Dramatic outperformance of synergy targets for merger of Managed Services Providers

Inside Consulting absolutely delivered significant incremental cost savings, well in excess of synergy targets, and above what they promised.- John Faulkner | CFO


  • In 2019, Hosting and Hostway merged.  Management and the transaction advisor estimated sourcing synergies of $2.25M in annual earnings improvement.  Inside Consulting was engaged to identify and deliver sourcing savings in support of of the merger targets.

Insights and actions:

  • The premise of the sourcing synergy estimates was primarily based on increased volume/leverage.  Detailed analysis at a contract-level, however, revealed that ⅔ of the cost base presented much more compelling sourcing opportunity (e.g., credible threat of competitive displacement, demand management potential, etc.) and that increased volume was the key lever for only 5% of the spend.  
  • Based on this fundamentally different assessment, we developed tailored go-to-market strategies and competitive sourcing plans, e.g.:
    • Public cloud spend optimization via instance reservation and pre-purchasing on the combined spend base, at an instance family level
    • Where the two firms used different solutions, we worked with the relevant stakeholders to conduct extensive demonstrations and technical evaluations, creating migration plans and quantifying potential switching costs– which then informed contract negotiations.


  • Ntirety realized $4.94M in technology spend synergy, over 2X the internal targets  (23% savings of the addressable spend).
  • Excluding anticipated system retirements– i.e., the “easy synergies”, Ntirety realized $3M in annual savings, versus internal targets of $600k.  This represented 17% savings of addressable spend and was 5X the internal target.