During the recession, businesses were not so prone to take advantage of the benchmarking clauses in outsourcing contracts, because the resources to make use of it were just not available. The benchmarking data itself was likely to be outdated too. Stephanie Overby however writes that these times have passed, and a newer, better outsourcing benchmarking process is on the way.
Five Improvements to Benchmarking
- Increased automation
- Decreased frequency
- Sharper focus
- Greater transparency
- Wider-ranging remedies
Benchmarking in its previous state took too long to be practical. Now, automation will be doing much of the heavy lifting, freeing up advisors and client teams to make better use of their time. On the flip side, since outsourcing deals tend to be much shorter than they used to be, benchmarking will in turn be offered at reduced intervals as well—perhaps just once during the initial term. About sharper focus, Overby offers:
Narrowing the scope of what is to be benchmarked will naturally shorten the process, require fewer resources, and cost less than one that covers all contracted services. Customers should make sure the clause gives them control over what is to be benchmarked, advises [Howard Davies, managing director at outsourcing consultancy Alsbridge]. [Matt Karlyn, partner in the Technology Transactions practice group of law firm Cooley]agrees that focus is key, but warns: “You don’t want the scope to be so narrow that it would be impossible to actually find deals to benchmark your deal against.” [source]
Cross-industry data is starting to become the norm for use in comparative models. If it comes from a trusted source, the result is that you have data that closely matches the scope of contracted services and is agreed upon as valid. This means better transparency for all. And lastly, benchmarking can now be used to trigger an outcome beyond demands for price adjustments by IT suppliers, because benchmarking can be used to measure so many other types of things.
Read the original article summary from AITS here>>