Tony: Hello, I’m Tony Mangino from TC2, and this is Staying Connected—the podcast where we talk about what really matters to enterprise buyers navigating today’s technology and sourcing decisions.

I’m joined today by my colleague Larry York from TC2 and we’re talking about benchmarking. Not benchmarking as a generic market check, and not benchmarking as a simple answer to the question, “Is this price good?”

We’re talking about benchmarking as a strategic capability: a way to understand where your technology deal stands before you negotiate, before you extend, before you run an RFx, before you accept a supplier’s savings story, and before you lock in the next operating model.

In complex enterprise technology deals, a discount is not a benchmark. A supplier can offer a reduction from list price, from legacy pricing, or from a narrow piece of the environment and still leave major cost, commitment, and risk untouched.

Larry, welcome back to Staying Connected.  Lets start with what might sound like a simple question…Why is benchmarking so important before an enterprise customer enters a negotiation?

Larry: Because suppliers know their margins. The customer needs to know the market.

Without that context, the supplier often defines the negotiation. They tell you the offer is competitive. They tell you the discount is meaningful. They tell you the terms are standard. And unless the customer has a credible fact base, it is hard to know which of those claims are true and which are simply part of the sales motion.

Good benchmarking changes that. It gives the enterprise a grounded view of commercial competitiveness, total cost, contract risk, and negotiation leverage. It helps the customer move from “we think this should be better” to “we know where this deal should land, and we know what to do next.”

Why It Matters for Enterprise Customers

Tony: That’s a key distinction. Benchmarking is not just a data point. It should inform the negotiation strategy.

Larry: Exactly. A benchmark that only produces a number is incomplete. The real value is turning market insight into action.

Enterprise technology deals are too complex for simple averages. You have to normalize for scope, architecture, geography, usage, volumes, service levels, transition, transformation, contract obligations, and commercial terms. Otherwise, the comparison can mislead the customer.

Two companies may both be buying network services, but one is transforming the WAN, one is maintaining a legacy estate, and one is negotiating under a compressed renewal timeline. The same rate may mean very different things depending on the operating model and the deal structure.

Tony: So if the benchmark does not account for context, it can create false confidence.

Larry: That’s right. Market data without context can be dangerous. It may suggest a deal is competitive when the customer is taking on too much commitment, weak transition rights, poor renewal flexibility, or lifecycle costs that are not obvious in the monthly rate.

Good benchmarking asks a broader question: are we making the right enterprise technology decision at the right price, with the right terms, for the right operating future?

Main Discussion

Tony: Let’s break that down. What should good benchmarking actually evaluate?

Larry: There are several dimensions.

First is pricing and unit economics: rates, discounts, any pricing tiers, minimums, credits, pass-through charges and volume assumptions.

Second is total cost of ownership. That includes recurring charges, one-time costs, transformation investments, transition economics, ramp exposure, future demand, and credits that may be at risk if the environment changes.

Third is contract structure. Term, renewal rights, exit flexibility, benchmarking rights, governance, price protection, service levels, remedies, and change control can be just as important as the visible pricing.

Fourth is architecture and scope. The benchmark has to consider the technology roadmap, solution design, support model, included services, supplier responsibilities, and transformation timing.

Fifth is service performance. Service levels, escalation paths, reporting, operational governance, compliance, and accountability all affect the value of the deal.

And finally, there is negotiation position. What does the supplier care about? What alternatives does the customer have? Where is there competitive tension? What range of improvement is actually possible?

Tony: That is much broader than “what is the market price for this service?”

Larry: It has to be. In enterprise technology, the price is only one part of the economics. A supplier can give a stronger unit rate but take value back through commitment, term, exclusions, service definitions, or weak flexibility.

The benchmark needs to show the customer where value is strong, where risk is hiding, and where the negotiation should focus.

From Baseline to Leverage

Tony: What does the process look like when benchmarking is done well?

Larry: It starts with the baseline. The customer needs a clear view of current spend, inventory, demand, service scope, commercial constructs, and contract obligations. If the baseline is weak, the benchmark will be weak.

Then you define the peer set. You select the most relevant comparison frame by service tower, scale, geography, architecture, term, and operating model. The goal is not to compare the customer to an abstract average. The goal is to compare against relevant enterprise outcomes.

Next, you model the economics. That means analyzing recurring charges, transition costs, commitments, credits, ramp periods, and lifecycle exposure. You are not just asking, “What do we pay today?” You are asking, “What will this deal really cost under the scenarios we can reasonably expect?”

Then you translate the benchmark into strategy. That includes target ranges, negotiation asks, RFx levers, directed negotiation alternatives, and decision thresholds.

Finally, you use the benchmark to support the outcome. It helps test supplier positions, align internal stakeholders, and drive final commercial decisions.

Tony: So the deliverable is not simply a report. It is a benchmark-backed negotiation position.

Larry: Exactly. The report is not the outcome. The outcome is clarity, leverage, and better decision-making.

How Benchmarking Fits the Broader Portfolio

Tony: Where does benchmarking fit within the broader TC2 service portfolio?

Larry: Benchmarking often sits at the front end of a larger value lifecycle.

It supports strategy because it helps the customer understand whether the current environment and proposed future state make economic and commercial sense.

It supports sourcing because it helps shape RFx targets, supplier feedback, evaluation criteria, and negotiation positions.

It supports directed negotiation because when full competition is not available, market intelligence becomes one of the customer’s most important sources of leverage.

It supports cost management and contract compliance because benchmarking can reveal whether the customer is paying above market, missing negotiated benefits, or carrying commercial terms that no longer fit the environment.

And it supports lifecycle services because the market does not stand still. A deal that was competitive at signing may need to be tested again as usage, suppliers, technology, and commercial models change.

Tony: That is important. Benchmarking is not just a one-time event before a big negotiation. It can and should be part of ongoing technology governance.

Larry: Yes. Many customers first ask for benchmarking because they have a deal on the table. But the broader opportunity is to build a more disciplined way to evaluate technology decisions over time.

Key Questions & Actionable Takeaways

Tony: If a listener is looking at a supplier proposal right now, what questions should they ask before accepting that it is competitive?

Larry: They should ask:

What is the supplier comparing this offer against?
Have we normalized for scope, architecture, usage, volume, geography, term, and operating model?Are we looking only at rates, or also total cost and contract structure?
What commitments, credits, transition costs, and future demand assumptions are embedded in the deal?
Where are the negotiation levers?
And what decision are we trying to support: renewal, RFx, transformation, directed negotiation, or business case approval?

Those questions help make the benchmark practical.

Tony: What should enterprise customers avoid?

Larry: Avoid treating a discount as proof of competitiveness. Avoid relying on generic market averages. Avoid benchmarking only the easiest line items while ignoring lifecycle exposure. And avoid waiting until the supplier has already set the timeline and framed the decision.

Timing matters. Benchmarking is most valuable before the negotiation path is locked in.

Closing Remarks

Tony: The key takeaway is that good benchmarking tells enterprise customers much more than whether a price is high or low. It tells them where the deal stands, where risk is hiding, what the market supports, and how to negotiate from a stronger position.

Guest, final thought?

Larry: Benchmarking is most powerful when it becomes a strategy tool. It should help the enterprise make, defend, and execute the next move. If it does that, it creates clarity for stakeholders, pressure on suppliers, and better long-term outcomes for the business.

Tony: That is a great place to leave it.

To our listeners, if you would like to discuss benchmarking, market intelligence, negotiation strategy, or how to evaluate a supplier proposal before you commit, or if you’d like to discuss other technology strategy, sourcing and cost reduction needs with our guest, me, or any of our TC2 and LB3 colleagues, please give us a call or shoot us an email.

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