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Objective

Save money and improve contract terms for a mainframe upgrade, all within the lease term of the current mainframe, either with the incumbent, or a new vendor.

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Approach

A project team was mobilized to quickly identify alternatives to accepting the incumbent vendor’s proposal to upgrade to new mainframe hardware.  Alternatives included new and used hardware from alternate sources, as well as outsourcing the mainframe, and its maintenance, entirely. These additional proposals, while ultimately insufficient to justify a switch, gave the Client detailed knowledge of the marketplace and, ultimately, the leverage to get better pricing and contract terms from the incumbent vendor. The vendor, sensing that leverage was shifting to the Client’s side, worked feverishly to pressure the Client to accept the initial proposal, using time against the Client.  However, because of the trust built with the Client legal team, Seprio was able to quickly finalize all legal documents with the Client legal department; and the project team, by adhering to a strict communication protocol, was able to overcome the attempts by the vendor to pressure Client executives into accepting less-than-optimal terms.

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Results

The Client elected to purchase new mainframe hardware from the incumbent vendor, which Seprio negotiated for $646,000 less than the incumbent’s original proposed price.  Additional credits on existing software license and support fees, along with the waiver of fees for certain required services, brought the savings up to $937,000. In addition, for two years, the Client has the option to upgrade the mainframe an additional level, something they felt could happen, at no additional cost (a value of $320,000). If the Client exercises this option, they will have saved over $1.2MM.


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