New Survey Finds Professional Services Pricing a Challenge for Most Technology Companies: Benchmark Study Conducted by Leading Industry Association Shows Need for Collaborative Development of Pricing Structures within Organizations

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The Technology Professional Services Association (TPSA - http://www.tpsaonline.com) today announced key findings from the industry's first-ever global rates benchmarking. The "PS Market Rates: TPSA Multi-Member Benchmarking Study" drew upon participating member companies who provided actual company data on list and realized hourly rates for six PS delivery positions in 15 countries representing every major geography worldwide. The study also captured rate data for three position levels as well as for onsite and solution center resources. The end product is a previously unavailable level of peer insight for executives with PS responsibilities in hardware and software products, systems integration, on-demand hosted applications, and value-added solutions, as well as the technology partners and vendors who support them.

Clearly, the issue of market rates is central to any discussion of PS financial performance and having solid industry data on market rates is an indispensable element in any effort to examine and optimize TPSO financial performance

    "The study yielded an unprecedented view of PS market rates in general and a particularly rich understanding of discounting tendencies. Of great interest to us is the almost inherent conflict between PS sales and the PS business around rates. Sales, more often than not, will tell PS that PS prices are too high. On top of that, they will often push for huge discounts on PS because they typically are more interested in selling product than PS and consider PS to be a loss leader," said Bo Di Muccio, Ph.D., Senior Director of Research and Advisory Services for TPSA.

"Our new study demonstrates that PS rates can actually be lower than the market will bear and further that huge discounting of PS to get product business is increasingly a thing of the past due in part to vendor-specific objective evidence and financial reporting guidelines, but also due to the fact that discounting appears to follow some organic patterns regardless of whether VSOE is present or not," Di Muccio explained.

Key highlights and findings of this study include:

-- Conventional time and materials (T&M) pricing remains the most common pricing structure for PS engagements, translating to a very high premium on the ability to correctly set and realize hourly rates for professional services.

-- Establishing vendor-specific objective evidence (VSOE) for PS hourly rates continues to be a huge challenge for most TPS organizations and is a common practice only in the U.S.: 39% of participants have not established VSOE for PS in any geography.

-- Geography is by far the most meaningful driver of differences in market rates, while industry and product maturity are among the least significant drivers.

-- On a country-by-country basis, discounting patterns adhere by and large to VSOE guidelines.

"The TPSA PS Market Rates study represents an especially poignant illustration of how incredibly valuable industry benchmark data can be for TPS organizations. Setting rates without a clear idea of what the market will bear directly affects the top line when rates are too high and needlessly steals from the bottom line when they are too low," said Thomas Lah, TPSA's Executive Director.

"Clearly, the issue of market rates is central to any discussion of PS financial performance and having solid industry data on market rates is an indispensable element in any effort to examine and optimize TPSO financial performance," Lah added.

For more details, visit http://www.tpsaonline.com, call 724-946-9798, info@tpsaonline.com.

About TPSA

The Technology Professional Services Association (TPSA) is the first and only organization for executives who create, produce, deliver, manage, measure, and optimize technology services in the world's leading corporations. Member companies represent a diverse group of market segments including hardware and software products, systems integration, on-demand hosted applications, and value-added solutions.

Led by experienced PS professionals and thought leaders, TPSA provides real-world guidance to address complex and pressing business challenges. Among its popular member benefits is TPSA Research, which includes the industry's only comprehensive PS Benchmark Study. TPSA also provides advisory services, unique industry insights, and both web-based and in-person collaboration platforms to better manage the business of delivering technology professional services.

TPSA is a member of a global network of associations that includes the Service & Support Professionals Association (SSPA), and the Association for Services Management International (AFSMI). More information on TPSA can be found at http://www.tpsaonline.com.

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