In today's disciplined and methodical business environment, benchmarking is coming to play a leading role.
It is vital to establish what the best practice is, to understand why the winners in each business sector are successful, and to keep on measuring how you are doing with a view to continuous improvement.
Benchmarking can be performed business-wide, covering all activities, using techniques such as ISO 9000 or balanced scorecard, or it can be used within the IT operation on a standalone basis, using measuring techniques such as Cobit (Control Objectives for Information and Related Technology), and process standards such as ITIL (IT Infrastructure Library).
IT departments have naturally gravitated to benchmarking, as CIOs tend to be highly numerate, and as IT operations lend themselves to measurement more than other areas of the business, such as marketing.
The first thing to do, say the experts, is to get clear in your mind what your objectives are.
You can measure your IT operations with a view to implementing and then tracking improvements, or with a view to comparing them with perceived best practice elsewhere, so identifying areas where you are falling short.
Pure measurements of factors such as cost per transaction are only part of the story.
John Handby, chief executive of user group CIO Connect, says, "You either benchmark because you want to check your operational quality of service, or to speed things up, or maybe your approach is more qualitative than quantitative, which is significantly more difficult."
John Parker, director of improvement services at user group The Corporate IT Forum, says, "Companies use benchmarking extensively to compare performance with their peers, but they are increasingly concentrating on benchmarking to drive change and improved performance, rather than just to find out how they rank."
Whatever you are measuring, it is only the first part of the process.
There also has to be in place a mechanism for implementing any changes which the benchmarking process indicates are necessary, and then further measurement at a later stage to ensure that the desired changes have been put into effect.
Benchmarking, by its nature, becomes an integral process to the running of an organisation, not merely a one-off health check.
Tony Lock, senior analyst at Bloor Research, says, "This is about pushing IT out from being pure infrastructure to being of demonstrable value."
One factor that can cause problems is outsourcing. David Roberts, chief executive of The Corporate IT Forum, says, "Questions about which parts of the business consume which parts of IT can be impossible to answer."
The solution is to ensure that the contract with the service provider organisation is drawn up in a way that harmonises with all of the company's benchmarking requirements.
Benchmarking IT is not a simple cure-all: it is a complex, ongoing process, which needs to be tied in to business objectives.
Ideally benchmarking exercised for IT should be run as part of a company-wide process and integrated with any other benchmarking activities in other departments.
Parker says, "CIOs need to help the board to clarify corporate strategy, without which IT performance will always miss the mark. Benchmarking helps to achieve this."
There also needs to be a fine balance drawn between the findings of such measurements and the business-based value judgments of senior executives. "Getting the right CIO is more important than adding up the pennies," says Handby.
Why use benchmarking?
- "We use benchmarking to demarcate where we are underperforming, where we are effective, and where we have deficiencies."
David Clayden, UK IT director of the Salvation Army and chairman of the UK Charities'Consortium IT Directors Group
- "It is a classic way to keep a clear understanding of where we are on price and service to our users is by benchmarking, and the best way of benchmarking is when the market does it for you. It is cheaper than consultants."
Thomas Endres, chief information officer, Lufthansa
User groups help CIOs share data
There is a growing trend for IT directors to reduce their dependence on consultants and share benchmarking information and approaches. Among the user groups that facilitate this are:
- The Corporate IT Forum. The UK-group based runs a well-developed subscription-based service called CPI (Continuous Performance Improvement)
- EuroCIO. The pan-European organisation holds benchmarking workshops as part of its annual conference
- UKgroup CIO Connect runs a regular benchmarking forum.