Our client, a global multi-brand grocery retailer, identified the need to codify their complex technology spend in order to identify initiatives that would alleviate trading and inflationary pressures.
Challenge
Brought in jointly by the CIO and CFO, Proxima was tasked with identifying areas in which the client could drive commercial impact at pace. In the course of locating multiple opportunities of scale across technology professional services, hardware, networks, and software, one deal stood out as a potential source of near-term value: A multi-tower vendor, which was the largest technology commitment within our client’s landscape.
our approach
With increased license capability requirements across Enterprise Agreement Subscriptions/Enterprise Agreements (EAS/EA), a growing workforce, and a growing cloud estate, the client needed a deeper understanding of its position in the market to drive value in the deal. Following identification of the opportunity, Proxima was engaged to drive maximum value from the deal via a renegotiation and re-terming of the existing deal. Proxima adopted a data-led and business-integrated approach to delivering value.
- Our team leveraged a target price calculator database at the SKU level, which was based on best-in-class pricing developed via external commercial reference points gathered over the previous 24 months
- In parallel, the team engaged the operating companies to understand their roadmap for their cloud estate and license consumption, developing a pragmatic and realistic approach to the overall commitment.
This allowed the team to:
- Calibrate the initial vendor offer against best-in-class pricing.
- Optimize spend via conversations with operating companies through both quantity reduction and specification alignment, ensuring value was maximized. This included the removal of a number of redundant licenses.
- Better leverage scale by focusing operating company forecasts and projections at a group level, bringing a realistic value-at-stake, helping to drive value across all of the vendor’s spend pillars.
Results
This approach drove over 20% in value across licensing and cloud estate spend on a very large 5-year deal. Beyond tangible commercial value, this deal also increased flexibility (i.e. on true-downs), removed >€15m of near-term license commitments, and improved payment terms. The final deal outperformed best-in-class reference points identified by analysts at a leading technology-centric market research firm.
These results allowed our client to further invest in the end-customer proposition both in-store and as part of the emerging digital offering.
