In the world of IT management, one critical area that often gets overlooked — or worse, poorly executed — is benchmarking. Proper benchmarking is essential for aligning IT performance with business goals, yet it’s frequently mishandled, leading to many issues that can significantly impact IT and business units.
The Pitfalls of Poor Benchmarking
Benchmarking, when done improperly, can cause more harm than good. The most common pitfalls include setting arbitrary goals that don’t consider infrastructure limitations, failing to distinguish between business metrics (outputs) and IT metrics (inputs), and lacking alignment between business needs and IT services. This misalignment often leads to the following issues:
- Business units feel misunderstood: They believe that IT doesn’t grasp what’s truly vital for the business.
- Misallocation of resources: Both IT and business units waste time and energy chasing metrics that don’t add value.
- Cost mismanagement: There’s a disconnect between the services demanded and the resources required to deliver them.
- Employee dissatisfaction: IT staff frequently complain about constantly shifting priorities and unclear roles.
The Benefits of Effective Benchmarking
On the flip side, well-defined benchmarks and related Service Level Agreements (SLAs) offer several advantages:
- Clarity on IT’s contribution to business: It becomes evident what IT delivers and how it supports business objectives.
- Accurate budgeting: IT can align budgets with the actual demands for services.
- Resource planning: You can better predict the impact of growth and change on limited resources.
- Focused efforts: IT teams know exactly which metrics to prioritize, leading to better overall performance.
- Shared responsibility: Benchmarking and performance assessment become a joint effort between IT and business units, often with the help of external consultants.
Setting the Right Benchmarks
Establishing meaningful benchmarks is complex and requires experience. Often, it’s best to bring in seasoned consultants who can provide tools, models, and industry-specific metrics. For instance, the Commonwealth Bank of Australia successfully used Gartner’s consulting services to benchmark its performance against peer institutions. Consultants can help identify relevant input and output metrics, document the context in which these metrics were achieved, and compare them against industry standards.
Current Benchmarks and Limitations
Ignoring the process of setting benchmarks because it’s time-consuming or prone to error is a mistake. Identifying the limitations that impact performance improvement is crucial. For example, if there are bandwidth constraints on a local area network (LAN) or CPU limitations, these will affect the ability to meet SLAs.
If you’re stepping into a new role as an IT manager, especially in an underperforming unit, understanding these existing benchmarks and their limitations is vital. It helps you assess whether the current demands for improvement are feasible within the existing infrastructure.
Measuring Business Outcomes
Business outcomes, such as sales figures, production volumes, or customer satisfaction scores, are typically the focus for business units. As an IT manager, however, you’re more interested in technical metrics. The challenge is to bridge the gap between these two perspectives.
Business leaders care about the end results, not the technical minutiae. For instance, a high disk usage rate or excellent transaction response times might be meaningless if a critical business process fails due to an end-of-month processing error.
It’s essential to establish business outcome metrics that both IT and business units can agree on. Sometimes, it’s wise to involve a third-party facilitator to help set these benchmarks and ensure that both sides understand and accept them.
Collecting and Analyzing Data
When it comes to data collection for benchmarking, involve internal staff wherever possible. They’re more likely to ensure data accuracy and completeness, which is in their best interest. As Ian Mackay of ICI (now Orica) advises, having your team collect and understand the data leads to more reliable results.
Selecting Meaningful Metrics
Don’t accept suggested benchmarks at face value. Always ask why a metric is important, what it represents, and how it can be controlled or influenced. This questioning ensures that the benchmarks you set are truly valuable and aligned with both IT and business goals.
Infrastructure and Operational Metrics
Operational effectiveness shouldn’t be overlooked. Metrics in areas such as system recovery, data management, and security are crucial for both IT and business units. Understanding that certain performance aspects are hardware-dependent can help justify the need for infrastructure investments.
Project Metrics and Support Unit Performance
For project metrics, it’s crucial to define clear responsibilities and ensure that both business and IT understand the scope and deliverables. Additionally, support units like the help desk often face criticism based on their metrics, such as response times or issue resolution rates. Defining and managing these metrics is essential for maintaining service quality.
Future Considerations
Setting target benchmarks can be challenging, especially when dealing with unpredictable changes in the business environment. It would be best if you accounted for factors like business growth, hardware upgrades, or process changes. Moreover, it’s essential to recognize that not all variables are under IT’s control, such as the quality of vendor products or external service disruptions.
Take Your Time
Benchmarking takes a lot of work. As Ian Mackay notes, collecting and analyzing data can be time-consuming but is essential for setting realistic and achievable benchmarks. Instead of rushing the process, take the time to gather a representative sample and ensure the data you base your benchmarks on is accurate.
Conclusion
Effective benchmarking requires expertise, a clear understanding of current performance levels, and a commitment to setting meaningful metrics that drive both IT and business success. Don’t rush the process, and always question the value of the benchmarks you set. Remember, the goal is to create a framework that allows your IT department to meet business needs effectively and efficiently.