This post, written by Behrad Mahdi and Raj Patel, originally appeared on Public Spend Forum.
4. Think “Outside the CLIN”
Most cost-reduction efforts focus on upfront reductions to contract line-item pricing, often referred to as the Contract Line-Item Number (CLIN). Standard contracting practices are well known to IT vendors, and many take advantage of CLIN-level analysis to conceal true costs. Vendors may bundle CLINs to bury the prices of pieces or parts, or use “special CLINs” to hide specific item pricing.
SVM borrows practices from strategic sourcing to address the drivers of the total cost of IT capabilities, not just upfront pricing. Through engagement with the vendors, extensive market research, and deep insight into future demand, chief information officers (CIOs) can identify strategies that will not only reduce short-term costs, but also sustain or drive out costs over time. “Outside the CLIN” cost reduction approaches identified through SVM include:
- Mechanisms for agencies to be treated as a single customer Enterprise agreements by product or service pillars
- Structure and flexibility for enterprise-level software and hardware maintenance and support
- Agency support caps, reinstatement fee tracking, and caps Tailored advanced customer support
- Structure and delivery models for enterprise-level training Value-added programs and briefings
- Periodic sales and asset tracking reports.
The items listed above address broad agreement dimensions that involve value, cost, visibility, and management approaches. Federal IT leaders will find that many of the dimensions, as well as others tailored to their organization, are relevant to achieving both near-term savings and sustaining long-term value to their organization. Fundamentally, the goal of thinking “outside the CLIN” is to ensure that we are not focused exclusively on upfront discounts, but rather on a long-term model for sustaining and continuously improving the value of strategic relationships.
5. Cross swim-lanes to collaborate
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