Situation:

• Following a period of customer demand growth, competition in the US market intensified, pressuring price realization and margins.
• The company had addressed some vendor contracts but had not conducted a comprehensive sourcing effort.
• Much of the company’s spend resided in telecom, where the sheer volume of circuits and connection rates (i.e., SKU proliferation) complicates competitive sourcing processes.

Insights and actions:

• Decomposed spend: unpacked the economics of opaque categories. This informed target setting and prioritization of effort in particular areas of spend.
• Applied structured sourcing processes across categories and vendors that had not been sourced rigorously in the past.
• Sourced goods & services at a granular level where advantageous; creating transparency, stimulating competition, and compressing vendor margins.
• Where advantageous, we used a proprietary live bidding portal (with reverse-auction ranking) to systematically drive each carrier to their indifference point, thereby revealing market pricing levels.
• Systematically identify discrepancies with usage and/or billing for selected resold SKUs.  We developed hypotheses to direct targeted audits, letting us find and correct excess volume (failed decoms) and revenue leakage (underbilling).
• Discovered pockets of SG&A labor spend that had not scaled appropriately with revenue and customer volume. We assessed productivity trends per function & team over time based on volume of cost drivers to provide the CEO and Board with a fact-based approach to align the labor cost base.

Impact:

• Evolve-IP realized ~$2.8M of annual EBITDA improvement.

• • $2.3M in cost reduction (35% savings from baseline). The majority of value was realized through vendor price reduction on Voice and Network carriers, via granular competition and use of live reverse-auction bidding events.
  • $550k in revenue from correcting disconnects between provisioning and billing.