Why all the fuss about benchmarking?

June 19, 2009
Team SQC, Uncategorized

Benchmarking won’t perform a lazarus routine on a six-foot -under business model, shave a  bazillion dollars from an IT budget or help the Saints win an Oscar. Frankly, if a company has already paid a reasonable amount of attention to its work processes, benchmarking won’t even provide any shiver-me-timbers surprises. Benchmarking-comparing corporate products and practices with the world’s best and then borrowing the work processes that will help close the gaps-has been in the corporate eye for a long time. There aren’t many real breakthroughs out there if you’re already doing things well, but still benchmarking does makes processes and procedures simpler and it can do wonders for getting new clients at newer territories,” added. But benchmarking can be a vital cog in the machine pulling a company towards continuous process improvement- today, that reason is compelling enough to benchmark with enthusiasm and benchmarking in today’s time is worth all the effort which goes into it. You will have to do it. You can’t be a loner, growing alone in the dark.

Even so, taking benchmarking for what it is-just a piece of the incremental improvement process-is important. Anyone, who finds shocking revelations in the course of trading process ideas has been in the dark too long. Measurement initiatives waste time and money, if they aren’t backed by commitment to appropriate process change; likewise, site visits to other companies often amount to nothing but ‘industrial tourism’. Change is the whole point of benchmarking.

Commitment to action is doubly crucial in the IT arena because the best IT benchmarking efforts measure processes that are interwoven with the rest of the business. Obtaining executive support is the first step in most benchmarking methodologies, including the sign-off of any business line managers whose work would be affected. For that reason, benchmarking is most effective when presented as one tool in a process improvement effort rather than as the star of the show.

A lot of companies are showing interest in having best practices in terms of processes and procedures. Companies that place a general emphasis on quality, typically have an easier time putting benchmark findings into practice.

Use measures built into IT projects.
If a company jumps on every benchmarking bandwagon suggested by zealous proponents, it could wind up spending half the IT budget measuring the effectiveness of the other half. That doesn’t have to be the case, if the benchmarking yardsticks are those already built into the IT processes. The measures have to be so well aligned with the business strategy that they are offshoots of the process. For example, metrics in the area of application development can include time to completion or the rate of defects found as testing progresses. Both measures are fairly straightforward to record, during the course of a development project. They are simple things-management just has to have the discipline to ask.

Measure the ’soft’ stuff
Many IS executives think of benchmarking as a tool strictly for repetitive processes. Nevertheless, companies that depend heavily on knowledge management are forging ahead with ways to measure those mushier kinds of topics. There are several well-known objectives for successful knowledge management systems.

Hit all bases in comparison
Process ideas and numerical comparison comes from three sources: business units within a particular company, competitors within the same industry segment and process leaders in other industries. Internal sources are easy to overlook, but they can provide sensitive numbers and process suggestions with the least amount of difficulty. Pitfalls as well as benefits lurk once, benchmarking goes outside the corporate walls. On one hand, companies need apples-to-apples comparisons in order to find meaningful numbers; those comparing themselves to companies with different strategic objectives and different customers might be misled. On the other hand, sometimes many companies compare industry specific numbers from third-party sources, but steer clear of actually partnering with competitors. That points to the third base for benchmarking - trading processes with world-class organizations outside a particular industry. Often, the best way to leapfrog competitors-instead of just playing catch-up-is, to borrow processes from a completely different type of organization.

Measure the rate of change
Corporate would have to make sure business objectives drive the measuring. IT departments that benchmark, cannot lose sight of the business objectives. Effective benchmarking projects are commonly one part of a broader process improvement effort that is focused on supporting the company’s overall strategy. Not every process demands best-in-class performance; in many cases, shaving an extra quarter of a second off network response time isn’t worth the pain.

© Software Quality Center LLC.