Why cross-portfolio benchmarks are more valuable than those bought from aggregators

One way to get an edge in negotiations with the major software vendors is to leverage benchmark pricing data that is relevant in the context of the negotiation. We're all familiar with mass-benchmark aggregators that will sell anonymized data points. Companies like Gartner, Vendr and InfoTech will provide benchmarking data for a hefty fee, but unfortunately in these benchmarks are rarely useful in software negotiations for the following reasons:

• They are anonymized and therefore when you approach the vendor with the price benchmark that you purchased, the vendor can easily argue that the data point was taken out of context (could have been part of a much larger deal), and therefore is not applicable to your purchase.

• They are often based on pre-negotiated rates, and initial proposal pricing, which leads to mass benchmarks often suggesting that the "fair price" is much higher than the price you can get.

• You can't prove that they are real, and vendors will usually ignore the benchmark all together for this reason.

The most valuable benchmarking tool a private equity firm can have is a cross-portfolio benchmarks database built with data points from their own portfolio companies:

• You can share pre-achieved pricing rates directly with vendor, proving not only that the benchmark is real, but also that it is applicable in the context of the negotiation. Private equity companies that own a majority share of multiple portfolio companies are responsible for the P&L of these portcos, and for that reason must know the pricing for major software contracts.

• Because these benchmarks are based on negotiated contracts, the comparative price will often be better than a mass-aggregated benchmark price point that includes initial proposal data.

  
  

  

  A business professional presents the importance of personalized benchmarking data over aggregated data to a focused audience.

  
  

With OneVolume private equity firms can quickly synthesize all of the software order collected from portcos to build a benchmarking database that can be used to drive value and savings for the entire group.