* Spencer Stuart exec relates story of contract renewal with Equant
Spencer Stuart, a global executive search firm, recently renewed its IP VPN contract with Equant after several months of negotiations. The privately held Chicago firm signed a three-year, $5.6 million contract extension with Equant, which will continue to support Spencer Stuart’s 50 offices worldwide.
I interviewed Rick Abel, senior vice president and CTO at Spencer Stuart, about why he signed on with Equant for another three years and about how best to handle contract negotiations.
This is the third in an occasional series of newsletters that feature interviews with corporate network executives offering advice about purchasing IP services. Earlier this year I interviewed GlobalStar executives about the challenges they face providing robust IP services in far-flung locations, and I interviewed Fujisawa’s IT executives to find out why the Japanese drug manufacturer dropped a frame-relay network supplied by MCI/WorldCom and installed IP VPN services from Sprint.
Spencer Stuart’s IP VPN supports 50 offices located in 26 different countries. Altogether, the firm has about 1,100 users of its VPN.
Spencer Stuart originally awarded a contract for IP VPN services to Equant in 2001 after running a competitive bid. Prior to that, Spencer Stuart was a customer of AT&T’s frame-relay service.
“We had a hub-and-spoke network with fairly low bandwidth for the price,” Abel says. “What was appealing about Equant’s offering was their [Multi-protocol Label Switching] network, which allowed us to prepare ourselves for the future and dramatically increase our bandwidth in remote locations.”
With its original move from AT&T to Equant, Spencer Stuart was able to dramatically increase its bandwidth – from five to 11 times, depending on the location – while spending the same amount of money for telecommunications services. Additionally, the mesh design of Equant’s IP network provided more redundancy than the old hub-and-spoke frame relay network.
Even more important, Equant worked with Spencer Stuart to fine-tune the performance of the firm’s key application across the IP VPN.
“We’ve got a proprietary software application that links every office. We run our entire business on it,” Abel says. “The application is very, very sensitive to round-trip delays. Any delays over 100 milliseconds, and the application tends to not work. Equant spent a lot of time tweaking the network to ensure the best-possible round-trip performance. It took five or six months to get the network tuned, but now we’re seeing some pretty impressive performance.”
About six months before Spencer Stuart’s contract with Equant was to expire, Abel began negotiations with Equant alone.
“The real issue for us was maintaining the stability,” he says. “As long as Equant was willing to work with us on the cost and the SLAs – which they did – we were very happy to stay with them as our primary network service provider.”
Abel says his primary focus during negotiations for the contract extension was on lowering the price of network services. Abel also wanted more flexibility in the contract provisions, such as lower penalties for buying alternative services for new offices.
“As we expand into new markets, we do want to take a look at other options,” Abel says. “We wanted to write terms into the contract that will allow us that additional flexibility. So if we want to take advantage of a VPN through the public Internet, we can do that without much penalty as long as we meet the minimum terms of the deal.”
Ultimately, Abel was able to negotiate significant cost savings with Equant.
“We’re a privately held firm, and costs are important to us,” Abel says. “When we’ve cut communications costs by 15% to 20% without losing service levels, we are really happy.”
By sticking with Equant’s leading-edge MPLS network, Spencer Stuart is also planning ahead for future network applications. Abel says he’s interested in migrating the firm’s voice and video traffic to its IP VPN.
“We have [VoIP] on the table as a project to do. Our issue isn’t a technical one as much as a funding one… It would be a big investment for us to undertake a project of this magnitude,” Abel says. “In fiscal ‘06 or ‘07, we hope to have a full VoIP implementation.”
To sum up, Abel says: “The main reason we signed up with Equant for a second tour is that we trust them. The fact is, with 50 offices spread around the world, migrating to a new network provider can be pretty painful. We are getting really good service from [Equant]. We’re getting strong bandwidth, great SLAs, and they’re coming to us at the right price point.”
