Conference Proceeding Article
Information technology (IT) services are often subject to downward price pressures due to improvements in technology and business processes in a competitive market. When clients enter into IT services contracts, they are faced with the future risk that their services will be overpriced relative to the broader IT services market. To mitigate this risk, clients often add benchmark provisions, whereby a neutral third party assesses the prevailing market price for services. It will support fair price adjustments if the market prices are lower than the current prices. We model the decision to benchmark in order to provide managerial information on the value of benchmark provisions. We ground the model empirically with data from a leading IT service provider.
Benchmarks, Contracts, Economics, IT Outsourcing, Risk Management
Computer Sciences | Management Information Systems
Information Systems and Management
ICEC '12: 14th annual International Conference on Electronic Commerce, Singapore, 7-8 August, 2012: Proceedings
City or Country
KAUFFMAN, Robert J. and SOUGSTAD, Ryan.
Valuation of Benchmark Provisions on IT Services Contracts. (2012). ICEC '12: 14th annual International Conference on Electronic Commerce, Singapore, 7-8 August, 2012: Proceedings. 270-271. Research Collection School Of Information Systems.
Available at: http://ink.library.smu.edu.sg/sis_research/1748
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