Award winning benchmarking, sourcing and transformation advisory firm, Alsbridge, Inc., today released a new report “The Hidden Benefits of Benchmarking.” As the title suggests, the report uncovers on some of the “hidden” benefits of benchmarking which clients do not expect from a mere comparison to current market price points.
Benchmarking outsourcing transactions is a time-tested approach for ensuring that outsourcing contracts remain competitive over time. It ensures that vendors continue to deliver market aligned services at market competitive prices, but also offers much more.
“Having conducted many benchmarks over the last decade, our benchmarking team has seen a recurring pattern of accrued ancillary benefits that often provide greater returns than were originally expected,” says Ben Trowbridge, Chairman and CEO, Alsbridge Inc. “These benefits do not come from the required investigations of comparable “market price”, but rather from examinations of other financial elements often overlooked during the day-to-day challenges of governing a complex outsourcing transaction.”
As part of the benchmarking process, invoices are often examined to capture the full scope of services and price. Errors are commonly uncovered with a simple question and a pointed finger asking, “What is this?” In most cases these errors are relatively small, but sometimes errors can be quite significant – exceeding 20% in extreme cases. ProBenchmark, Alsbridge’s benchmarking division, estimates that greater than 80% of all transactions have errors on their invoices. Furthermore, most of the errors we uncover are in favor of the vendor.
Benchmarking can also uncover non-standard and convoluted pricing schemes. What may have worked at the start of the deal later becomes a hindrance as SOW’s and work orders are added to the outsourcing contract. This complexity can cause strange behaviors by either party. In addition to confirming that the invoice is correct, a good benchmark will uncover billing schemes that are no longer effective, or worse, detrimental to the relationship.
These are just two examples of problems which are commonly uncovered. They serve as additional reasons why organizations should consider conducting a benchmark: not only to ensure that the price is reasonable, but that the invoice is accurate, understandable and effective.
To further uncover the benefits of benchmarking, go to the complete report- The Hidden Benefits of Benchmarking.
About Alsbridge Inc.
Alsbridge provides world class sourcing advisory and benchmarking services for the CIO, CFO and CPO. We’ve helped hundreds of companies reduce costs and get more value from their vendors. Our experienced consultants leverage proprietary tools and information databases to identify and engage the optimal vendors for your situation, negotiate best practice terms at fair market prices, and improve the way you work with your vendors. Alsbridge clients utilize the most cost effective and value added sources globally for IT infrastructure services, hardware and maintenance, network services, software and maintenance, application support and development, business processes and cloud services. Alsbridge was ranked the #1 outsourcing advisor in the world by the International Association of Outsourcing Professionals (IAOP) based on the value delivered to clients. This commitment to delivering value to our clients has made Alsbridge a distinguished member of the 2010 Inc. 500 fastest growing privately held companies in America.