As much as I try to seek out savings opportunities on current spend, inevitably, my time and my staff's time is consumed on getting the next deal done.  It's not a surprise that as deals "age," they also sometimes get "fat."  For example, what you were paying for software maintenance back in the day may not be reasonable now because of the increasing spend with that vendor—you should be getting a better deal...  But it takes precious time to go back and look at old deals to try and figure out if there are any potential savings.  And it takes time to then try and negotiate a savings.  It's a noble thing to do, but if I have a customer that needs to get a deal done, they could give a hoot that I'm busy saving oodles of money on an old deal.

Therein comes the boutique consultants that offer to go back through old deals and try to get the savings for you.  They basically act as a virtual member of your procurement department, identify savings, develop a negotiation strategy, and then negotiate the savings with the vendor on your behalf.  Since most of the costs these firms focus on are recurring costs, the savings can be huge.  Most of these consultants operate on the basis that if they don't achieve any $$$ (at least on paper), they don't get paid.  It's a great, commission-based, deal.  At least on its face...

Even though there's enough business to keep these consultants alive, they generally have a hard time getting business for two reasons.  The first is ego.  If I run a procurement department and a consultant comes in, renegotiates old deals, and saves a ton of money, I could end up looking incompetent.  I mean, why wasn't I able to get better deals on the front end?  Well, things (and deals) change, and I think your employer would understand that and not see you as incompetent.  Instead of worrying about your ego, you should look at yourself as a hero for being smart enough (and ego-less enough) to bring someone in that saved your employer $$$.  But, for some reason, my experience is that procurement folks don't like the idea of one of these consulting firms coming in and "showing them up."  If that's how you think, you're doing it wrong.

Fear is the next reason.  Fear that the vendor is going to screw something up.  Unlike ego, fear is an acceptable objection.  There are horror stories out there...  These consultants come in, only save $$$ on paper, and then your employer is on the hook to pay their commission—whether you take the savings or not.  Or, the consultants strong-arm a key vendor and the vendor becomes outraged.

I've used these types of consultants before to re-negotiate telecom deals, software maintenance, and the like.  And, I've been extremely happy (as was my employer) with the results.  In fact, the results have been phenomenal in some cases.  I'll continue to use these "guns for hire" in the future, and I consider them an important part of my tool-kit.

The way I get over the fear factor and reduce the potential of having unfortunate situations arise is via a solid contract.  Most of these consultants will present you with their contract template, where they get paid even if you don't take the savings—I understand their rational, but I don't buy it.  Instead, the consultants have to sign up to my version of their contract (which I'm attaching to this blog post).  I think you'll have the same success as I've experienced, provided that you keep the consultants under the tight leash of the contract that I drafted for this purpose.  As with everything on this blog, the attached contract template shouldn't be construed to be legal advice.

Contract Negotiation Consulting Services Agreement