Outsourced Customer Care & Billing Platform Achieves $1 Billion in Synergies

Problem

outsourced-customer-care-smallShareholders had been assured that the merger of two Fortune 200 telecommunications carriers would generate over $500 million of synergies within the IT organization alone. A significant portion of these savings were anticipated to be delivered though rationalizing the legacy customer care and billing platforms and outsourcing the platform's operational services to the selected supplier. The newly-combined carrier asked Pace Harmon to determine how to best consolidate these systems and capture the savings while protecting against a negative customer experience.

Approach

Pace Harmon was engaged to complete a comprehensive analysis of both legacy platforms, develop a recommendation as to which platform best accommodated the combined entity's unique business needs, and execute the outsourcing transaction. With each day costing significant sums of money in lost synergies, Pace Harmon proceeded as follows:

  • Rationalization began with a comprehensive diagnostic of the customer care and billing platforms of both legacy companies. We conducted detailed interviews to understand the universe of requirements, business considerations, and issues. Based on the data gathered and an analysis of existing contracts, we developed a robust financial model to reveal the financial impacts of selecting either service supplier
  • We conducted an extensive Request for Offer (RFO) process that focused on obtaining the requisite information to make an informed decision. This process included coordinating stakeholder participation, drafting the RFO and scoring the responses. Through this process, over 70 business and IT experts reviewed supplier responses to more than 500 questions, and 50 company personnel attended oral presentations
  • In parallel with the RFO evaluations, we coordinated an independent 3rd party analysis of the suppliers, concentrating primarily on financial viability, performance references, system stability and historical system performance
  • With the orals and response scoring complete, Pace Harmon assembled the business case and financial analysis, which included an exhaustive comparison of quantitative results (NPV, ROI, EBITDA, TCO). The financial analysis revealed that one of the two suppliers delivered the greatest value. Though the supplier’s solution was not the lower cost of the two, the solution was better aligned to the needs of the client: its tightly integrated architecture lowered the risk of delays in development and deployment. We recommended the adoption of that leading platform
  • We provided executive leadership with thorough advice on best practices for the agreement structure, service level agreements, contract terms and conditions, and program management of the implementation. At the negotiation table, we helped ensure that the contract became the manifestation of a long-term, mutually beneficial relationship

Outcome

Pace Harmon recommended an outsourced solution that was forecasted to deliver over $1 billion (more than twice the IT synergy target) over the 8 year term of the relationship. Our recommendation received broad organizational buy-in from both pre-merger entities due to the program's effective change management and communications planning, and the comprehensive participation of the impacted organization and executive leadership. Most importantly, given the size of the deal and the potential sensitivities associated with the decision, both suppliers agreed that the process was thorough and fair; an opinion that was confirmed when internal audit completed an extensive review of the deal.