Neil Barton

Monday, May 28, 2007

Benchmarking In The News

The last six months has seen a higher than usual profile for benchmarking in the IT industry press.

Law firm Baker McKenzie started the ball rolling in September 2006, with a fair and well thought out commentary called Price Protection Through Benchmarking.

Shortly afterwards, the outsourcing advisory firm TPI initiated a project to investigate customer satisfaction with the benchmarking process and propose improvements for the future. The results were announced at their annual conference in February 2007, and a paper with slightly modified statements was published on their web site in April.

In parallel with this, Stephanie Overby at CIO Magazine was researching for an feature on benchmarking which was eventually published in March 2007. Outsourcers May Try To Prevent Benchmarking was thoroughly researched and turned up some interesting nuggets, but contributes nothing which will help to improve the benchmarking process.

My own contribution, A Benchmark For Benchmark Clauses, was published in the April/May edition of SCL, the Journal of the Society For Computers & Law. You may have to register as a visitor in order to read the article. The idea was to offer a comprehensive "Do"s and "Don't"s for writing benchmarking clauses to the legal and advisor community, many of whom are drafting these clauses without the benefit of feedback from experienced benchmarkers. This fact, more than anything else, contributes to the industry disatisfaction with benchmarking that is described by TPI and CIO Magazine.

Since then, several others have picked up on the subject. There is a benchmarking forum at the newly created Outsourcing 2.0 site, though so far it seems to be pretty dead. Baker McKenzie have run a webcast on the subject, and in Canada McCarthy T├ętrault are holding a benchmarking seminar on May 29th.

It's a positive thing that the outsourcing industry is thinking more carefully about benchmarking. Yet there is a long way still to go. Achieving a fair market price is absolutely central to a successful relationship. It enables the customer to achieve their financial goals by outsourcing, while ensuring that their supplier is financially stable and a sound long-term partner. It is therefore remarkable that, 10 years after the first outsourcing contracts were benchmarked, the IT industry has still not established a concensus for what constitutes fair benchmarking and what does not.