Case Study - UK Utility Company

Our client was being pressured into changing an existing IT outsourcing agreement to one based on "Joint Venture" partnership principles. Below is a brief outline of the major 'Before' and 'After' positions of this Lucidus intervention.

Before Existing Arrangements

  • Our client was excited by the prospect of recovering financial benefit to fund its ongoing large outsourced IT service
  • The spreadsheet financial position offered by the outsourcer painted a "Rosy" picture of the upside to the relationship and, understandably, avoided potential downsides
  • This relationship was to be formed and controlled by the creation of a new "Joint Venture" company

After Lucidus Intervention

  • Using Lucidus value modelling techniques, the value to each party was modelled over the estimated 20 year life of the outsourcing agreement
  • Value was articulated as direct, indirect and non financial value
  • Market potential for the products of the joint venture was modelled
  • Both Upside and downside value to each party was modelled


  • Outsourcer would make significant money on both upside and downside
  • Arrangements left little incentive for outsourcer to push products of the joint venture in order to deliver expected revenues to our client
  • The practical market for the proposed products of the joint venture were severely limited
  • IPR in joint venture products skewed heavily in favour of outsourcer even though high proportion currently owned by our client
  • Inequities of the arrangement were discussed (by our client) with the outsourcer
  • Following those discussions, our client decided not to enter into the joint venture arrangement