Leading VoIP provider expands capabilities and builds credibility through transformational procurement outsourcing

Situation:

Within a couple of years after a spin-off, this leading VoIP provider was experiencing additional regulatory and competitive pressures and, in parallel, suppliers began to increase prices, no longer willing to extend the parent company's terms. As a result, the company began looking for higher performance and productivity from every business function…and procurement was no exception. To meet these challenges, the procurement organization launched a major transformational effort to become a strategic value driver within the company.

Solution:

After studying the alternatives, the company quickly recognized that partnering with a Procurement Services Provider to leverage their expertise and infrastructure would provide the fastest, most cost-effective path toward their vision. The company selected ICG Commerce, who offered immediate access to an infrastructure of category and process specialists, a best-practice-based procurement operation, and a wide range of tools and technology capabilities that would support the entire procurement lifecycle. The company worked with ICG Commerce to develop a four-pronged approach to achieve their vision:

1. Establish a sourcing strategy and program to identify cost reductions
2. Establish the procurement center to realize savings and increase business-unit satisfaction
3. Implement a performance-management program to gain organizational credibility and continuously improve capabilities
4. Establish a category management program to leverage data and market insights to sustain and improve cost reductions

Results:

Today, the company's global procurement organization has achieved its transformation goals. By working closely with functional organizations and extending procurement's influence and value, procurement has been able to address 60% more spend, with an average savings rate of 19.5%. 97% of indirect spend is processed through Ariba, providing essential information on spend, costs, and liabilities. 85% of identified savings targets are realized, making a demonstrable earnings impact. Operating costs are in line with value delivered and have been slightly reduced, even while capabilities have expanded.