Increasingly over the last decade, IT organizations have been using benchmarking—the comparing of existing values/metrics to internal or external values/metrics—as a management tool. Benchmarking helps organizations better understand how they compare to top-performing organizations and how to communicate the tangible value that their IT services bring to a business.
Two equally useful types of IT services benchmarking are cost and price. Cost benchmarking compares internal IT services and costs of user IT organizations, while price benchmarking compares the price that vendors charge clients during the delivery of an outsourcing contract.
While the value of benchmarking IT services is widely accepted, it is not without its detractors. For example, end-user organizations have begun to view cost benchmarking as intrusive and offering limited value. They often consider the effort to gather data for a benchmarking exercise time-consuming and may even regard the benchmark results with suspicion. Vendors may dislike price benchmarking exercises because clients automatically assume that a benchmark will result in a contract price reduction.
From the CFO's perspective, benchmarking is an invaluable tool for informed decision-making and many are reluctant to commit to a multi-year, multi-million dollar outsourcing deal without a benchmarking clause that measures contract performance during the relationship.
There is a way to determine a fair price and performance for IT services that both sides can view favourably. This white paper recommends an approach that can benefit end-user IT organizations and vendors interested in exploring the use of cost or price benchmarking.
Download this white paper to learn more.
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