The buying company is a key leader in telecommunications in Europe (referred to TelCo). TelCo began their Vested journey like most organizations: wanting to understand if making the shift to a highly collaborative Vested relationship is worth the effort. Today TelCo has five Vested agreements.

TelCo’s Vested initiative started as a pilot to see if the Vested model could work to streamline the maintenance for its thousands of technical sites including cell towers. TelCo kicked off the Vested journey by having EY, a Vested Center of Excellence, conduct a six-week “pre-study” that included over 20 different functions within TelCo. The pre-study revealed several key things. First TelCo’s numerous contracts were rooted in transaction-based models, which created a misalignment of goals. TelCo had “stiff contracts” that were not flexible in allowing suppliers to optimize maintenance operations.

TelCo’s leadership team decided to formally approve the pilot. The Vested journey – facilitated by EY and Cirio law firm – included 17 highly interactive workshops where TelCo and their supplier co-created how they would follow the Vested Five Rules. The process took eight months (including vacation breaks). TelCo inked their Vested agreement in April 2017.

Under the Vested agreement the supplier is rewarded for making investments in the relationship that help TelCo and the supplier achieve mutually defined Desired Outcomes. A supplier executive commented: “Under the pricing model, we make less profit on base services. However, we have the potential to earn above market profit margins on our project/transformation initiatives.  Shifting to Vested means we (both TelCo and the supplier) now look at the financials across the whole portfolio of business together and not just the price of individual projects or services. We are now making much smarter and collaborative business decisions that ultimately motivate TelCo to make investments that will have a high ROI for both parties.”