At the Consol event, one topic I touched on a number of times regarding the importance of getting stakeholder support to source and then actively manage complex categories was the importance of benchmarking exercises around price and other factors. Especially in strategic categories like audit, for example, benchmarking can serve as a non-threatening means to understand the value a company is currently receiving. Yet benchmarking is also key for everyday, high-value contingent line items as well, including IT spend.
In Stephanie's talk that followed mine at the Consol Thought Leadership Forum, she shared that only 53% of current VMO functions benchmark hourly rates for IT contractors, while 47% do not. The biggest barrier to benchmarking appears a combination of uncreative sloth and poverty. To wit, 54% of respondents suggested "we don't have access to the data to benchmark" and 27% noted, "we don't have the budget for a benchmarking project." The qualitative reasons and anecdotal reasons Stephanie noted that IT and vendor management organizations don't benchmark is fascinating in and of itself (and very relevant for broader services categories outside of just IT contingent spending as well).
These reasons include:
"Internal politics would make some groups look inefficient."
"We rely on preferred vendors."
"We continually drive lower rates with existing vendors."
For those companies that are benchmarking successfully, the sources of relative KPIs and metrics come most from third parties. 50% of those benchmarking IT contingent spending report that they use "industry-wide" data, 21% rely on their MSP and 16% use internal business unit information. Stephanie then noted the importance of combining both internal and external insights to drive benchmarking success.
Even though I can't attend this year because I'll be in the UK celebrating the one-year anniversary of Spend Matters UK/Europe at a big bash we're planning, I have no doubt that the Forrester Sourcing and Vendor Management Forum taking place on November 7th and 8th would be invaluable in sharing additional vendor management and services procurement insights from an IT buying perspective. Check it out if you can (I attended last year, and it was certainly worth it).
- Jason Busch