Divestiture and Merger IT Asset Rationalization

IT vendor negotiation support for divestitures and mergers.

Divesting a large business unit? Merging two large enterprises together? In either case, there are a lot of moving parts to be rearranged. There is extra work required of almost every business function, and a C-suite-mandated deadline. Meanwhile, the normal day-to-day work has to get done.

IT is one challenging and time-consuming area where NPI can take on a big part of the burden.

Splitting Your IT Estate for a Divestiture

When a large business unit is divested, you need to split IT assets that span hundreds of vendors and hundreds, perhaps thousands, of individual products, subscriptions and services. And if the divested entity won’t need certain assets, you need to reduce your footprint. In some cases, you have to provide post-divestiture transition services for a period of time.

The fact is, most of your IT vendor agreements don’t allow for unfettered assignments, transfers, transition periods or commitment reductions – you need to get the vendor’s approval. And most vendors view each approval as a revenue opportunity.

Once the desired future-state IT asset allocation plan has been defined, there is a stunning amount of information management, process control, cost-mitigation analysis, negotiation and contract work to be done. It’s nitty-gritty work that takes time and requires a specific skill set. This is where NPI steps in.

NPI’s IT Negotiation Services for Divestitures

NPI is uniquely qualified to augment your team so you can rationalize your IT portfolio and meet your deadlines. For over 15 years, we have helped our clients deal with enterprise IT vendors all day, every day. We know how vendors behave at the negotiation table. We know whether they’re offering a fair deal. We speak their language, and we understand their licensing and subscription documents. For NPI, this is just another flavor of transaction-level IT purchase optimization.

NPI has a proven approach to divestiture-driven IT asset rationalization that helps you complete negotiation with IT vendors on time, and get the best deal. Here is a high level summary of the process:

Preparation

  • NPI provides a purpose-built shared repository for information and documents associated with the project – typically there are thousands of documents spanning hundreds of vendors
  • NPI populates the repository with specific information related to each vendor including asset quantities, vendor contacts, internal stakeholders, and other relevant foundational data
  • NPI collaborates with you to prioritize the vendors into tiers based on criticality, spend and other factors
  • The repository provides the joint project team with visibility into the status of all activities

Vendor Engagement and Negotiation

  • NPI communicates with the vendors and begins the process of reaching completion for each one – from the simple to the complex
  • NPI collaborates with your legal team to draft all assignments and amendments
  • NPI follows internal approval and escalation processes established by the joint project team, driving each vendor negotiation to completion

Assessment

  • In accordance with the prioritization roadmap, NPI assesses each IT vendor agreement for assignability, transferability and other relevant factors based on the desired future state for that particular set of assets (status quo, transfer assets, reduce commitment, enable transition services)
  • The catalog will self-stratify into a set of vendors that will be relatively straightforward and administrative, a set that will be moderately challenging, and a set that will be highly complex (and usually business-critical)
  • For the challenging and complex vendors, NPI will establish an initial negotiation strategy, including market-based analysis of costs and targeted outcome
  • This information is added to the repository, vendor by vendor

Optimization

Throughout the project, NPI seeks material opportunities to drive additional value including market-based pricing/cost targets, value-added terms and conditions, and other relevant recommendations.

Governance

NPI performs project coordination and provides status updates, issue resolution and leadership team updates.

Combining Enterprise IT Vendor Estates for a Merger

In a merger scenario, the challenge is different but the required skill set is the same. Merging entities each have their “top 10” enterprise IT agreements that represent a significant portion of IT spend. Usual suspects include Microsoft, Oracle, SAP, IBM, CA Technologies and Salesforce.com.

At a certain point in merger talks, it becomes necessary to assess the overlap for large-spend IT vendors. And if the merger goes through, it becomes necessary to negotiate new or amended agreements with those vendors. NPI can help on both counts.

NPI’s IT Assessment and Optimization Services for Mergers

NPI helps clients optimize enterprise agreements with Microsoft, Oracle, SAP, IBM, CA Technologies, Salesforce.com and many more. In large enterprise merger scenarios, an initial assessment phase usually happens as part of due diligence. In this phase, NPI will:

  • Compare licensing and cost-related terms of each entity’s agreements with a specific set of vendors to identify gaps and establish the strengths and weaknesses of the agreement that each entity has with the vendor
  • Perform quantitative cost benchmark analysis of the agreements compared to market
  • Estimate potential savings opportunities and anticipated costs (if any) based on a business-as-usual analysis of the existing agreements

Once the merger goes through, NPI’s enterprise agreement optimization services come into play. While there are some additional complexities and leverage opportunities in merger scenarios, the approach is the same.

The NPI Difference

NPI has a long history of IT price benchmark analysis, licensing optimization, vendor-specific negotiation intel and direct negotiation experience that makes us uniquely qualified to help clients with divestiture and merger IT rationalization. We understand transaction-level IT purchase optimization, how to get you the best deal and how to manage a high volume of purchases on a timeline.

Interested? Let’s talk.