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Specialist advice pays off for Zespri telecomms

Specialist advice pays off for Zespri telecomms

Kiwifruit exporter Zespri's IS manager Andrew Goodin likens the process of conducting a telecommunications cost review to building a house. 'You don't just throw it up...along the way you make minor adjustments but you do it methodically.'

Running a global supply chain that markets and delivers New Zealand’s flagship fruit worldwide all year round is a complicated business and one that relies heavily on the latest telecommunications solutions to connect growers to their markets. “The big challenge for us was to find a way to improve our use of ICT while managing the associated costs,” says information systems manager Andrew Goodin. “The technological environment moves so quickly that plans operating well for us three years ago were no longer valid by the time we hit the contract expiry date. Both the technology available and the way in which we were using it had changed.

“When our contract came up for renewal, we needed to gain a clear understanding around how and why our telecoms usage patterns had changed. We also needed to question and analyse what benefit that change was bringing to our growers. As a management team, we can’t make sound decisions without that sort of detailed information.”

Zespri engaged Total Utilities Management Group (TUMG) to help shape the tender process. “We were looking for a partner to help us through the process,” Goodin says. “We needed to make sure that we were aware of all the available options before making a final decision.”

“TUMG were not only focused on reducing costs. They became an extension of our business and worked hard to get the best overall result for us. Analysts helped us to manage the RFP [Request for Proposal] process and presented the contract information clearly so that we could make accurate comparisons between the different contracts on offer.”

Having clear benchmarks in place against which to measure technology usage and performance against cost was essential in the new contract, he says. “This in-depth information can only come directly from the telecommunications supplier, so reporting became one of our key requirements from the successful bidder. In many ways reporting was more important to us than straight cost savings. We needed to make sure that the partner we selected could provide the information to help us continue to get the best from our investments.”

A joint Zespri/TUMG team started work on the RFP at the end of December 2011 and by the end of February 2012 a new three-year ICT supply contract had been agreed and signed off until 2014.

Once the RFP had been issued, the team quickly narrowed their search down to three potential suppliers. “We invited the companies to come and present their proposals and we evaluated each one based on the criteria we had set. The resulting evaluation was then shared with each supplier, so that they had the opportunity to correct any error and clarify any misperceptions. The process was extremely transparent and was geared to getting the best possible result for both parties – by creating a clear understanding of needs and capabilities.”

Zespri is currently in negotiations to renew its contract with its existing supplier, Gen-i.

No single technical area can be identified as particularly prominent in achieving savings, says Gooding. They were achieved across the board – voice, data mobile voice and mobile data.” Zespri’s profile of usage between those channels had changed substantially over the three years of the previous Gen-i contract, he says, so re-evaluating current usage presented the chance of immediate savings.

The most important factors in the change process were benchmarking and the understanding that TUMG brought of what relevant offerings were available in the market, Goodin says. “Good-quality dialogues” with candidate suppliers were also key.

The process included introduction of tools for continually monitoring patterns of usage and pricing changes, says David Spratt, ICT specialist at TUMG. This will be a continuing process into the future and Zespri hopes to keep up a 28 percent year-on-year saving in telecoms costs over the life of the new three-year contract.

Involvement of the Commerce Commission in the market will help keep pricing realistic, Spratt says.

This scale of continued saving would not be possible with all organisations, Spratt adds, but “Zespri is a very dynamic company”.

Goodin likens the process to building a house. “You don’t just throw it up. You plan the rooms, the aspect and the functionality. Along the way you make minor adjustments but you do it methodically. By putting the framework of the RFP up first we were able to work quickly but accurately.”

Once the bidders had been narrowed down to two quality suppliers, Goodin acknowledges, it was very hard to make the final decision. Zespri was genuinely happy to work with either supplier. Ultimately the slightly lower risk presented by one sealed the deal.

The reduction in telecommunications costs was a great start, Goodin says. But with Zespri’s ICT usage currently growing at a rate of around 30 percent year-on-year, these savings would soon be eroded. The real value of the company’s engagement with TUMG lay in the establishment of the benchmarks that would enable Zespri to continually improve its telecoms use.

The process TUMG used is “robust and repeatable”, Goodin says, and “will have ongoing value to our business”.

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