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The Role of Benchmarking in Outsourcing

White Paper | Category:   Benchmarking  IT Infrastructure & Applications  Business Processes...

With increasing economic uncertainty comes increasing pressure to evaluate and make the most of your outsourcing options, both from a business and an information technology perspective.

More and more benchmarking is becoming recognized as a management discipline for driving external cost-efficiency and ensuring benefits from sourcing operational activities are delivered to efficient, or specialized providers.

This white paper discusses how benchmarking can be an effective tool in an environment where requirements are constantly changing, returns are required sooner rather than later and there are ever more options for selective sourcing.

Contract Renegotiation: Timing is Everything

White Paper | Category:   Negotiations / Renegotiations  Benchmarking  IT Infrastructure & Applications...

The consequences to a buyer company that fails to renegotiate certain provisions of its outsourcing contract at the right time can be devastating. Right now is the right time for many organizations.

As the outsourcing services market continues to undergo significant changes in service provider mix, technological advances, and price drops, more and more outsourcing buyers are entering into the contract renegotiation process wholly unprepared. As a result, many leave significant financial savings on the table and/or structure sub-optimal deals that don’t adequately serve their needs or deliver real value.

Contract renegotiation is not a cure-all for all outsourcing ills and is not a replacement for maintaining a healthy relationship with your service provider. At the end of the day, both sides of the table are looking for a positive outcome and a relationship that delivers value. However, understanding how and when to renegotiate your outsourcing agreement and then taking the time to prepare for your renegotiation is fundamental to success. Start early to make time your asset, not your enemy.

Strategies to Reduce Network Costs in a Rapidly Changing Environment

White Paper | Category:   Strategy & Business Case  Benchmarking  Network Services...

The cost of an organization's telecommunications network services (voice, data and wireless), typically accounts for three to six percent of overhead and can average more than two percent of total revenue. In addition, telecom network services spend is increasing. Industry forecasts predict enterprise businesses' spend on IT and telecom will increase 3.7 percent in 2012 over 2011.

The current level of cost coupled with the anticipated increase makes controlling total network services spend a top-level imperative for all IT leaders, requiring them to scrutinize telecom costs and seek out every option for savings. Over the past 10 years, working with hundreds of clients, Alsbridge has learned a thing or two about managing network services spend. We've identified several trends and management strategies to help IT leaders rein in runaway network costs.

Alsbridge expects the market to continue to experience the following trends for the near-term:

• Vendor Side
• Full Service providers will continue to be difficult to negotiate with on pricing and contract Terms and Conditions as they flex their market power and continue to focus on trying to maintain their market share and revenue streams as they adjust to new market conditions and an overall shift in mindshare and CAPEX from the enterprise to the wireless and consumer markets. As a result, contract pricing and Terms and Conditions will begin to be a real differentiator between Full Service and Business Wire-Line providers.
• Layoffs will continue at Full Services companies, making retention of quality FTEs increasingly difficult.
• Vendor consolidation will continue, while integration issues also plague the market.
• The Business Wire-Line space will experience more activity, including increasing financial stability, driving better scale and service.
• Network services pricing will continue to decline year-over-year.
• The gap between the lowest price point for a particular service and the average price for that same service will widen.

MPLS T1 Port: Quarter Trending Graph

White Paper | Category:   Benchmarking  Network Services  Outsourcing

This chart reflects the continued downward trend and compression in pricing for the period 1Q05 - 4Q11 despite the industry consolidation that has occurred during this same period.

Both the average price and the low price (or price point), continue to decline.

Leveraged clients are typically able to contract at the price point irrespective of volume

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