IT benchmarking

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Under IT benchmarking one is strategic management method understood in which the performance of the IT services of a company is compared with those of another. Both efficiency and effectiveness criteria are summarized under performance , the comparison can take place within an industry but also across industries. An example of an industry-specific IT benchmark is the IT benchmark method of the VDMA (VDMA guideline 66420).

The aim of IT benchmarking is to identify optimization potential and derive recommendations on how performance can be improved. So-called best practice is used as the benchmark . H. the company (or its processes for the provision of the IT service under investigation) which best meets the defined efficiency and effectiveness criteria.

Typical approach

After determining the efficiency and effectiveness criteria according to which the comparison should take place, the key question here is how the IT services should affect the operational processes (benefit of IT or "business value of IT"). Benchmarking should find participants (internal) and partners / donors (external) in order to create the necessary basis for comparison. The respective partners must be ready to share the necessary information .

When creating a key figure system that takes comparability into account, it is important to pay attention to a clear definition in order to create a fair basis for comparability. The analysis of the database and identification of the best practice participants is a definition of the so-called target benchmarks .

After determining the optimization potential and action lines by comparing them with best practice , calculating the theoretical savings potential (gap to benchmark or "gap to benchmark") and deriving goals to close the gap to best practice as well as establishing an implementation plan and monitoring results and progress .

structure

Comparability plays a special role in IT benchmarking. Since the creation of IT services is not standardized across companies, generic IT functions must be defined that exist in every company and thus enable comparability: A sensible allocation of the entire IT costs is the condition for a holistic overview.

In general, IT costs are separated by function and by cost type (see overview below).

IT costs per IT functions

IT cost types

The following types of costs are usually relevant for the creation of IT services and are examined in more detail as part of an IT benchmarking:

  • IT personnel costs (including personnel-dependent costs)
  • Costs for IT external consultants
  • Hardware costs
  • Software costs
  • IT outsourcing costs
  • Data communication costs
  • Other IT costs

Basic types of benchmarking

From a practical point of view, dividing benchmarking into different basic types has proven successful. The classification is based on the characteristics of the benchmarking partner. These can be found in your own or in a foreign branch and they either belong to your own or to another organization .

Benchmarking is the English translation for the term “ company comparison ”.

See also: Benchmarking in Business: Basic Types of Benchmarking

advantages

From an economic point of view, IT benchmarking replaces the market, which often does not exist due to the obligation to contract or because the services cannot be compared. Benchmarking thus supports pricing and improves the effectiveness of services that are not directly subject to market mechanisms. In this context, mandatory contracting means that within a company or within a group of companies, IT services must be used by a group company and not by a third party.

disadvantage

Often a significant proportion of the costs (overheads) is distributed to the individual IT services using a key. If the underlying distribution key is not fair, the service costs determined from it are faulty and lead to poor comparability. A comparison is only valid if the scope of the respective IT service is clearly defined and can be complied with by all parties.

In many benchmarking initiatives, best practice is determined solely on the basis of efficiency criteria; the benefits of IT services for customers / consumers remain undervalued .

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