Case Study

US $1.2 million in savings delivered through effective management of IT maintenance contracts

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Leading U.S. energy company


Business need addressed:
Effective contract management implementation, including large numbers of non-strategic suppliers that accounted for 20% of spend, and many rolling contracts

Genpact solution:
Conducted a spend analysis and opportunity assessment to provide visibility into spend, then implemented a process for proactive contract negotiation and management of IT maintenance contracts

Business impact:

  • Standardization and simplification
  • Cost and margin pressure

A leading U.S.-based energy concern required active management of IT maintenance contracts with a spend of $20 million. Genpact delivered $1.2 million in savings by implementing a robust Source to Pay solution that provided visibility into spend on these contracts, a proactive approach to sourcing and supplier rationalization, and a standardized sourcing and procurement process for IT maintenance spend.

Business challenge

The company faced a number of challenges in managing their IT maintenance contracts, including:

  • 212 suppliers and 376 hardware and software maintenance contracts
  • 60% of contracts were less than $50 thousand in value
  • No strategic approach to sourcing, with contract renewals often handled reactively
  • Multiple contracts awarded to suppliers for the same service
  • No price benchmarking or view into market trends to assist buyers in renegotiating/renewing contracts
  • Limited staff resources for handling contracts and ongoing renewals

Genpact’s sourcing and procurement experience provided clear visibility into contract spend and increased spend under management, leading to $1.2 million in savings

Genpact conducted initial process due diligence and spend analysis to identify improvement opportunities, then implemented a range of solutions:

  • Created a category tree, through Level 4, to improve spend visibility
  • Deployed sourcing strategies for upcoming contract renewals

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  • Consolidated demand by conducting negotiations at the supplier and category level
  • Poactively managed contracts for better volume/ supplier consolidation
  • Used best-price evaluation based on internal and external benchmarks for similar services provided in the market
  • Developed category profiles and sourcing strategies, identified selection factors and screening suppliers, created RFPs, and developed, negotiated, and implemented agreements
  • Transitioned the Requisition-to-Purchase-order process to Genpact, increasing spend under management and enabling negotiation of lowvalue requisitions that had no scope for strategic negotiation
  • Introduced toll gates with key stakeholder reviews

Business impact

  • Reduced the vendor base by approximately 20%
  • Instituted demand management to proactively reduce the number of individual contracts
  • Delivered savings of $1.2 million

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