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VENDORCONSOLIDATIONTHE

JOURNEY

TOWARDSEFFICIENCY

AND

GROWTHInaneradefinedbyrelentlesschangeandongoingcrises,manyorganizationsarefindingthatmanagingcomplexvendorlandscapesisconsumingsignificantamountsoftimeandeffort.Thisvendorsprawlisnotonlyincreasingthedifficultyofcoordination,butit’salsodrainingsubstantialresources,leadingtocostinefficiencies.TheITpartnerecosystem,originallya

sourceofinnovationandaddedvalue,hastransformedintoanoverheadburdenthatrequiresa

costlymanagementlayertofunctioneffectively.Butatthesametime,weareobserving

a

surgeintechnology-relatedspendingwithmorethan60%ofbusinessesplanningtorampuptheirinvestmentsindigitaltransformationin2023.[1]

Thecriticalquestionthatarisesis:canthesecompaniesdelivervaluefromtheseinvestmentswhilstalsomanagingmultiplevendorswithcompetingagendas?TheanswerliesincostoptimizationwithinITandotherbusinessareas.Vendor

consolidation

canbea

cruciallevertoachievethisbalance.Whenexecutedeffectivelywiththeassistanceofanexperiencedservices

provider,itcanleadtosignificantcostreductions,enhanceoperationalefficiency,andrevealuntappedopportunitiesthatwerepreviouslyinaccessible.[1]

Boston

Consulting

Group

(November

2022),Mind

the

TechGap.2VendorconsolidationUNLOCKING

EFFICIENCIESTHROUGH

CONSOLIDATIONRecentreportssuggestthat75%oforganizationsarepursuingvendorconsolidationin2022,upfrom29%in

2020,emphasizingthegrowingsignificanceofthisstrategy.[2]

By2025,itispredictedthat70%oforganizationswillconsolidatethenumberofvendorssecuringthelifecycle

ofcloud-nativeapplicationstoa

maximumofthreevendors.[3]Moreover,engaginga

smallernumberofmoreversatilevendorsmakeseverything

runsmoothlyandincreasescompatibilityacrosstheentireITenvironment.

Thismakesitpossibletoscaleoperations—eitherupordown—withminimalissues,adaptingtothebusiness’schangingneeds.Andthat’snotall.Havingfewervendorsleadstoa

streamlinedprocurementandinvoicingprocess,therebyreducingtheadministrativeworkload.Thisalsoenablesmoreefficienttrackingandmonitoringofvendorperformance,adherencetocompliancestandards,andcontractmanagement.Theoverarchingideahereissimple:byreducingthenumberofserviceproviders,companiescancapitalizeonvolumediscountsandslashadministrativecostslinkedwithhandlingmultiplevendorrelationships.Moreover,a

singlepointofcontactforITservices

removescommunicationcomplexities,enhancingservice

levels,andfreeingcriticalresourcesforotherITinitiatives.Consolidationisa

smartmovethatboostsoperationalefficiency.Ithasthepotentialtopushthebusinessmodeltothenextlevel,makingita

stepworthconsideringinthejourneytowardsbetterbusinessperformance.Forexample,whenitcomestocybersecurity,itwasobserved

thatthenumberofincidentssignificantlydropswhenfewervendorsareinvolved.Thereason?ConsolidationensuresthatsecurityprotocolsmaintainaconsistentstandardacrosstheITinfrastructure,therebypromotingamorecohesive,integratedapproachtosecuritymanagement.[2]Gartner

Inc.,

Gartner

Survey

Shows

75%ofOrganizations

Are

Pursuing

Security

VendorConsolidation

in

2022(September

13th,

2022)[3]Cisco

(March

2023),Stop

the

Sprawl:

HowVendor

Consolidation

Can

Reduce

SecurityRisks

in

the

Cloud.3VendorconsolidationOVERCOMING

THE

CHALLENGESWhiletheperksofconsolidation,likecostsavingsandincreasedefficiency,areappealing,businessesmuststayawareofpossibleissuesthatmightariseduringtheprocess.ThetaskofbringingtogethermultipleITservicesvendorscanpresenta

numberofchallenges.Ifthesearenotdealtwithrightaway,thebenefitsoftheentireconsolidationeffortcouldbewatereddown,andthebusinessmightfaceevenmoreriskthanbefore.Thisisparticularlytruewhenthereisnotenoughexpertisetomanagetheprocessproperly.So,whatarethemajorhurdlesthroughouttheprocess?people.Maybetheywouldnow•

Vendormanagement

alsoposesa

potentialbottleneck,addinganotherlayerofcomplexity.Ina

scenarioinvolvingmultiplehavetoraisea

ticketasopposedtopickingupthephonetoa

familiarvoice.Employees,whoareoftenusedtotheirroutines,mayfindithardtoadapttochangesintheirwell-establishedprocessesandmightbehesitanttoengagewithanewvendor.providers,businessesoftenassignspecificteamstomanageeachvendor’s

services.

Whenvendorsareconsolidated,therecouldbeadownsizingofthesemanagementresources.Thiscanleadtodifficultieswhenoverseeingtheservices

ofthenewlycombinedvendor.•

Contractuallimitations

poseanotherroadblockthatanorganizationmayencounteronitspathtoconsolidation.ExistingagreementswiththecurrentITservice

vendorsmayimposerestrictionsontheabilitytostreamlineservices

ortransitiontoa

newprovider.Theseconstraintscouldincludeearlyterminationpenaltiesorclausesthatprohibitmergingservices

withanothervendor.

Servicelevelagreements(SLAs)

areanotherchallengeaseachvendormayhavetheirownonesinplace.•

Withoutdoubt,

employeeresistancestandsasthemostsignificanthurdleinthisscenario.Picturea

companywheretheemployeeshavebecomeaccustomedtoresolvingissuesthrougha

particularvendorchannel.As

youaimtoreducecosts,thisshiftmightnotresonatewiththem-

tothem,it’sa

newprocesswithnew4Vendorconsolidation•

Maintainingservice

qualityisanotherkeyconsideration.Whilevendorconsolidationcanleadtofinancialsavings,businessesmustavoidcompromisingservice

qualityinthepursuitoflowercosts.Tonavigatethischallenge,it’scrucialforthemtocloselyexaminethecostslinkedwitheachITservice.

Inpartnershipwiththeconsolidatedvendororvendors,theyshouldthenbuilda

cost-effectivesolutionthatclearlymeetstheirneedsbasedonagreedmeasures.•

Unpickingcomplexity

isyetanotherchallengethata

companyattemptingtoreduceitsnumberofvendorsmightneedtodealwith.Thiscomplexityrangesfrommanagingemployeeresistancetocertainchanges,toweighingtheprosandconsofbreakinga

contracttoattainspecificbenefits.Thiscanbeespeciallydifficult,

asmanycompaniesarenotevenawareofthecomplexitiesinplay.•

Lastly,theimportanceofcommunicationandcollaborationcannotbeoverstated.Consolidatingvendorsoftenresultsinshiftsinprocessesandprocedures,whichcancreatea

climateofconfusionanduncertaintyamongemployees.To

addressthisissue,it’scrucialforbusinessestomaintainclearandtransparentcommunicationwiththeiremployeesandstakeholdersregardingtheconsolidationprocess.Additionally,providingcomprehensivetrainingcanhelpwithensuringthateveryone

iswell-versedin

the

new

processes

and

procedures.5VendorconsolidationTURNING

LESS

INTO

MORETheroadmapfora

successfulvendorconsolidationshouldconsistofthesethreekeyphases:2.

DESIGNThefollowingphaseentailstheWhileitmaysoundlikethisistheend,vendorconsolidationshouldcontinueevenafterthetransitionhasbeencompleted.Itisbeneficialtokeepstreamliningandautomatingprocessesandlookingforpotentialconsolidationopportunitiesthatcanbringthecompanyevenclosertoitsidealendstate.creationofa

solutionarchitectureandthedraftingofa

well-definedStatementofWork.It’salso1.

PLANNINGWhenembarkingona

vendorconsolidationjourney,theinitialstepshouldalwaysinvolvetakinga

stepbacktoreviewthecurrentsituation.Thisinvolvesconductinganassessmentduringwhichdatasourcesareidentifiedandanapproachisagreedupon.Itisatthisstagethattheframeworkiscustomized,dataisgathered,quantitativesegmentationimportanttoestablishanSLAandKPIframework,aswellasadetailedtransitionplan.Completingcommercialandlegaldocumentsisalsoessentialduringthisstage,astheywillbecruciallateron.To

ensuresmoothsailingthroughallthesestages,particularlywhentheorganizationlacksexperienceinvendorconsolidation,it’scrucialtohavea

competentpartnerguidingthecompanythroughtheentireprocessandallofitsphases.3.

EXECUTIONWhenitistimeforthetransition,itisgoodtoinstitutionalizebestpracticesandimplementtoolsthatwillassistinmanagingthetransition.A

well-craftedmigrationplanisusefulhereandshouldincludenewmetrics,cut-overdates,exitcriteria,andotherimportantelementsofthetimeline.Themigrationtofewervendorsshouldbeconductedinstagestoavoidoverwhelming

operations.andsuitabilityassessmentsareperformed,andclusteringandconsolidationrecommendationsaredetermined.Thisphaseentailsthecreationofa

solutionarchitectureandthedraftingofa

well-definedstatementofwork.6VendorconsolidationFROM

EXPERIENCE

TO

EFFICIENCYLeveragingyearsofexperience,Capgemini’sADMnextVendorIna

seven-monthprojectConsolidationapproachstreamlinesITservices

setupforclients.Thisapproachsimplifiesvendorcontractmanagement,

overseestheCapgeminihasconsolidateda

globalchemicalgiant’sITlandscapeof50applicationsacross17providers.Utilizingprovenmethods,weclosedSLAgapsandextendedoursupportbeyondtheoriginalscope.Thisapproachresultedinover2,400enhancements,about30,000resolvedtickets,andsignificantcostsavingswithin18months,allwhileachievingconsistentlyhighuserratingsandzeroSLA

breaches.Thisprocessalsoallowedustoautomatetickethandling,leadingtoadditionalsavings.procurementprocesses,andminimizestechnology-relatedcosts.Weuseadvancedtoolsintheinitialassessmentphasetocrafta

tailoredconsolidationplan,analyzingcontractors,services,applications,andinfrastructures.Withvastbusinesstransitionexperienceanda

comprehensivesuiteoftools,wecansmoothlytransitionclientstoanidealvendorlandscape,achievingcostreductions

between

20-50%,

dependingontheclient’smaturity.Read

more7VendorconsolidationTHE

RIGHT

PARTNERAttainingsuchbenefitscantakea

lotofpreparation,butasanexperiencedpartnerwhohastherighttoolsetanda

uniqueexpertiseinvendorconsolidation,wecanhelpyouminimizecosts,driveefficiency,andachievethefutureyouwant.

Contactustodaytoseehowwecanhelpyoureapthebenefitsofconsolidatingyourvendors.8VendorconsolidationAboutCapgeminiCapgemini

is

a

global

leader

in

partnering

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