There are many ways IT buyers can reduce IT overspend – but none more effective than IT price benchmark analysis. What makes this tactic so effective? Why are more enterprises including it as part of their IT purchasing (and renewal) process?
An acceleration in enterprise IT buying has generated an explosion in toxic spend across the IT ecosystem. The root cause can be traced to two systemic issues. First, companies today are making more IT purchases, more frequently, and with more vendors with whom they have less buying experience. This translates into more pressure on IT procurement teams, many of which are already resource-constrained.
Second, complexity and change within IT vendors’ licensing, subscription and pricing models is greater than ever. Part of this is a natural function of the IT vendor landscape where innovation, competitive pressures and an ever-present need to appease shareholders drive change momentum. But there has been acceleration and volatility in these areas as well and IT buyers are feeling the bottom-line impact.
IT buyers have many tools in their toolbox to reduce IT overspend. These run the gamut from proper definition of business and technical requirements and RFP structuring to negotiation best practices. One extremely effective tactic is IT price benchmark analysis at the transaction level. This analysis answers four key questions:
NPI analyzed over $25 billion in enterprise IT spend for our clients in 2022. An astounding 89 percent of the purchase quotes and agreements we analyzed were priced above fair market value.
Here are 10 reasons why IT price benchmark analysis should be performed on all material IT purchases and renewals:
NPI’s IT price benchmark analysis services provide precise, actionable findings and recommendations – in writing.
IT price benchmark analysis requires visibility into peer-based purchases and renewals that are similar in size and scope. This perspective is often difficult to obtain internally within the IT buying center, which typically only has visibility into its own organizational purchasing history. While IT buyers can consult their network of peers for purchasing/ renewal outcomes, the scope of visibility is typically limited to a few examples of anecdotal evidence.
NPI’s IT price benchmark analysis services provide precise, actionable findings and recommendations – in writing. They reflect vendor-specific subject matter expertise, price benchmark analysis, industry insights and first-hand knowledge of peer buyer experiences. This empowers enterprise IT buyers to get the best deal on every IT purchase and renewal.