Benchmarking clauses are commonly used in IT agreements to ensure that contract pricing in long-term agreements aligns with market trends, competitive pressures, new technologies and continuous improvement initiatives that consistently drive down delivery costs of services. But the benchmarking process can go far beyond a tactical adjustment of pricing, and significantly enhance vendor management and governance practices that enable more effective IT spend utilization.
Strategic benchmarks can identify causes of value leakage such as poorly negotiated agreements and misaligned service levels. By extending the analysis beyond the typical scope of pricing, a benchmark facilitates results exceeding the sum of its parts.
This ISG white paper examines how benchmarking initiatives can support a Vendor Management Organization (VMO) and be applied to drive operational transparency, business alignment and successful relationships.