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Technology benchmarking refers to comparing an organization’s operations and processes with the technological performance and practices of the best in the industry.
When looking to improve your business’s competitive edge, it is essential to analyze its performance against your competitors and the industry standards.
Learn more about technology benchmarking in this detailed guide, and find out how you can use it to improve your business’ performance.
What is a technology benchmark?
A technology benchmark is a standard against which you compare your IT operations and process. The standard is generally determined by the best in your industry.
Carrying out effective business evaluations can help your business rise to higher scales while improving performance efficiency and profits.
It helps you decide on the areas to improve and can help establish the impact of a given solution on a business.
For example, suppose you run a tourism agency and add customer service personnel to cater to the high number of bookings and customer inquiries.
In that case, the previous and current customer experience can help you tell the impact of the increased number of customer service personnel.
If the problem you aimed to solve has not been fully addressed by the project you undertook, you need to analyze the challenge better and understand why it wasn’t and how to hit the expected goal.
On-time delivery
The amount of time you take to effect a given solution in the business is another important metric to help you gauge your solution delivery.
Calculating the percentage of projects you could complete within the desired time can overview your current solution implementation status.
The on-time delivery metric is more effective in evaluating solutions implemented via a waterfall methodology ( wrapping up each phase of a project before starting another) than those delivered via an agile methodology ( working on different project phases simultaneously).
Project cost
The project cost metric focuses on whether the business implemented a project within the budget and accurately spent the allocated funding.
A project that goes over the allocated budget indicates a low business solution-delivery, and so does a business undertaking that consumes less than the allocated funds.
The under or overutilization of the allocated budget could be due to poor budget estimation and allocation, which calls for massive improvements.
Production defects
During the development phase of each solution, you need to focus on defects that are likely to slip through the test environment and find their way in the production cost, as they are much more expensive to eliminate.
An effective way of measuring your business effectiveness in defects identification is to identify and correct all the possible flaws in the project’s development phase.
Then, a month after production, compare the number of identified deficiencies to those dealt with in the development phase.
The difference between the defects identified in the development and those realized in the production phase will give you a clear overview of the effectiveness of your testing practices and guide you on the most appropriate actions to take.
2. Organizational metrics
Organizational metrics measure the level of involvement of your workforce.
Your employees’ satisfaction, attribution, and performance reviews are vital aspects to help you gauge the operation performance of your business.
Employees satisfaction
If your employees are satisfied and happy working in your organization, they will be much more productive.
To gauge how pleased your employees are with their service to your enterprise, you could constantly survey them anonymously on various areas of their involvement. You could also use pulse surveys, suggestion boxes, and interviews.
Their responses will give you valuable information on where you need to work to provide a favorable culture for your staff members.
Employees attrition rate
An increasing number of employees who decide to leave your business indicates a problem that needs to be addressed.
Since the number of resources involved in the training of new staff members is often higher than that used in their retention, employees constantly resigning from your firm is a blow to the operational efficiency of your enterprise.
Employees performance reviews
Your staff’s performance reviews are a good indicator of how well they are executing their duties in the firm.
Establishing an effective performance review system that focuses on improving your employees’ value, skills, and competence is a great way to develop a highly productive team.
Reputable leadership practices such as setting avenues for regular one-on-one sessions between managers and their teams will promote a healthy environment for performance reviews, which raises productivity.
3. Operational metrics
These metrics assess the performance of your enterprise production systems.
Some of the critical evaluation factors to consider are:
- Production incidents
- Application availability
- Application load speed
Let’s explore these benchmarking factors.
Production incidents
Here, incidents refer to an occurrence that results in a reduction in the quality of service.
Production incidents take note of the number of incidents experienced per each application and the severity at which the incidents occur.
Application availability
This metric assesses the amount of time an application effectively functions under the specified guidelines.
Application load duration
The amount of time an application takes to load gives a snapshot of its performance.
So, the above mentioned are the general technology benchmarking metrics.
But you’ve probably heard about Gartner IT benchmarks. Let’s look into that.
What is technology benchmarking by Gartner?
Gartner.com is a benchmarking company that helps businesses get a custom overview of their IT functions and performance on various criteria.
Their analysts measure performance through a process called peer benchmarking, which involves comparing products and services using several criteria such as:
- breadth and depth of functionality,
- scalability,
- performance,
- quality,
- ease of use,
- time-to-market,
- and customer experience support
They also pay attention to strategic priorities and future needs to help align a business to its goals.
But Gartner is not the only technology benchmarking company.
Examples of IT benchmarking companies
- InCloud Counsel (now Ontra): Ontra is a leading technology and services provider of Contract Automation and Intelligence based in the USA.
- Demand Logic: This UK-based software tool company offers actionable intelligence to property managers and building contractors.
- Apptio: Apptio.com is a leading independent provider of on-demand Technology Business Management solutions for managing IT business. The company focuses on enabling IT leaders to manage the cost, quality, and value of technology.
- VisibleRisk™: The company is focused on creating a standard cyber risk rating.
Types of technology benchmarks
There are different types of benchmarking, including product benchmarking, process, operational, systemic, and strategic benchmarking.
1. Product Benchmarking
This is the most common type of benchmarking and involves looking at a product or service provided by your competitors and how it differs from your own.
Some companies go so far as to disassemble their competition’s products to understand better how they work.
2. Process Benchmarking
This type of benchmarking looks at the processes your competitors use. It can include everything from creating a product to handling customer service, including phone calls and email inquiries.
Process benchmarking is designed to improve business processes or operational procedures.
3. Operational Benchmarking
Operational benchmarks are used to identify and solve specific issues within the organization, such as poor customer service or delays in product delivery.
Operational benchmarking can include internal and external comparisons that help identify problems and prioritize improvements based on their impact on the organization’s goals.
4. Strategic Benchmarking
Strategic benchmarking looks at your competitor’s business model, goals, and plans to understand better where they are headed and how they will get there. This type of benchmark is used to create a vision and plan for the future.
Strategic benchmarks are usually compared to world-class organizations.
5. Systemic Benchmarks
This type of benchmark is used to assess the effectiveness of an organization’s system, such as its quality management system, safety management system, or environmental management system.
Systemic benchmarking is used to determine whether an organization’s systems meet their goals, comply with regulations, and provide value for customers.
But there’s more to the types of technology benchmarks.
Let’s look at two popular benchmarks; internal and competitive.
What is competitive benchmarking?
Competitive benchmarking is the process of comparing your business processes and performance metrics to the industry’s best or best practices from other companies.
By studying the most successful competitors in your market from business management and creativity perspectives, you can adopt proven strategies and develop your own best practices.
Competitive benchmarking involves an in-depth analysis of your competitors’ products and operations so that you can gain insight into the strengths and weaknesses of their strategies.
You can apply competitive analysis to any department or business activity.
Suppose you’re in a sales company and realize that your competitors make far more sales than you.
In that case, you can perform a competitive benchmarking to help you understand how your competitors are selling their products and services by answering questions such as:
- Which companies are leading in sales of similar products?
- What unique practices have they adopted that are helping them make more sales?
- How are these competitors communicating with prospects to convert them into customers?
- Which offers are included in their products to attract customers?
With this evaluation, you can establish what makes their products or services more preferred by buyers; and therefore decide what attributes you should play up to attract your target market.
Competitive benchmarking is often used to adjust the business strategy and can also be used for day-to-day tasks like creating more effective sales scripts.
What is internal benchmarking?
Internal benchmarking is the process of comparing a company’s performance to itself, using historical data or reports from other parts of the organization. Internal benchmarking helps a business understand its performance compared to its past versions and set internal goals for improvement.
It involves identifying key metrics common to all parts of the business and then collecting data on each area’s performance concerning these metrics. You can then analyze the data to identify which areas are performing well and improve.
For example, a telecommunications company might benchmark its customer service department against its marketing department.
It would look at how much time its customer service representatives spend dealing with customer complaints and compare it to how much money is spent on marketing campaigns.
Critical metrics for internal benchmarking will vary according to the type of business and industry but typically include factors like the time taken to complete tasks or projects (e.g., time taken to write a press release or time taken to deal with an insurance claim).
Now let’s dive into the steps for technology benchmarking.
How do you do benchmarking?
Here are the steps:
1. Identify a subject to benchmark
Pick a high-value process that needs to be benchmarked. The organization’s key management officials should be actively involved in the subject identification process.
The subject picked should have the potential to give the business a competitive edge, and the results should be measurable.
2. Decide on the companies or businesses to benchmark
You may select a direct competitor, your own company, or a company outside your firm’s industry. To gather more accurate and detailed information, you can benchmark several companies and collect data from different sources.
3. Map out your current processes
Document your current processes and identify areas that need more improvement.
4. Gather and analyze information
Collect information from contacts from other organizations through interviews, casual conversations, or questionnaires. You can also gather secondary data from websites and news articles.
After gathering adequate information from the various sources, gather the decision-makers to analyze the data thoroughly.
5. Compare your firm’s performance with the data you have gathered
Assess your business processes concerning the collected information, and identify the gaps in your processes that could contribute to the other organizations’ superiority.
6. Formulate a plan
Develop a plan to implement the changes you have established as the most appropriate to close the identified gaps.
The method you formulate should align with the company’s culture to avoid friction with the employees and should include well-defined and measurable goals.
7. Implement the changes
Monitor the implemented changes and the performance of the employees. If you realize some challenges in executing some established changes, try to identify the trouble areas and make adjustments where necessary.
Repeat the process for different benchmarks.
Why is benchmarking technology important?
Technology benchmarking helps to improve efficiency, product/service quality, make more sales, among others.
1. Benchmarking improves efficiency and effectiveness in an organization’s operations
Through benchmarking, a business analyzes the performance of the top competitors in detail, helping them realize why their competitors are more efficient and effective in their operations, then use the information to improve their systems.
2. It Increases business performance and sales
Benchmarking enables business owners to compare and assess sales figures against the top performers. These evaluations show them the practices boosting their competitor’s sales and hence act as guidelines to a business on the steps to improve their sales and performance.
3. Benchmarks help you set clear goals for your business
Understanding the industry standards establishes the work you need to do to reach the desired outcome. You can then set some measurable goals on the targets you intend to hit after a certain period.
4. It helps you understand the business’s strengths and weaknesses
Assessing how your business stacks up against your competition helps you identify the areas that give your business an upper hand and those that need to be prioritized for improvement.
You can allocate fewer resources to better-aligned areas and put more on the weaknesses to create a balance.
5. Benchmarking rejuvenates and motivates the employees
Evaluating your competitors’ departments and comparing them with those in your organization helps the employees understand what is expected. They hence feel more obligated to deliver to help the firm reach and even surpass the competitors.
To keep the employees more motivated, you should also implement recognition programs to reward them for their outstanding efforts.
Find out the top concerns that affect your employees in this post.
