Case Study: Telephony

The case

A major global manufacturing company was to renegotiate telephony services for its two major offices at a total value of some $800,000. The case was relatively complex with a large number of destinations and service types. In all, a few hundred tariffs, prices, and services levels where to be evaluated for every supplier.

The approach

The negotiation was purely electronic, except for one workshop per supplier. The negotiation was performed in initial (quality and price) qualification phases, and an iterative final negotiation process.

In the final negotiation process, the suppliers competed over the contracts by stating its different tariffs, starting costs and relations between different services. For example, discounts could be given if several services would be contracted (typically this was used when certain calls did not have to leave the supplier’s network and hereby certain switch costs could be avoided).

The negotiation server then on-line evaluated the different offers reflecting the buyer’s preferences for different service-levels etc.

The result

The project was a great success with a total saving of approximately 40% (dependent on how different service levels where accounted for). The contracts were awarded two supplier of which one was a current supplier.

The project not only demonstrated the potential of huge savings in telephony, but also Trade Extensions' ability to efficiently perform electronic negotiations in cases with huge numbers of quality and price attributes.

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