Benchmarking is the data driven practice of measuring a company’s quality and performance by comparing its processes and outcomes with competitors, industry leaders or innovative firms from a different industry and identifying areas to improve services and general performance.
IT benchmarking delivers invaluable data about how businesses and competitors are performing and taking care of critical initiatives. Benchmarking can offer a superior view and act as a helpful point of reference for an organisation’s decision and overall IT strategy. By benchmarking its IT activities against competition, an organisation can judge whether they are overbudget or spending less than required, get an idea about the market and decide for or against a particular spending.
The process of benchmarking can be a powerful tool in decision making, to run a tighter operation, and secure a better position in the market. It is important to follow a systematic approach in a benchmarking process, executed by a trained and dedicated cross-functional team to discuss, analyse for opportunities, and initiate improvement actions.
The following four key phases are involved in a normal benchmarking process – planning, analysis, integration and action. Let us look at them in detail.
- Planning Phase
This is the important phase of planning where there is no scope for errors. The first step in this phase is to identify the opportunities and prioritise or decide what to benchmark. The top management’s involvement here is crucial to decide the processes critical to the success of the company. Once the processes to be benchmarked are ready, they need to be prioritised according to a predetermined set of criteria to fulfil customer needs.
The next step is deciding the organisation whose processes will serve to be benchmarked. It is important to ensure the accessibility of detailed information about the selected organisation so that all comparison will be relevant and useful.
Next is the important, but most difficult and highly time-consuming activity of collecting authentic information with all the details within a specific time period.
- Analysis Phase
The Analysis phase involves studying the information and data collected, with deep involvement of the people associated with the process to be benchmarked. After the best organisation’s data is collected and analysed, the project team has to develop an improved process and set goals for it. These goals should target even better results than the other company’s process.
- Integration Phase
This phase also comprises of two steps and acts as a connector between the earlier two phases, and the final phase, action. This phase moves ahead once the results of earlier phases have been accepted by the management and the top brass is committed to the recommended action plan.
The proposals for the improved processes are presented to senior management and head of departments for approval. Once the proposed revisions are accepted, new functional goals are established and their acceptance is the next big logical step.
- Action Phase
In the last stage which is the action phase, the improvement areas are taken into consideration. After the improved process is accepted, a detailed action plan is drawn up with important details like timelines, the people responsible for carrying out the tasks, possible short-falls in tasks completion and stretch targets to compensate the short-falls.
The senior management is responsible for the coordination of different activities, monitoring the progress of plan implementation and remove any hiccups on the way. After the revised process is in place, a complete report showing the benefits of the new process should be prepared.
As one successfully completed project leads to another, more ambitious projects for benchmarking with the best approach should be brought in. A system should be built to review the performance of the improved process periodically and make sure the benefits are retained, making the process a continuous one. A company’s ultimate success in benchmarking is judged by how well the process continues.
Benchmarking provides managers with valuable insights which help to drive targeted strategic and transformational initiatives to significantly impact the company performance. It also helps to align resources to focus on the areas that yield the greatest benefit, without disrupting the regular operational support of the business.
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