10 Golden Rules for Good Benchmarking
【DateTime:2015/6/12】 【View Num:1323 】 【Close

date:2015.04.14  source:NOA

Benchmarking is a worthwhile endeavour. When conducted properly, the practice will give you a baseline indicator of your business is currently, it is headed on its current trajectory, you need to be to maximise gains and how you can get there.

Benchmarking can also act as the catalyst for a more fruitful long-term outsourcing relationship, by highlight areas that must be focused on moving forward. On the other hand, it is not the solution to every problem that relationship might have. The term is frequently misunderstood and the practice is even more frequently misused.  

At the NOA’s Special Interests Group on Benchmarking in association with Everest Group, benchmarking experts led a roundtable discussion on when benchmarking is necessary, how it is best carried out and what the practice does to help business relationships between clients and their providers.

The speakers included:

Steve Jackson, Co-Founder and Group COO, Xoomworks
Sarthak Brahma, Vice President and Head of Pricing Assurance, Everest Group
Mark Taylor, Partner, Hogan Lovells
Their talks were informative and prompted a lot of lively discussion – here, the conclusions drawn in the session have been condensed into 10 golden rules for good benchmarking.

Be sure it’s benchmarking that you want – Sarthak Brahma

Benchmarking is often confused with a number of other concepts. While rewarding, the process can also be difficult – make sure it’s actually benchmarking you need before you start the process.

Know when benchmarking is and isn’t necessary – Sarthak Brahma

Even if it is benchmarking that you want, in some cases it just isn’t feasible, practical or necessary. Sarthak recommends benchmarking for the assessment of pricing, delivery, technology landscapes and provider capabilities. For other issues, a detailed review might be more appropriate.

Focus on the future, not the present – Mark Taylor

Benchmarking should be used to strategically plan for the future, rather than to serve near-term tactical needs. The cost involved in outsourcing is typically front-leaded, with ongoing savings only becoming apparent further down the line – benchmarking should account for this, and all trends should be adjusted with the future in mind.

Iron all ambiguities out of the benchmarking contract – Mark Taylor

A mutual understanding between client and supplier of what will be achieved is crucial for successful benchmarking. Don’t let ambiguity get in the way. Clients and providers can both be guilty of using vague wording in order to shirk commitment. However, a half-hearted attitude of that sort is not conducive towards successful benchmarking.

The client and supplier should have equal control – Sarthak Brahma

The best benchmarking occurs when client and supplier collaborate in overseeing the process. This cooperation encourages transparency and mutually aligned objectives – as a result, benchmarking can also become the catalyst for a happier and more productive business partnership.

Appreciate the impact that benchmarking can have on the softer side of the business – Steve Jackson

Rashly introducing benchmarking can be the equivalent of throwing a hand grenade into the middle of an otherwise healthy business relationship. Ensure this won’t happen - breakdown the contract fully, scrutinise its elements and pay attention to the potential impact that benchmarking might have on aspects of the business that you could be taking for granted.

Benchmarking should never be purely mathematical – Sarthak Brahma

Numbers, in isolation, won’t help your business – the mathematical side of benchmarking must always be accompanied by an appreciation of the underlying context.

Decide whether you’re tracking ‘micro’ or ‘macro’ changes – Mark Taylor

Benchmarking accounts for change – micro and macro changes are vastly different, springing different areas of the business. When you make the decision to benchmark, be sure you know whether it’s changes on the micro or macro level that you’re focusing on.

Know how frequently you’re going to benchmark – Mark Taylor

When benchmarking is first introduced, some suppliers ask for a ‘benchmarking holiday’ – exemption benchmarking until a few years into the contract. While this can sometimes work with longer contracts, it’s important that benchmarking isn’t left too late or conducted too infrequently. Conclusive results must be achieved with plenty of time for them to be acted upon.

Recognise the importance of data – Sarthak Brahma

As with so many practices in this day and age, benchmarking is only as good as the data that is used. Data has become one of the most precious assets that larger companies possess – the better the quality and breadth of your data, the more accurate your benchmarking is going to be.