Estimating annual cost reduction when pricing information technology (IT) service deals
Abstract:
One embodiment provides a method for estimating unit price reduction of services in a new in-flight deal using data of historical deals and market reference deals cost structures. The method includes receiving a detailed cost structure for historical information, market deals information, services quantity information and deals metadata for a first year. For each service: peer deals to the in-flight deal are selected based on the detailed cost structure; missing cost data values in the peer deals are augmented; unit cost reduction values for the peer deals estimated; the unit cost reduction for the in-flight deal from each year in total contract years to a next year without a last contract year are estimated; and a total cost for the in-flight deal for all years in the total contract years beyond the first year are estimated.
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