Hard Look at Invoices, Pricing Structures Can Yield Big Savings
DALLAS, October 28, 2008—A leading benchmarking tool provider is finding hidden savings and other benefits from benchmarking outsourcing transactions.
“These hidden benefits come from examining often-overlooked financial elements such as invoices and pricing structures,” said Ben Trowbridge, president and CEO of Alsbridge, Inc. the parent company of ProBenchmark.
In one case, he said a benchmark uncovered an inadvertent overcharging of CPU hours on an IBM mainframe, resulting in an immediate $19 million price credit.
ProBenchmark estimates that more than 80 percent of all transactions have errors on their invoices. Most errors are in favor of the vendor.
“Invoices containing mainframe application hours are one of the most common areas where errors hide,” said Trowbridge. Other typical errors include mis-counting servers and processors and the continued billing of out-of-date statements of work and add-ons.
Benchmarking can also uncover non-standard and convoluted pricing schemes. As the complexity of an outsourcing agreement grows, business units lose the ability to conduct regular cost/benefit analyses of their spending.
In one case, the per-MIP rates for mainframe services included multiple software titles which most business units no longer used. The simple question, “Why does the rate include $4.28 million in software used by only a handful of employees?” led to a complete reworking of the price structure.
Organizations should conduct a benchmark to ensure that
- the price is reasonable
- The invoice is accurate, understandable and effective
- Issues with non-standard and convoluted pricing schemes are uncovered
These areas can produce hidden benefits beyond just a comparison to current market price points, Trowbridge said.
ProBenchmark provides the industry’s only patent-pending, highly automated and repeatable toolset for benchmarking. To learn more about ProBenchmark’s Online Market Assessment, Snapshot BenchMARK, and third-party benchmarking services, visit www.probenchmark.com or contact inquiry@probenchmark.com
Alsbridge is a Dallas-based independent advisory firm that helps organizations conduct thorough evaluations of outsourcing options for operating their information technology, finance and accounting, and human resources organizations. For more information, visit
www.alsbridge.com
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About Alsbridge, Inc.
Alsbridge, Inc. is an award winning global advisory firm, providing unbiased advice and assistance on outsourcing, shared services and benchmarking. Alsbridge consultants bring extensive vertical industry expertise and a practical knowledge of all areas within information technology and business process outsourcing. Alsbridge’s proven methodology incorporates proprietary collaborative sessions, bringing together executive teams from both the client and the provider in an environment that fosters success. Alsbridge, Inc. supports its recommendations and assistance through significant investments in proprietary benchmarking and ongoing research within the industry. |
