Sungard Chapter 11 Filing Boosts Customer Leverage

SunGard Availability Services recently filed for bankruptcy for the second time in three years, having failed to sufficiently improve its operational cost management practices with its 2019 Chapter 11 filing. In the meantime, we have experienced an uptick in client queries about how best to deal with the managed services provider.

The sales team at Sungard is working hard to assure customers that the company will soon right itself and is eager to retain its revenue streams. We view the situation as a good opportunity to improve buyer leverage. Considering recent events, customers can express concern about the vendor’s long-term viability and indicate a reluctance to stay the course. In other words, clients are now in a unique position to gain concessions from a vendor that cannot afford to lose business.

We have seen that the company is remaining inflexible in offering short-term renewals (less than 2 years), as its intent of locking in business for as long as possible. However, we have observed some customers who have maintained existing pricing on multi-year renewals, and others who have reduced pricing by decommissioning unneeded parts of their Sungard data center footprints, without incurring any penalty.

In terms of competition, Sungard’s backup and recovery products go up against several vendors, including Commvault, Veeam, VMware SRM (Site Recovery Manager), and Zerto. For any of Sungard's resilience and testing solutions, other services providers, such as Accenture, can implement similar custom offerings for customers looking to switch.

We urge customers to immediately inspect their Sungard contracts with an eye to improve terms and begin the process of vetting competitive solutions. The vendor could certainly solidify its financial foundation soon, but its current position puts buyers firmly in the driver’s seat in any upcoming negotiations.

For more information about creating leverage and using best practices to achieve better deal outcomes, download our blog titled Leverage: The Key to Every Deal, or contact your Accenture representative.

- Kevin Betts is an Advisory Specialist at Accenture.