What is Benchmarking?

  • Published on: 25 July 2019
  • By: Victoria Heritage

What is Benchmarking?

Benchmarking is vital in ensuring that outsourcing contracts remain competitive and fit for purpose during their lifetime which can be 3-10 years. In the face of ever-present cost challenges and a fast-evolving technology market how do you ensure you continue to receive value for money and the best service?

Primarily benchmarking is a risk management tool designed to overcome the risks of fixed-price long-term contracts. In its simplest format, a benchmarking process compares a contract price to a market price. Carried out effectively, a benchmarking exercise can lead to increased levels of performance and reduced fees for a customer's outsourcing arrangement. However in many cases customers are failing to effectively benchmark and reap the full benefits, that often include service and SLA improvement.

Ask yourself these questions:

  1. Are you using your suppliers and outsourcing partners to maximise your competitive advantage?
  2. Are you minimising your supply chain risks
  3. Are you taking full advantage of technology advancements? 
  4. Are you 100% confident that your current agreement delivers best value for money today?

Clients tell us that they often do not have time or a sufficiently detailed understanding of their suppliers to be sure they are getting the services the contracts and SLAs entitled to them at the right cost.

Benchmarking requires significant work by a benchmarker to sift through data, or do a market test to be able to present a “valid” comparative result. This process may require extensive labour by highly trained personnel over a period of several weeks or months. Accordingly, the use of benchmarking may reflect not only a question of suitability, but also of the cost of execution.

Renegotiation of a contract, with expert assistance, can provide an opportunity to improve and enhance all aspects that have proved less than effective, and can also open the door to revisiting key areas, such as duration, delivery, management, solutions, technologies, SLAs and cost.

Our consultants have worked with a wide range of clients and suppliers across all sectors and categories and negotiated thousands of agreements, overcoming many pitfalls that outsourcers have had to face. The major challenge being 'you do not know what you do not know'

At eXceeding, we have helped many companies with their benchmarking strategy. To find out how we could help you contact us today.


0333 009 5333