IN FOCUS
Benchmarking IT for Truly Competitive Advantage Running the Numbers By John Berney, CIO+
Let’s get one thing out of the way first. I’m a big fan of benchmarking, but only if it’s done for the right reasons, carried out in the right way and delivered for the right price. The Right Reason: You should
always benchmark to improve the bottom line and not, as I often come across, to provide ‘statistics’ to defend an entrenched position and therefore, maintain the status quo. The Right Way: Adopt a two step
IT is probably one of the easiest functions to benchmark, as there is a significant volume of readily comparable
information available. But be warned, IT may be a common function within almost all industries but the benchmarks vary widely from industry to industry. Make sure that you take account of this and make sure that you end up with a set of targets that is meaningful, but more importantly, achievable.
approach. Firstly, benchmark from the top down to get the analysis done quickly and start to understand the benefits that are on offer, taking full advantage of the 80/20 rule. Secondly, put a plan together to get you to the benchmarked position. The Right Price: Make sure that
the deal you strike with your provider guarantees no downside. Truly experienced practitioners should be able to spot ‘low hanging fruit’ very early in the process which should cover the cost of any initial outlay. If you don’t get a tick in all the boxes
then don’t waste your money; either change your supplier, do it yourself, or
concentrate your efforts on some other more profitable pursuit. The aim should be: ‘Benchmark to improve, not to stand still.’
What to look at? Invariably there are certain metrics important to a particular environment which are crucial to good performance, and these vital measures must be accommodated. There is, however, a standard range of metrics that can be applied across most industries that will certainly deliver prompt value. These include: IT as a percentage of turnover; IT spend per user; downtime measures; total IT spend per access device; IT staff per 1,000 users; percentage of IT spend on projects; percentage of IT spend on networking, etc. The list is immense, but you can see
the power of theses metrics if you use them properly. In the Financial Services example set out overleaf, a financial model was constructed that was driven by only four of these metrics, yet a loss making company was still turned into a profitable one.
Benchmarking is not just about
reducing costs – in my experience companies that spend too little on their IT are probably missing out on significant automation efficiencies outside the IT department.
Proving the case
But what’s the good of knowing that you are underperforming or spending too much (or too little) without knowing what you can do about it? That’s where experience and ‘bottom up’ planning come in. If the size of the benchmarking
prize is worth pursuing, then it’s also worth putting in some extra effort working out how to deliver it. This usually takes the form of identifying the projects that need to be delivered to put the IT department back on track. The second phase of the benchmarking journey is constructing the plan that delivers the benefits to move the IT spend and performance back in line with the benchmark targets, in such a way as to ensure that those benefits are really delivered.
“If the size of the benchmarking prize is worth pursuing, then it’s also worth putting in some extra effort working out how to deliver it.” 26 NETCOMMS Volume I, Issue 4 2011
www.netcommseurope.com
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