A leading retail bank with one of the largest IT environments in the UK was in the final contractual year of its outsourced voice and data service. As part of the original contract, the supplier had underwritten committed cost-savings from the use of convergence and service management improvements. Each year end the supplier reviewed its progress against these commitments, and where not delivered, issued a series of annual credit note refunds to offset any shortfall. As the contract reached its final year in 2008, the supplier calculated a final credit note. The supplier believed that it had over-compensated on previous year refunds and so reduced the final credit note to a figure that was considerably less than the bank was expecting.
The challenge to the final credit note had to be presented to the supplier within a tight deadline, making the task complex and labor-intensive for the bank. The bank was already using Sumerian’s analytics services across its critical banking applications and to drive its internal service recharge process, and so Sumerian was ideally placed to provide a rapid, independent, verifiable audit that would help the bank to challenge the final credit note figure.
Sumerian’s understanding of the bank’s voice and data environment through its existing services proved a distinct advantage in gaining a fast and accurate picture of the issue at hand. Sumerian was already capturing data from multiple sources across the bank’s IT environment, correlating service usage against business division demand and supplier billing, to support internal service recharging. This baseline information was leveraged to great effect enabling Sumerian to accurately analyze the bank’s historical invoices against the supplier’s cost-saving calculation. Sumerian created a model that provided a complete listing of all voice and data circuits, with a breakdown by year, usage, expected and actual charges – indicating where discrepancies were evident. In order to recalculate the credit note figure for 2008, Sumerian compared the modeled savings actually delivered against the committed underwritten savings as stated in the contract. When compiling the final report, Sumerian kept in mind that the findings needed to be easy for the bank to convey, so that it could carry out its own independent negotiations directly with the supplier.
Outcome and result
Sumerian’s analysis identified a £6.3 million pound discrepancy spanning the lifetime of the contract. Sumerian presented the findings directly to the customer team so that they could clearly understand the approach taken to calculate the final totals and corresponding credit note figure. Additionally, a report was prepared for the bank so that they could discuss directly with the supplier and illustrate where the discrepancies lay. The ability for Sumerian to leverage data from its existing analytics services with the bank enabled a rapid turnaround of the analysis, with the final findings being delivered in just ten days. As a result, the bank was able to present independently corroborated evidence of its case well within the supplier’s cut- off time. The bank successfully presented its case to the supplier and received a £6.3 million pound refund.