The technology decisions made for the combined five companies were not necessarily the best strategy for Atlantic Aviation's future post-split companies. They brought in Deloitte to assess the situation and their analysis recommended significant outsourcing. Tracy's team of about 30 people couldn't support that model.
Atlantic Aviation's CFO brought in past partner AIQ to evaluate technology spending. Atlantic Aviation's procurement team is made up of just two people and focuses primarily on purchasing fuel, the largest cost of the business, rather than IT. The move deepened Tracy's initial concerns about changing too quickly. But she was always impressed by her AIQ's data-driven process and the significant cost savings it delivered. That convinced her there was potential for significant savings. It is encouraging that a small number of technology categories are having a significant impact on cost savings.
AIQ's work with Atlantic Aviation includes a high-level evaluation of technology spend, identifying technology categories with the highest potential for savings, conducting multiple procurement auctions, and entering into actionable negotiated agreements. . Tracy appreciated that the focus was not just on cost, but also on SLA and support. She needed to consider whether a small team could support and deploy the changes. AIQ also helped us find the right partner at the right price and level of support. Tracy thought the results were amazing.
- Total savings to date are more than $1 million (with more to come), exceeding the savings Atlantic Aviation invested in private equity, even though the project is only partially completed .
- The auction was conducted in four technology categories: managed voice, mobility, hardware, and security cameras. They deliver savings of over 30% on average, with some categories delivering savings of over 70% and others delivering savings of almost 50%.
Important points
The Atlantic Aviation story highlights several important points.
- innovative business strategy: Procurement consulting and procurement auctions are not tactics commonly used by IT and procurement departments. However, Atlantic Aviation's success shows its effectiveness in driving significant cost savings.
- Adopt data-driven decision making: A rigorous data-driven AIQ process built trust and helped Atlantic Aviation embrace change.
- collaboration is important: Cross-functional collaboration between finance, procurement, and IT is essential for the success of technology cost collection initiatives.
- Focus on value, not just price: The lowest bidder does not necessarily win. Factors other than price should also be considered, such as the importance of maintaining business continuity.
- Change management is essential: A clearly defined change management plan can help reduce disruption and ensure a smooth transition to a new supplier.
When I asked Tracy what advice she would give to other CIOs, she had this to say: “Be proactive with companies like AIQ. Don’t be afraid to expose your contracts and costs to scrutiny. Things change so quickly in the technology industry that competition and pricing trends In a world of rapid change, it may be worth evaluating even decisions made two years ago. Also, changing technology within a company takes a lot of effort and time. You have to be willing to do the work and not bite off more than you can chew.”
By following Atlantic Aviation's lead and adopting a data-driven approach to leveraging technology budgets, companies can achieve significant cost savings without sacrificing quality or service. This approach frees up capital for strategic investments that drive growth and profitability.
