There are over (29k) companies in the US that have a revenue between $100m and $1B, according to the North American Industry Classification Systems (NAICS). For those companies, technology costs are often the second largest expense, after payroll. Therefore, finding ways to manage and decrease these costs is one of the best levers to improve EBITDA and reinvesting in the business.
At Green Cabbage, we serve both Enterprise & Mid-Market clients, and we observe an interesting paradox: While overall technology spending in the Mid-Market is at its highest level since 2019-2020 (post-pandemic effect), we do not see a clear behavior from Mid-Market companies to intently negotiate better deals with their technology Suppliers. With respect to technology costs, the EBITDA is not leveraged as a cost takeout approach.
We believe that this paradox comes from the combination of the following elements: Unlike Enterprise companies that have large, dedicated resources, Mid-Market companies usually lack the time, in-house expertise, people, or simply data to be equipped to have an informed dialogue with their Suppliers.
We at Green Cabbage observe this pattern occurring in all industries. Mid-Market companies see the invoices for their renewals, upgrades or migrations pile up with a 20% increase or more (another well-known post-pandemic effect, by the way), with little to no say. This is not satisfying, and certainly is not helping the EBITDA.
The good news is that changing this dynamic takes less effort than one Chief Financial Officer or one Chief Procurement Officer would think. Indirect Technology and Contingency Workforce costs can be deciphered, with the right market intelligence capabilities. Proactive analysis will often reveal low hanging fruits, whether on the “Mega Suppliers” or addressing the “Tail Spend” of niche Suppliers (Ask yourself this question: “When was the last time someone looked at the auto-renewed contract we have for the digital security cameras in our building”?).
The analysis is the (relatively) easy part. Market Intelligence will reveal potential savings, but the Art of Negotiation is what will make those savings happen. Where and how does one start to negotiate with suppliers and VARs like Microsoft, Oracle, Insight, CDW or SHI, etc.?
Mid-Market companies would be astonishingly surprised by how much EBITDA improvement they could quickly realize by decreasing & rebalancing their technology & workforce costs.
Partnering with Green Cabbage provides a no-risk approach to take a fresh look at those costs, with guaranteed savings at stake.
Are you ready to take control of your supplier negotiations? Click here to learn how you can be fully prepared and ensure you are getting the best deal possible.