![]() ![]() This points to the asymmetry (or skewed imbalance) of information. In practice, standard rate cards are extremely inefficient and work to the service provider's benefit because the provider always migrates to the highest-cost category and makes the argument that it is what your company needs in a particular instance. There are myriads of exceptions (driven by new technologies, new capabilities, or changes in market conditions) that occur as you apply rate cards to your company’s situation. ![]() That sounds great in theory, but in practice, it falls apart very quickly. Typically, companies negotiate a price (with a set of skills outlined) that sits in place for three years and then renegotiate that price after three years. This example uses the most simplistic benchmark – a price benchmark – to look at what your company should pay for labor rates in your market. Basically, your teams need ongoing support, allowing them to bring the power of the analytics and data to the ongoing set of issues they wrestle with daily. It is important to recognize that an analytics process or service brings a challenge: to get full benefit from it, your company must proactively provide the information in bite-sized pieces to your teams, and not overwhelm them with workshops every two or three years. It gives an incredibly high rate of return. It means that as services and markets evolve, your company has current and precise information.Īn analytics process or service provides data and analytics that can support your teams so that as they work through their portfolio, gaps do not appear. In the context of pricing, using an analytics service instead of benchmarking means you never have to say you are sorry to your executive team. It provides robust analysis to clients on an ongoing basis so that gaps do not appear at the end of three years. How An Analytics Service Differs From BenchmarkingĪn analytics service resolves this situation resulting from benchmarking. Once again, this results in a triage of opportunities, with only a few of them moving to resolution. The benchmark provides too much information for procurement and vendor-management teams to absorb in an actionable time frame. The problem of information overload further exacerbates this problem. These negotiations then stretch on and eventually result in, at best, modest savings when compared to the initial findings of the benchmark. However, it is extremely hard to get the vendor community to agree, as arguments around context, company size, location, and a myriad of other complexities work to cloud the analysis and confuse the negotiations. It is common that a benchmarking exercise highlights areas of above-market cost. When companies undertake benchmarking to examine the cost of services, a similar phenomenon occurs. In the end, companies triage these issues with only a small number successfully addressed. These difficulties then amplify by the number of issues presented at the same time. This, in turn, may set up a flurry of discussion however, moving to address these issues turns out to be far more difficult. Meaningful and helpful issues may surface with gaps in best practices. One of its most troubling shortcomings is the time gap that occurs with a three-year cycle. This is a time-consuming and expensive process. ![]()
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