During the phase of standardization and price determination, the benchmark provider standardizes (balances out) the differences in service performance within the peer group so that there is a uniform basis for the evaluation. The market price is calcu­lated from this starting point.

Validation and analysis of deviations

The results obtained during the previous phase are then validated and assessed with the input of all of the involved parties so that they can be presented officially as the final results during the presentation of results.

Presentation of results

The benchmark process is brought to its conclusion by the management presentation of the benchmark results by the benchmark provider. In addition to the results them­selves, recommendations for optimization of the services will also be given, provided that they are meaningful and feasible. The limitation inherent in the principle of a price benchmark described earlier applies here as well. Generally speaking, the benchmark provider should point out any relevant special circumstances, i.e., aberra­tions from what is usual on the market them being of a technical or commercial na­ture. These special circumstances pop up especially frequently during the phase of data collection. Depending on the objectives of the price benchmark and the individ­ual situation, the benchmark provider may also submit recommendations concerning the price negotiations which will follow the benchmarking.

Concluding thoughts

Price benchmarks are a tool which can be used flexibly in many ways, but, regard­less of the specific application, it is of decisive importance that users be aware of the limits to the procedure resulting from benchmarking’s basis on statistical methods. In other words: even if the price is shown precisely down to two decimal places, it is still nothing more than an indication which entails a certain degree of uncertainty.

For example, different peer groups lead to different prices because all any bench­mark provider can do is take a part (random sample) from the total set of actually comparable reference companies (the relevant part of the IT market, the population) for comparison, namely: the reference companies which the benchmark provider has benchmarked in the past so that they have been added to his database. But this pre­liminary selection, which is unavoidable, influences the results. So even terms such as market price should be interpreted in the above sense.