Benchmarking business and IT operations is a tried-and-true method of ensuring that internal and/or external service providers are performing efficiently in terms of costs and service quality. A good benchmark shows how an organization is doing relative to industry peers and market standards, identifies improvement opportunities and provides a stake in the ground from which to plan and implement a transformational change strategy.
But a good benchmark doesn’t happen by itself. As a client, you have to conduct due diligence in selecting the right benchmarking partner; specifically, you need to ask some direct and detailed questions around the benchmarker’s capabilities, methodology and experience.
For example, you should know how many analyses the benchmarker has conducted of operations that are similar in size and scope to your organization’s. You should know about the depth, breadth and quality of the data used in the analysis: how many organizations are used in to provide a comparative reference? How is data normalized? How recent is the data? How is the analysis conducted? How long will it take? What client resources will be needed?
The answers to these questions should be transparent to all parties involved. While it’s important for the client organization to be comfortable with the findings of a benchmark, it’s imperative for the service provider to trust the numbers if an outsourcing contract is being benchmarked. Since the findings will potentially impact a service provider’s bottom line, they will push back if the numbers are dubious. And the last thing you want is for the benchmark process to become contentious and argumentative.
Ultimately, if the benchmark is effective, the provider may not like the results, but will accept them and do what is necessary to improve the situations.
For additional detail on the results a proper benchmark can achieve, check out this new white paper guest-authored by an ISG client, Lawrence Kane, a senior IT leader at Boeing.