I recently worked with a potential client whose five year infrastructure outsourcing contract was coming up for renewal in six months.  They were struggling with whether to move ahead with pricing that their provider had offered them (with some negotiation of course) or whether to step back and examine what the going market rate was for the services being provided.  The big question was really this: “How do you know you are getting a competitive price?”  

There are two ways to solve that:  1) Get a “competitive benchmark” for the specific services you are outsourcing, and/or 2) “Test the marketplace” with a fresh request for proposal.  Either method will more than likely give you a better price than what the provider offered.  I have actually seen clients do both.

Continue reading "Benchmarking: Look Before You Leap"

While the typical benchmarking clause provides the opportunity to benchmark the services, many clients find third-party benchmarks to be expensive, disruptive and time-consuming. Results may just as likely confirm that a vendor’s price is market competitive, and no savings are to be had. Further, third-party benchmarks by their nature pit client against vendor – making them all but impossible to complete – and risk damaging what otherwise might be a good working relationship.

Continue reading "A Sneak Peak Benchmark?"