
both transformative in nature, while
substantially reducing client costs and
incorporating ITSM best practices.
WGroup then negotiated a revised
contractual arrangement with new
Service Levels that provided greater
insight into service delivery and
improved controls and flexibility
to meet changing business needs.
Furthermore, WGroup’s work with
the client indicated that the client
lacked the necessary capabilities to
manage the Service Provider and
contract on an on-going basis to ensure
that the contractual commitments
would be met. WGroup crafted a
Vendor Management Framework and
processes for managing the Service
Provider and laid out a plan to expand
the VMO capability to include
other Tier1 IT Service Providers.
Insights & Advice
• Clients who have had a long-
term relationship with a particular
Service Provider are reluctant to
change, while at the same time they
may lack knowledge of how the
market and industry has evolved
with respect to services, pricing,
best practices, etc. It is critical for
them to understand this evolution
before entering into a new contract
or renewing an existing contract.
• Service Providers in a sole-
source environment will not
typically present the best pricing
WGroup
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and solution initially because it
requires investments and reduces
revenue streams. Additionally, they
usually have more information
on the client environment and
the marketplace than the client
IT team(s). In order to address
both these issues, it is beneficial to
engage with an independent 3rd
party that has no vested interest
in the final outcome but is able to
conduct a data-driven, fact based
approach to such negotiations.
• Revising the contract is not enough
in itself to ensure a successful
outcome. In order to ensure that the
relationship and services continue
to be delivered and improved
as per the revised contract, it is
essential to have a very strong
vendor management capability.
• When negotiating with Service
Providers, there is often tremendous
information asymmetry in favor
of the Service Provider.
• Where there are balance of trade
considerations, clients must engage
service provider business, sales and
delivery teams in order to ensure
that all aspects of the relationship
are discussed. Additionally, it
is important to understand and
model the benefits and costs of
such relationships to improve
one’s negotiating position.
• The sourcing space is changing
rapidly and there are Service
Providers with new approaches
to sourcing, transition, service
delivery, service level management,
etc. Any contractual relationship
that was issued more than 3
years ago should be reviewed for
value and cost to the client.
Clients who have
had a long-term
relationship with a particular
Service Provider may
lack knowledge of how
the market and industry
has evolved with respect
to services, pricing, best
practices, etc. It is critical
for them to understand
this evolution before
entering into a new
contract or renewing
an existing contract.

3. Results
Over the course of the previous
contract, the relationship between
the Service Provider and client
had deteriorated. With the help of
WGroup, the client did not have to
change providers and both parties
enjoyed a renewed relationship in
which the provider was viewed as a
valuable addition to the client’s team.
The client was delighted with their
outcome and found great value in
WGroups evaluation, they enjoyed
many improvements including;
• Upgraded contractual relationship
was implemented per the client’s
request and requirement
• Significant cost reduction ($80+
Million) in on-going service costs,
much beyond the client’s initial
expectation
• Reduced transition risk
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Contact Us
WGroup
301 Lindenwood Drive, Suite 301
Malvern, PA 19355
610-854-2700
CPG_OSRNGCS_100312_006
About WGroup
Founded in 1995, WGroup is a boutique management consulting firm
that provides Strategy, Management and Execution Services to
optimize business performance, minimize cost and create value. Our
consultants have years of experience, both as industry executives and
trusted advisors, to help clients think through complicated and pressing
challenges to drive their business forward.
For more information on WGroup, visit http://thinkwgroup.com
• Major improvements in service
delivery processes, tools and
technology with an emphasis on
transforming and optimizing the
client IT environment
• Improved commitment to meet
balance of trade objectives
• Strong executive to executive
relationship and on-going
engagement agreement at the
highest levels of the organization
• Restructured service level
management framework with greater
emphasis on critical services, with
the flexibility to adapt to changing
needs
• Additional contract terms and
clauses to address security and
compliance concerns
• New vendor management capability
to ensure compliance to contract
terms and on-going governance of
the relationship
As a result of WGroup’s
work the client
enjoyed significant cost
reduction ($80+ Million) in
on-going service costs,
much beyond the client’s
initial expectation.