We helped a global fleet management solutions provider renegotiate and reduce its IoT connectivity costs by over 75%

Project experience | Strategy


The problem

  • Our client, a leading provider of fleet management solutions across the globe, was reviewing its Internet of Things (IoT) connectivity strategy and investigating the opportunity to renegotiate its existing connectivity agreements (with two providers) and/or switch connectivity providers
  • Initial price benchmarking conducted by Analysys Mason suggested that switching providers could provide a cost reduction opportunity
    • we then conducted an end-to-end procurement process, including a request for information (RFI), request for proposal (RFP) and final negotiations

The solution

  • Initially, we developed a list of connectivity requirements in five areas (commercial, supply chain, platforms and systems, networks and coverage, service management and security) that was used as a key input to the preparation of an RFI document
  • We shared the RFI document with 15 connectivity providers that had been screened, out of a longlist of 20 providers, via high-level desk-based comparison key performance metrics (e.g. business longevity, track record, cellular coverage)
  • We assessed the connectivity providers’ responses to the RFI through a multi-criteria evaluation model and shortlisted six providers for the RFP stage
  • We developed an RFP document for shortlisted providers to give further detail on specific areas (e.g. eSIM capabilities, roaming partners); based on analysis of candidates’ RFP responses, we shortlisted three providers for final negotiations
  • Negotiations involved setting a target price based on output of previous tasks and several discussions with contenders to achieve targets and clear any remaining technical/commercial issues

Figure: Comparison of IoT connectivity costs (EUR million, 2021) based on initial estimates vs. responses received from 15 providers

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The result

  • Our client has renegotiated connectivity costs with one of its existing providers at a 75% discount (EUR2.4 million cumulative cost savings over a three-year period) and will expand this agreement to future SIM deployments (20% cost savings expected, i.e. EUR4.6 million cumulatively over the next three years). Our client will also migrate SIMs still in the footprint of its second connectivity provider, generating cost savings of over 85%

After an initial price benchmarking exercise conducted by Analysys Mason, suggesting that switching providers could provide a cost reduction opportunity, we helped our client, a global fleet management solutions provider, renegotiate and reduce its IoT connectivity costs by over 75%