5 Ways to Optimize Application Sourcing Costs in an AI-Enabled Market
Application sourcing —software, support, labor and managed services — presents a prime opportunity to reduce spend and improve value realization.
You can’t manage what you don’t measure.
We have +15 years' experience helping enterprise clients compare defined services to the market.
We have the data and know-how to help you benchmark cost, quality and productivity across all functional areas of business and IT, including:
Find out the right benchmarking services for your needs and strategic objectives.
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Price
Staffing rates, contract pricing and competitiveness

Cost
Total cost of ownership (TCO) and industry benchmarks
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Performance
SLAs, user experience and provider relationships

Contract
Price, terms and conditions
Are total staffing levels and staffing utilization right for each functional area?
How do our level of assets compare? Are we providing the right service levels to users?
Are we spending the right amount of money in total, and by major functional area?
Where are the variances from leading practices?
Why and where are there gaps? How do we drive sustainable improvement?
What are the high impact, high ROI changes we can make in the immediate term?
Are there services currently provided in-house that should be outsourced, or vice versa?
What complexity or constraints could be alleviated through automation or simplification?
Outsourcing contracts become uncompetitive over time, but it’s difficult to know when it will happen – or by how much.
Whether you want to benchmark your outsourcing contracts’ price, compare your internal service delivery cost to the market or both, ISG gives you at-a-glance visibility into price competitiveness via a single-pane dashboard, plus access to deep dives into real-time IT industry market price intelligence.
In addition to the above project based price benchmarking services, you can also monitor the price competitiveness of your contracts in real time using using the ISG Probenchmark® price monitoring service.
Acting on timely, accurate and actionable price data allows enterprises to more quickly respond to changes in market prices and make more strategic decisions regarding their IT services.
To get a complete picture of your landscape, you need to understand your service quality and personnel productivity, potential efficiencies and gaps, user satisfaction, and how all these elements relate to cost and compare to the market.
We offer a holistic benchmarking solution that gives real-time, online dashboard visibility into the three key components of performance:
By comparing your spend, staffing allocations and performance across the enterprise, we help you identify opportunities to improve your financial and operational performance.
TCO Benchmark: Compares your total cost of ownership against industry standards of cost, quality and productivity for a variety of IT products and services.
Industry Benchmark: Compares costs against industry metrics, such as IT spend as a percent of revenue.
Get real-time access to cost benchmarking data with ISG Inform™.
Build a defense against the risks of fixed-price long-term contracts. Compare your contract price, terms and conditions to the market and know when your contract falls out of favor.
The terms and conditions of your contracts set guidelines of acceptable behavior, but they are evolving entities – and you need to manage that evolution. A commitment to benchmarking your contracts is a commitment to progress and improvement.
An ISG contract terms and conditions assessment can:
KPIs and SLAs are essential for tracking performance in terms of achieving strategic goals and making decisions. In the best of cases, KPIs can serve as an early warning system to let you know when you are heading off course and where
action might be needed.
An ISG performance benchmark compares your performance against industry peers and leaders and gives you a cost-effective approach to share, compare, improve, and transform internal functions and processes.

SLA Benchmark
assesses service levels against the market, including both performance levels and structure

User Experience Benchmark
measures the impact of technology on users, including customer satisfaction
AI investment is accelerating, but results remain uneven. Only one in four initiatives is meeting revenue impact expectations, at an average spend of $1.3M per use case. Enterprises are no longer asking whether AI works. They are being asked to prove that it pays.
We help you identify where AI agents deliver the most value, restructure workflows around them and build the accountability models that keep autonomous execution auditable. The enterprises that win won't be the ones that reacted. They'll be the ones that designed for it first.
We give enterprises transparent, benchmarkable pricing models that tag each resource unit with the autonomy level used to deliver it. As AI capability advances, your pricing keeps pace. Both buyers and providers can quantify what that progress is worth.
We bring analysis of more than $2.6 billion in tracked AI spend to every sourcing decision. Procurement, technology and finance leaders get the independent intelligence to rationalize vendor portfolios and hold providers accountable to measurable outcomes.
We embed controls at the point of data creation, define accountability for autonomous actions and build adaptive frameworks that keep pace with AI without impeding it. Enterprises that get this right don't just manage risk. They build the trust that lets them scale faster.
We ground strategy in research across 2,400 enterprise use cases, aligning investment to where impact is proven and designing the data, talent and governance foundations that move AI from pilots into the workflows that drive commercial results.
We benchmark your AI readiness against peers across 75 countries, identify the dimensions holding you back and give you a personalized roadmap to close the gap.
AI investment is shifting decisively toward revenue-generating functions. CRM automation, sales enablement and forecasting have replaced chatbots and IT productivity tools as the leading use case priorities, reflecting enterprise recognition that productivity gains alone do not satisfy board-level scrutiny. At the same time, use cases in production have doubled since 2024, and the portfolio is diversifying rapidly, with over 300 distinct function and industry-specific use cases now in active deployment.
ISG research across 2,400 enterprise use cases shows that the strongest AI returns are currently concentrated in compliance, risk management and quality control, not in the growth and cost outcomes most enterprises originally set out to achieve
The gap between where enterprises are investing and where AI is actually delivering is the defining commercial tension of 2025. Organizations that close it by targeting functions with structured, revenue-attributable data and clear ROI measures will establish performance benchmarks that compress the window for competitors still cycling through pilots. The standard is being set now.
ISG is a leader in proprietary research, advisory consulting and executive event services focused on market trends and disruptive technologies.
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Learn MoreThe market loves flashy HR tech, but much of the real value sits behind the interface.
That is easy to forget in a market shaped by polished demos, hot buzzwords and high-visibility features designed to win attention quickly. Copilots, assistants, dashboards and sleek user experiences tend to dominate the conversation. They are easy to see, easy to explain and easy to remember. But some of the most important technology in the HR stack is the part most users never notice at all.
The insurance services market in North America is operating under a different set of structural pressures than many other regions, with the life and retirement (L&R) segment exerting much influence on sourcing behavior. Insurers are managing long-term obligations amid persistent margin pressure, high regulatory scrutiny and limited tolerance for operational disruption. Unlike shortcycle property and casualty (P&C) portfolios, L&R books mandate long-term servicing commitments from carriers, spanning decades, making stability, accuracy and continuity nonnegotiable operational requirements rather than just optimization. These conditions are reshaping the way enterprises assess providers in North America.
This ISG Provider Lens® Specialty Analytics & AI Services – Supply Chain 2026 study assesses providers enabling analytics- and AI‑driven supply chain transformation across planning, orchestration and execution. These providers help improve visibility, strengthen risk management, enhance forecasting accuracy and accelerate informed decision-making across planning, sourcing, manufacturing, logistics, warehousing, inventory, transportation and procurement. The report focuses on providers’ ability to enable AI-powered decision engines, real-time insights and proactive exception management that help enterprises build resilient, responsive and adaptive supply chains. It examines how providers support the evolution from traditional process execution toward intelligent orchestration, autonomous decision-making and outcome-driven supply chain operations.
I recently wrote about the increasing popularity and range of adoption choices for the PostgreSQL database. Having done so, it is also worth taking the time to assess the health of another significant open-source database: MySQL. As with PostgreSQL, potential adopters of MySQL have a variety of different options available, thanks to a broad ecosystem of service, support and software providers. Unlike PostgreSQL, which is developed by an open community, MySQL is owned and developed by a single provider. This has been a source of tension for the MySQL provider and user ecosystem throughout the project’s history. While MySQL-related products have prospered at Oracle since it became the project’s owner in 2010, tension resurfaced this year amid calls from some members of the MySQL community for Oracle to consider handing the MySQL project over to a provider-neutral, non-profit foundation. Given this discussion, it’s timely to evaluate the past, present and potential future of MySQL.
B2B buying has moved into a more fragmented operating model: more stakeholders, more digital research, more internal consensus-building and fewer moments where the seller actually controls the conversation. The implication for CROs is clear: Revenue teams need better technology to manage what happens between meetings, not just what happens inside the CRM. The complication is that many sales organizations still rely on email threads, static decks, scattered links and seller memory to move complex deals forward. So, the question becomes: What technology helps sellers guide a buying group without forcing the buyer back into a seller-led process? The answer is the digital sales room, a shared deal space that gives buyers and sellers one place to collaborate, track progress, surface intent and move from interest to decision.
Benchmarks ground strategy in reality by showing how you compare to peers on cost and performance. Used well, benchmarks reveal outliers to investigate and areas for improvement without pushing you to chase the lowest price or sacrifice quality.
Benchmarks reveal market-competitive rates and terms, letting you renegotiate with current providers instead of running a full RFP. That shortens time-to-value and reduces disruption while giving you the confidence that you’re paying a fair, defensible price.
A TCO benchmark looks at the whole solution, design, volumes, service levels, operating model and efficiency levers, so you spot bigger, more sustainable savings. Price-only benchmarks compare line items and can miss structural changes that lower overall cost.
No, benchmarks work best for fungible offerings with multiple suppliers. For proprietary products (e.g., software), pricing is shaped by bundles and SKU choices, so optimizing the bill of materials and total cost of ownership matters as much as discount level.