CSSA index plan to aid supply contract

A pricing index that will enable suppliers to more accurately set the cost of long-term IT contracts is being developed by the Computer Software and Services Association (CSSA).

An index already exists for assessing the inflation effects on the price of long-term contracts, but it does not take into account the annual increase in costs for suppliers, according to John Higgins, director general of CSSA. As a result, suppliers often find it difficult to accurately set contract prices, especially on long-term deals. Similarly, customers can find themselves faced with unexpected and non-budgeted price increases.

Higgins said: 'Companies' contract price will be linked to an index that accurately reflects the cost that those suppliers will incur by servicing that contract.'

The CSSA is discussing the revised index with the Office for National Statistics, but Higgins said he did not know when it would be completed.

Higgins claimed that creating a retail price index for the software and services industry would be of great benefit to both customers and suppliers alike.

'Anything that enables pricing to more accurately reflect the cost means there is more stability in margins, less surprise for shareholders and is generally good for the industry. It is also good for customers, because they will know where they are,' he added.

The CSSA wants to make the index available to all companies but is expected to make access cheaper for its members.

'The index will obviously cost money to produce, so it might be available to CSSA members at one price and non-members at another price, but it will be available to everyone,' said Higgins.