Outsourcing vendors terrified at call to benchmark

95 percent of assessments are ineffective.

Businesses are being pinched by expensive or inefficient outsourcing deals because they do not enforce their right to benchmark.

Even the cheapest outsourcing deals can become cost blow-outs over time if regular benchmarks are not inked into contracts, Gartner says.

Chicago-based research director Helen Huntley said benchmarking is considered "profanity" in the IT industry, but she hesitated to lay blame for the smear campaign.

"Both vendors and customers face tremendous risk during benchmarks," Huntley said, "but customers won't know if outsourcers have made improvements if they don't have a baseline to build on."

Huntley held her first lecture on the benefits and pitfalls of benchmarks in outsourcing contracts in Sydney last week, after some 20 years of research in the field. She has spent more than a decade playing the role of a tier one vendor, a client managing a complex multisourced environment and as a consultant for some of the biggest outsourcing deals in North America.

More than 95 percent of benchmarks are poorly constructed

Gartner

IT managers are scared to benchmark, she said, because the results turn their blood, sweat and tears into cold, hard metrics for comparison between peers with similar environments.

Vendors are even more terrified of them because they cut through marketing spin to compare apples with apples.

"[Benchmarks] give you a credible basis at the negotiating table, validate the environment that the service provider is inheriting, and provide a measure for continuous improvement over the life of the contract," Huntley said.

One outsourcing provider raised eyebrows at Gartner's Outsourcing and IT Services Summit, where Huntley spoke, after he asked whether customers would accept a substantial discount if they promise not to benchmark.

Huntley question the motives behind the offer, equating it to a bribe.

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