SaaS Case Study: Live Auction Cut Support Cost by Half

The high price was justified. That’s exactly why nobody ever questioned it.

When an employee at one of this company’s customers rings the confidential ethics line, they’re usually reporting something they’re afraid to put in writing. The call has to be taken by somebody trained specifically in how to receive that kind of report, in a language the caller is comfortable speaking. There are identity checks. Documentation requirements. Legal obligations. Every extra language and every extra country pushes the cost higher still.

Which is precisely why the number was never examined. When a cost is high for reasons everybody accepts, those reasons become the answer to any question about the cost. Everyone in the building could explain why customer support was expensive. Nobody had ever established what it should cost.

Then, before anyone had found an answer, a third supplier that nobody had invited contacted the company directly and offered to do the same work for noticeably less money. That unsolicited offer made the problem worse rather than better. It proved the current prices were higher than they needed to be, gave no indication of how much higher, and came from the only party in the room who wanted the contract.

The market you could see from inside

● Suppliers you knew about

● The rest of the market

You can’t test a price against a market you can’t see

Two suppliers had held the work for years. A third called out of the blue. That was the entire market from inside the building, and no company spends 13 years learning a supplier market it needs to understand once.

Two obvious ways to test the price. Both of them fail.

The first is to take the unsolicited offer and use it to push the existing suppliers to lower their prices. Companies do this constantly and it feels like hard negotiating. In practice, you’ve tested exactly one alternative, chosen for you by whoever happened to call. You’ve handed your existing suppliers one number to undercut instead of exposing them to a whole market. You’re not negotiating. You’re being handled.

The second is to run a formal purchasing process yourself. An internal process reaches the suppliers who answer purchasing emails, which isn’t the same group as the suppliers who are genuinely good at confidential compliance work in several languages. The best ones are frequently not looking for inbound inquiries at all.

And there was a specific memory in the room. Some years earlier, the company had run its own supplier search for related work. It reached the final stage, then collapsed when the company’s own lawyers couldn’t approve the data-security arrangements of a single finalist. Comparing prices is straightforward. Passing the data-security review of a business that sells compliance software is the thing that eliminates suppliers, and it eliminates them late.

Two supplier searches at once, eighteen suppliers scored, and the company ran the auction itself

There were two pieces of work to place: the confidential ethics reporting lines (emotionally difficult phone work in multiple languages) and the insurance claims processing program (document-heavy back-office work). The company also needed the option of hosting either program in the United States or in Europe. OC ran two supplier searches simultaneously and answered the two questions separately, rather than assuming the best supplier for one would be the best supplier for the other.

Roughly 18 suppliers went through evaluation with OC, each scored against 13 years of performance data before the company saw anything. Data security, disaster recovery, and language coverage were checked before price was ever discussed. Then both shortlists were entered into the company’s own purchasing software. Sealed offers were collected, then a live auction was run in which the remaining suppliers could see they were being outbid and lower their prices in real time. Fifteen suppliers took part. The winning price came in below half what the previous supplier had been charging.

Step 1

Screen 300+ vetted suppliers on 100+ performance measures, two hosting regions at once

Step 2

Score 18 suppliers before the client sees any. Remove data-security failures before price is discussed.

Step 3

Load the shortlists into the client’s purchasing software. Live auction. The client selects the winner.

Step 4

OC writes a monthly report on every contracted target, sent to client and supplier simultaneously.

The price came down by more than half. The quality of the work went up.

The winning price came in at less than half what the previous supplier had been charging for the same hour of work, established by putting pre-vetted suppliers into a live auction rather than by negotiating with the suppliers already there. Accuracy on the claims-processing program ran between 99 and 100 percent. Attendance ran at 100 percent. Staff turnover ran at zero, against a contract permitting 7.5 percent. Work volume beat the contracted requirement by roughly a third. On the confidential reporting lines, average call handling improved past a supplier the company had hired on its own and was watching in parallel. And when the company sold the division behind the claims program, the buying company kept the program rather than putting the work back out to tender.

Price per hour of the same work

100%

Previous supplier

<50%

Auction winner

Index of the price paid for one hour of the same support work, before and after the auction. Established inside a single purchasing cycle.

Average call handling time

Before
22 min

After
18 min

On the confidential reporting lines, on the OC-sourced program. Meanwhile a supplier the company had hired on its own moved in the opposite direction.

99%

accuracy held

Accuracy 99-100%, attendance 100%, and turnover at zero

On the claims-processing team, against a contract that permitted 7.5% turnover. Zero staff left. And accuracy climbed because nobody new had to be trained.

Four ways to read this outcome

Different leaders read this story against different numbers. All four readings are correct.

If you answer to a board or a PE owner

Customer support is usually the largest variable operating cost a software business carries apart from its sales team. That makes support cost, measured as a share of revenue, a lever on gross margin and on the Rule of 40. Halving the price of that cost inside one purchasing cycle is an improvement that repeats every year it holds. For an owner with several software companies, it’s an exercise that can be run again rather than a one-off project.

If you have to justify the price you agreed

This company didn’t accept a price on trust. Eighteen pre-vetted suppliers bid against one another in a live auction, run on the company’s own purchasing software, under its own approval rules, with its own record of the decision. OC assembled a group the company couldn’t have assembled alone and took no part in the choice. OC is paid the same regardless of which supplier wins. That’s a structural answer to “how do we know we got the best price”.

If quality is the thing you can’t risk

The reasons this work costs more than ordinary customer service are real, and not one of them was removed to get the price down: the legal obligations, the identity checks, and the language coverage all stayed. Only the price moved. Accuracy held between 99 and 100 percent, attendance at 100 percent, turnover at zero, and phone calls handled faster than by a supplier the company had hired on its own. A cost can be justified and still be too high. Those are different findings.

If you have to sign off on the risk

A previous supplier search at this company collapsed at the final stage because its own lawyers couldn’t approve any finalist’s data-security arrangements. So in this search, data security was checked before price was discussed. Disaster recovery had to mean a named second site in another country, kept staffed. One finalist was removed for how its executives behaved during a site visit. And every target that mattered was written into the contract with a figure attached, then reported on monthly by somebody outside both the client and the supplier.

Things to take from this story

A cost that’s high for good reasons is the hardest kind to examine, because the good reasons keep answering the question. Genuinely justified and far too high are two different findings, and only one of them shows up without an outside benchmark to compare against.

Write the targets into the contract with figures attached, then have somebody outside both parties report on them every month. A target nobody measures is decoration, and no supplier marks its own homework.

Check data security before you discuss price. It takes longer to set up and finishes far sooner, because the alternative is discovering the problem after months of work have gone in.

An auction of 18 suppliers cut support costs by more than half.