Outsourcing Leadership Blog

A Sneak Peak Benchmark?

on Monday, 22 June 2009 21:01

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Categories: Benchmarking

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.

There is a better way. Clients looking to confirm market competitiveness are increasingly relying on screening benchmarks (often referred to as “pre-benchmarks” or screening benchmarks) that help them understand the market at a fraction of the cost of a third-party benchmark. Further, because these benchmarks are done without executing the third-party benchmark clause, they can be performed confidentially by the client. Only if the results are promising does the client consider executing the third-party benchmark clause.

Clients that perform these “pre-benchmarks” are armed with market knowledge that helps them determine the best course of action for their particular situation (which often doesn’t include executing the third-party benchmark). Clients that use screening benchmarks have a wide range of alternatives available to them, including renegotiating with their existing provider or rebidding the services.

Chris Pattacini
Director, ProBenchmark

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