• In an Unpredictable Economy, Flexible IT is Key
  
  
• Renewing Your Microsoft Enterprise Agreement: Five Ways to Get More for Less
  
  
• Auditing Transportation Invoices – In-house or Outsourced, Immediate Savings Await
  
  
• Client Spotlight: Surviving the Unpredictable – CompuCredit Turns to NPI to Weather Economic Storm
  
  
• Client Spotlight: American DJ Cuts Transportation Spend, Improves Carrier Partnerships
  
  
• Deferred Tier Pricing…Is it Good for You?
  
  

• CIO, How To Get More From Your Vendor: CIO magazine’s, Kim Nash, turns to NPI to find out how companies can get more value from their technology vendors.
  
  
• SearchCIO.com, Tupperware CTO Locks in Fresh Spending Plan: SearchCIO.com speaks with Tupperware about how NPI’s spend management tactics have removed excess IT spend from his operations.
  
  
• Computerworld, Heft of New Tech-Buying Guidelines May Prove Intimidating: NPI weighs in on the merits and downfalls of the recently-launched Capability Maturity Model Integration (CMMI) framework for IT purchasing.
  
  

In an Unpredictable Economy, Flexible IT is Key
The jury’s still out as to whether or not the U.S. economy will enter a recession – and that’s left a lot of IT departments pondering a difficult question. Should you take the time and resources to prepare for the worst, or focus on improving business as usual?

We believe you can do both. The key is to create an IT infrastructure that is flexible, especially in areas such as bandwidth, storage and support. This will allow you to quickly reduce costs as market demand contracts and easily expand the capabilities of your infrastructure as the market rebounds.

Outsourcing, virtualization, open source and many other advancements in technology have made improving IT flexibility easier than ever. NPI recommends taking a hard look at the following tactics to help you develop an IT strategy that fosters flexibility, cost savings and responsiveness to market conditions:

Virtualization & On Demand Computing: There are several areas of IT that can be easily outsourced to improve flexibility, including storage, application hosting and support, and helpdesk support. As an in-house function, data centers, software licenses and helpdesk personnel often represent fixed costs that can eat into profits when not being fully utilized. So, why not outsource using transaction-based pricing models and pay for only what your company needs right now? You can reduce costs as demand decreases, yet respond quickly as the market rebounds.

Open Source: If you haven’t seriously considered the merits of open source, now is the time. With no fee for licenses, many infrastructure components, such as server operating systems, databases, application servers, and even system management and monitoring tools, now run easily on the Linux operating system. Alternative offerings, like MySQL, JBOSS and Zenoss, integrate seamlessly within your environment. These applications will help you reduce total cost of ownership by eliminating license fees and reducing support costs.

Transaction-based Vendor Pricing: Most vendor agreements offer fixed pricing models based on an estimated volume of licenses, bandwidth, storage requirements, etc. That model may work well in a boom economy, but it’s not such a smart idea when the climate is unpredictable. Consider renegotiating your vendor agreements to support transaction-based pricing models in areas like storage and security.

Refine Support & Maintenance Contracts: There are many creative ways to reduce support and maintenance spend. Start with an audit of licenses and subscription-based services to see if there are opportunities for reductions. Identify any unneeded costs in your contracts, such as 24x7 support or other premium support features that you may be able to do without. Stock spare parts onsite or utilize aspects of your existing disaster recovery capabilities to supplant them. You may find you’re paying for support you don’t actually need. And, of course, you can always ask a vendor to forgo an annual increase in your support contract – you may be surprised how many are willing to work with you.

Each year, thousands of companies renew their Enterprise Agreement (EA) with Microsoft. But, what may seem like a routine renewal process is actually an excellent opportunity to reduce your Microsoft spend.
Here are five ways you can get the most out of your Microsoft EA:

1. Determine what Microsoft products you will need.
In 2007, Microsoft’s entire product line underwent a refresh, leaving a lot of companies wondering what new upgrades and purchases should be made. The problem is that most companies simply don’t know the extent to which changes to existing products, along with new products being offered, will impact their plans. Not until companies have an immediate need for software do they start thinking about alternative products, competitive pricing and timelines. Before you end up with a lot of Microsoft “shelfware,” take the time to determine what products you will be using in the long term as well as when you will likely be able to implement them. If you plan ahead now, you can negotiate better pricing, as well as prevent Microsoft from charting your upgrade course.

2. Don’t renew.
More companies than ever before are opting not to renew their EA with Microsoft. Why? Many companies only need the most basic of Microsoft’s offerings, like Exchange, Office, etc. If that sounds like you, consider dropping the EA. Under your current EA, you already have ownership rights to the next upgrade of these products. If you don’t have a need to upgrade beyond that, you may wind up paying $500,000 to $2 million a year for upgrade rights you won’t use. Keep in mind that getting rid of your EA will require close tracking of licenses and functioning without the same level of support, and you will need to be EA-less for at least two Microsoft product cycles (typically 3-6 years) for your decision to really pay off.

3. Use the Select Agreement when it makes sense.
Very few companies buy all of their Microsoft products through an EA. That’s because EA’s require companies to deploy each product across all desktops. If you plan to purchase applications that don’t need to be widely deployed, purchase them under a Select Agreement with Microsoft. Between licenses, maintenance and support, you will pay substantially less.

4. Consider Google Apps, open source and virtualization.
Only 10 percent of Microsoft application features are used, proving companies are paying a lot of money for things they don’t really need. NPI recommends evaluating your application portfolio to see if there is opportunity to use a cheaper – or free – alternative. Google Apps, Star Office and other open source alternatives have all received consistently good industry reviews. Furthermore, they integrate with Microsoft and cost little or nothing. Or, you can get rid of client-server applications altogether and virtualize your environment.

5. Negotiate for basic discounts and soft credits.
Microsoft is known for its pricing consistency, but that doesn’t mean there isn’t room to negotiate. Regardless of where you fall in their pricing tiers, they often provide up to a 10 percent discount and you can always negotiate for soft “credits” like training or consulting. This is especially advantageous for those going on an EA for the first time with existing Microsoft OEM licenses. Microsoft doesn’t have a track record of rigorously confirming these, so feel free to bump up your pre-EA license count. It can translate into 10 to 25 percent reductions in your overall EA spend. These are just a few ways you can decrease the costs and constraints of your Microsoft EA. From achieving fair market value for each purchase to developing goal-based strategic vendor relationships, NPI makes sure your IT portfolio is constantly aligned with your business and budgetary demands. To have one of NPI’s spend management experts contact you for a one-on-one MSEA consultation, please email us at smartspend@npifinancial.com.

If you think your transportation costs are high now, just wait. NPI anticipates the fuel surcharge rate increases between April and September of 2008 to be the highest on record. The question is – how do you minimize the impact of these drastic increases?

Many companies are unsure. In response, NPI recently launched an education campaign to teach companies how they can reduce transportation spend in light of rising fuel costs. Some of the tactics presented in this article can be deployed on your own, while others may require third-party services. Regardless, we feel it’s important to let companies know there are solutions to mitigate fuel rate increases.

Invoice Auditing
If you’re not thoroughly auditing your carrier invoices, you are leaving money on the table – plain and simple. The truth of the matter is that it’s quite a task. Large shipping companies, like FedEx, UPS and DHL, as well as truckload and less than truckload (LTL) carriers, intentionally make invoices hard to decipher and employ claims representatives that are highly trained to minimize the revenue they concede to customers.

But, the cost recovery benefits associated with intelligent invoice auditing and refund filing are simply too favorable to ignore. If you’re not auditing invoices, then you’re likely paying two to five percent too much each week. NPI recommends one of two solutions:

If you can handle auditing in house, get started immediately. Depending on your shipping volume, you may be able to handle invoice auditing on your own. You will most likely need to make an investment in software and experienced staff to track shipments, interpret large flat file invoices and identify billing errors. Please remember that FedEx Insight, UPS Quantum View and DHL ProView are not comprehensive tracking systems. They’re useful visibility tools, but not an accurate means of identifying all service failures or billing errors.

Outsource it...ASAP. If you have high shipping volumes, you’re probably better off outsourcing

invoice auditing. You don’t have to purchase, employ and manage the necessary resources. The ROI is immediate and, with the right third-party partner, you’ll see large-scale cost savings. You’ll also see improvements in on-time delivery performance and enhanced customer satisfaction. Carriers monitor billing adjustments on a weekly basis and this drives process improvements. Here is a list of activities you should expect your invoice auditing service provider to perform:

• Identify and file for Guaranteed Service Refunds (GSR) by tracking every single shipment. Ensure GSRs are properly credited and notated on future invoices.
• Identify billing errors and work directly with you or the carrier to resolve.
• Identify excessive surcharges or accessorial fees that can be addressed through process changes or contract renegotiations.
• Earn a fee based solely on actual cost recovered for your firm, not transactional fees.
• Employ the expertise required to navigate carrier invoice and resolution process/system complexities (outsourced auditors overseas simply can’t do this).
• Provide expert analysis and reporting of current expenditures and practices, leveraging data that managers can use to improve operations, reduce costs and enhance profits.

Companies turn to NPI to assist with both of these options. Whether you need guidance on how to improve your internal invoice auditing procedures, or need an outsourcing partner, NPI can help.

Shipping rates are a hot topic right now, and rightfully so. However, there is another transportation spend issue that is burdening many companies – it’s called Deferred Tier Pricing (DTP). This pricing model, commonly used by UPS, FedEx and DHL, uses a rebate-like process to provide shipping discounts to customers. You pay full price for shipping charges up front and receive carrier discounts end of quarter or, in some cases, year-end via a rebate check.

There are several problems with DTP, ranging from its negative impact on cash flow to the accuracy in which rebated discounts are tracked. If your carrier contract employs this pricing model, NPI’s transportation experts recommend restructuring your agreement for the following reasons:

• Loss of Time Value of Money: Immediate savings translate into immediate cash flow. DTP delays that impact – often at the expense of other profitable opportunities. You may receive a lump sum rebate check at the end of year, but just think how you could have leveraged that money. For example, why let carriers earn interest on your money when you could put it into a simple money market account that would earn five percent? Could you have purchased new equipment that would have increased productivity or new staff to boost operations? DTP blocks those opportunities by manipulating cash flow.
  
  
• Savings Dependent on Regular Shipping Volumes: If your shipping volumes are erratic or vary seasonally, steer clear of DTP. This

pricing model requires you to commit to a certain shipping volume quarter after quarter, and the rebate that you receive is dependent on that volume. If you don’t reach that shipping volume during the specified time period, then you don’t receive a rebate.

• Discount Base is Significantly Smaller: The pricing schema for DTP is a little tricky. Most carriers only apply DTP discounts to the net transportation charges of a company’s bill. That rate doesn’t include fuel surcharges and other accessorial charges and is applied post-discount. In most other pricing models, discounts are applied to gross transportation revenue, or the total sum of the shipping rate and fuel surcharges. Therefore, DTP prevents companies from realizing the full potential of contracted discounts.
  
  
• Manual Process Rife with Errors: The pricing schema for DTP is a little tricky. Most carriers only apply DTP discounts to the net transportation charges of a company’s bill. That rate doesn’t include fuel surcharges and other accessorial charges and is applied post-discount. In most other pricing models, discounts are applied to gross transportation revenue, or the total sum of the shipping rate and fuel surcharges. Therefore, DTP prevents companies from realizing the full potential of contracted discounts. NPI’s transportation experts suggest any company contracted to DTP re-evaluate their carrier contracts and ensure this pricing model truly makes sense. To find out how you can remove DTP from your carrier contract, contact jhaber@npifinancial.com.