At BankServices1, we have found that money is always left on the table when banks negotiate their own outsourced IT contract. This is true, regardless of the amount of savings realized. Bankers typically negotiate an outsourced contract once every five to seven years. The vendor, on the other hand, negotiates these contracts every day. Negotiating an outsourced contract should involve at a minimum:
- A detailed analysis of each line item
to ensure the lowest possible price
- A review and analysis of the contract terms and conditions to provide flexibility and avoid diminishing the savings in a year or two.
The bottom line is this; negotiating a contract of this complexity requires 30% negotiating skill and 70% database information.
The negotiated price is the foremost concern of most bankers, but that means only a small portion of other important results is achieved. In addition to price, the negotiation process must address the contract terms to ensure a bank has the flexibility needed to achieve its specific Strategic Business Intent and growth objectives. For example:
- All contracts contain a Service Level Agreement (SLA) that only addresses the performance of the system. Nowhere in the SLA is service addressed (response time to issues). In addition, there should be a financial penalty associated with a vendor’s lack of service performance.
- All contracts contain an annual adjustment of 3% or greater to cover the vendors’ increased cost of doing business. Who covers the increased business costs for the bank?
We could go on, but hopefully, you get the idea.
BankServices1 is one of many consulting firms that negotiate outsourced IT contracts for the banking industry. Therefore, why choose BankServices1?
There exists a basic truism in all business that “Customers make decisions based on value.” The amount of perceived value from any one company is truly the deciding factor in any business transaction.
The keyword here is value because if you do not perceive BankServices1 as adding value to your bank, then a relationship between our organizations will never be formed, and your decisions will not include us.
The value of being a BankServices1 Client is present in four areas.
First, at BankServices1, our only business is contract negotiations. As a result, we have the largest database of various systems and their market costs. The strength of this database enables us to negotiate a contract for you to provide for two (2) key components:
- The best possible price.
- A contract that supports your bank’s strategic business intent.
We do not use the discipline of contract negotiation as an entry to your bank. We won’t negotiate for a quick resolution to begin looking for other opportunities in your bank. That approach leaves a substantial amount of money on the table; money you should save on your outsourced contract.
Second, at BankServices1, we work on a fixed price or contingency basis. This approach allows you to decide how you want to pay us and makes us a part of your staff. We work for you! Since our only business is contract negotiations and our database is so strong, we are the only firm in the industry that will guarantee results; results that you want or you don’t pay our fee.
Third, in addition to the cost savings, BankServices1 will review the Contract Document set in its entirety, focusing on our 37 point contract analysis. This 37 point analysis examines specific sections and paragraphs where hidden clauses typically lie. The contract document set includes:
- Master Agreement
- Service Level Agreement
- Any schedules, exhibits or addendum
Last but not least, once you become a BankServices1 Client, you may call us at any time to answer a question, pick our brain or ask us to review a contract. Once a BankServices1 Client, always a BankServices1 Client. Of course, there is no additional fee associated with our ongoing relationship.
The negotiation process involves pricing, legal language, additional terms and service level agreements. None of these exist in a vacuum, nor can they be taken out of the negotiation context as a whole. BankServices1 will work with your bank to ensure the best combination of these contractual elements is achieved according to your institution’s priorities.
Our clients are our most valuable asset and our reputation in the marketplace is our most valued possession. It is our goal to provide unparalleled expertise, knowledge and experience to our clients. At BankServices1, we negotiate the best possible contract with the lowest possible monthly cost for our clients.
Joe Chimera, President, BankServices1