Benchmarking

Benchmarking, prioritizing and outsourcing services

Benchmarking at a macro level

When IT services can be clearly specified and priced, it positions internal IT

organizations to be able to consider service delivery alternatives using external

service providers. There are two primary reasons why IT organizations may wish to

benchmark their services:

1. To compare the services of the IT organization with those being offered by

alternative providers. The aim behind this comparison is to assist the IT

organization to answer questions such as: Are we offering the right services and

service levels? Are there service providers who can do the things we don’t want

to focus on?

2. To gauge competitiveness of service pricing with alternative providers.

Benchmarking using services as the basis, is different from traditional benchmarking

approaches that use productivity-based parameters such as, ratio of support staff to

workstations, notional cost per workstation, total cost of ownership, and so forth.

Ÿ Services-based benchmarking can be tailored for the business. Traditional

benchmarking relies on existing averaged and categorized data organized in

predefined categories from peer groups for comparison. Services-based

benchmarking enables the business to compare the services at the level of

service required to meet the unique requirements of the business.

Ÿ Services-based benchmarking is oriented towards bottom-line cost and includes

all productivity contributions and value-add considerations. Traditional

benchmarking usually revolves around productivity and efficiency with inferred

potential cost benefits.

Ÿ Services-based benchmarking performs comparisons with commercial service

providers. Traditional benchmarking is based on peer comparisons, usually

with businesses in the same industry. Traditional benchmarking strives to

determine ‘best practice’ within a peer group. In contrast, services-based

benchmarking strives to determine a realistic ‘best price’ through competition

among service providers.

The crucial step in services-based benchmarking is in specifying services accurately

and comprehensively enough to enable a true comparison of services and pricing

from service providers. Locking down the specification for services effectively locks

down the benefits to be derived. Costs (which includes the service price) then

become the determining variable for value. Of course, this assumes that the service

provider is actually able to deliver the specified service at the promised service

levels!

As with any benchmarking initiative, the effort to plan and conduct the benchmark