The Cost Optimization and Benchmarking Playbook

Key Benchmarking Considerations Has your benchmarker:

01 Adjusted for volume and quality?

Normalize comparisons to compensate for differences in service quality, responsiveness, and consumption levels.

02 Included financial parameters?

Consider cost of capital, depreciation, lease vs. buy, volume purchase agreements, timing of acquisitions, life cycles of equipment, and technology.

03 Identified peripheral agreements and promises? Note financial engineering, balance of trade agreements, bundling, and other forms of value exchange.

04 Accounted for total service cost with the workforce? Conduct a broader total- cost-for-service analysis that includes management, governance, and uniqueness of individuals and teams. 06 Provided action-oriented findings? Identify source of cost irregularities and include recommended action- oriented strategies. Too often, benchmarks only provide indication of high or low costs.

05 Validated data by experience?

Supplement data with interviews and note if benchmarking is delegated to the least experienced consultants who may not have the background to challenge the validity or completeness of data received from a client.

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