IT Contract Benchmarking

IT Contract Benchmarking saves costs!

Many medium-sized and large organizations have outsourced some of their IT services to external suppliers. IT contracts are legally binding agreements that govern the procurement, delivery, and ongoing management of information technology products and services, encompassing a wide spectrum from software development and cloud hosting to cybersecurity, hardware maintenance, and managed IT support.

In many cases, IT contracts contain a benchmarking clause that allows them to benchmark the contract after, for instance, 2 or 3 years after starting the contract. In many cases, the supplier needs to adjust their prices contractually when the benchmark result deviates more than 5% from their prices. As prices in the IT industry change all the time, IT Contract benchmarking can easily result in large cost savings on IT contracts in the very short term.

AgileBenchmark delivers IT Contract Benchmarking through collecting all client contract documents— MSAs, Schedules, DFA, SOWs, SLAs, etc, as well as other relevant documentation, like invoices and Service Level Reports received.

The documents are processed and validated on several aspects: quality, volume, complexity, and service delivery. All these aspects have an impact on the price and, therefore, also on the benchmark. For example, a maintenance contract with an SLA guaranteeing an availability of 99.9% is more expensive than the same contract with an SLA with a guaranteed availability of 98%. The benchmark analyst needs to take all these aspects into account to calculate the correct market price for the services in scope.

Approach

Every Contract Benchmark starts with a joint Kick-off meeting where the AgileBenchmark analyst and the customer discuss the expectations regarding the planning, roles and responsibilities, scope, the peer group used in the benchmark, project governance, and other relevant issues.

After the kick-off, the Data Collection phase takes place. In this phase, all relevant documents and data are collected. After collecting all, a 'data freeze' is communicated, meaning that under normal circumstances, no new data will be accepted.

After the data freeze, the Analysis and Benchmark phase starts, where the actual benchmarking takes place, resulting in a draft report.

The draft report is shared with the customer in the Reporting phase. After presenting the results, the customer can request AgileBenchmark to make some changes. Then the final report is shared with the customer, which concludes the project.

This structured data is instantly matched against a continuously updated repository of more than 50,000 anonymized IT contracts spanning cloud services, software development, managed maintenance and support, and cybersecurity, with filters for industry vertical, deal size, geography, and contract duration.

Benefits: IT Contract Benchmarking

• Market-Aligned Rates: Compares your IT vendor pricing against anonymized data from thousands of similar contracts, ensuring competitive costs.

• Optimized SLAs: Benchmarked service-level agreements (uptime, response time, penalties) to industry standards, strengthening performance guarantees.

• Risk-Reduced Terms: Identifies unfavorable clauses (liability caps, IP ownership, termination rights) by comparing to proven market norms.

• Negotiation Leverage: Arms procurement teams with data-driven evidence to push back on inflated fees or weak commitments.

• Vendor Performance Insight: Measures actual delivery against contracted KPIs using normalized metrics, exposing underperformance early.

• Cost Savings Validation: Quantifies overpayments in existing contracts and forecasts savings from renegotiation—often 10-25%.

• Compliance Assurance: Ensures contract language meets regulatory (GDPR, NIST, ISO) and governance standards prevalent in peer organizations.

• Portfolio-Wide Consistency: Standardizes terms across multiple IT suppliers, reducing administrative overhead and legal exposure.

• Strategic Vendor Selection: Ranks bidders not just on bid price but on total cost of ownership benchmarked against historical outcomes.

• Actionable Recommendations: Delivers prioritized contract improvements with projected ROI, turning insights into immediate value.

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