$580 Million Financial Institution with 11 Branch Locations

The Challenge

  • CFO estimates they lost over $30,000 due to the Evergreen Clause
  • Unaware of Evergreen Clause and that maintenance contracts can have auto renew written into contract:
    • One maintenance contract alone was as much as $95,000
    • Original contract signed 15 years ago
    • No copy of original contract
  • This leads to many contracts auto renewing year-after-year at an average increase of 3%
  • Locked into existing contracts leads to:
    • Lack of ability to negotiate contracts
    • Lack of flexibility to choose service providers
  • Annual maintenance budget was locked into the higher price of multiple maintenance contracts

The Solution

  • Policy in place to remove auto renew language
  • Sent “Opt-out” letters to maintenance contracts with Evergreen Clause
  • Removed the Evergreen Clause from all maintenance contracts
  • Equips consolidated 23 contracts into one maintenance agreement
  • Equips offered a solution with the ability to budget and project cost of maintenance

time-E-LINK

The Outcome

  • In addition to the initial savings of $30,000, the FI experienced an additional 18.6% savings with the Equips agreement on the remainder of their maintenance contracts
  • Savings impact continuously grows with each renewal year
  • Equips managed their Evergreen notifications throughout the year and initiated opt out
  • They went from 23 contracts with Evergreen Clauses to one agreement with Equips

The Foundation

By consolidating multiple maintenance contracts into one annual agreement they were able to accomplish:

  • Time savings on contract management and negotiation
  • Staff time reallocated back to primary job responsibilities and not lost on service calls
  • Management had real-time reporting on equipment maintenance centralized online
  • Maintenance budget is fixed
  • Performance-based renewal savings