IT Benchmarking
Measuring, managing, optimising
There are many reasons for benchmarks...
- Learn from the best in and outside your own industry
- Proof of economic activity
- Develop a basis for management, integrated servicebilling, service catalogue and key performance indicator system
- Review and adjust contracts during their term or extend contracts with verified market prices
- Optimise supply and demand through increased transparency and causal fairness
- Standardise the offer by focusing on the current market level and its best practices
- Opportunity to objectify the dialogue with customers and clarify progress
History of benchmarking
An IT benchmark is a comparison of IT systems or processes to determine their performance, efficiency, reliability and quality.
The benchmark has long since developed from a pure comparison of costs and services into a complex system.
Root of modern benchmarking in the 1980s: systematic comparison of Xerox copiers by Robert C. Camp with the cheaper models of the Japanese competitor Canon.
Marking (trigonometric point) of the official surveyors in Great Britain.
Marking (‘mark’) of the carpenter on his workbench (‘bench’) to efficiently ensure the same length of new chair or table legs.
Granularity in benchmarking
Efficiency can be analysed in varying breadth and depth.
IT expenditure as a percentage of revenue is one of the most sought-after IT key figures at the top level. However, it is highly subject to economic fluctuations and company-specific formulas. This makes it all the more important to use the same definition when calculating the key figure for the comparative companies. In addition to top-level key figures, the granularity extends from the indication, the health check and the benchmark to the deep dive, which enables simulations as well as detailed and quantified optimisation measures and savings potential.
The comparison can include individual towers or services, e.g. a service desk benchmark, or cover the entire service landscape and IT processes such as problem, incident and change management.
Perspectives in benchmarking
In a benchmark, we can take different perspectives in order to draw a holistic picture of IT.
Qualitatively and quantitatively, we answer the question of effectiveness (are we doing the right thing), agility (how adaptable are we) and efficiency (are we doing what we do right).
The user perspective focuses on the users and the cost centre managers and their view of IT. This is because IT is always caught between costs and customer satisfaction.
The market view provides information on whether the services and prices correspond to the market level.
The production view can be used, for example, to assess in-house production depth, the degree of automation, cloud utilisation, costs (divided into personnel, hardware, software and other) and IT staffing levels.
Examples of benchmarking
As a rule, the comparison takes place with a group of around eight companies, the so-called peers. The names of the peers are subject to confidentiality agreements and are not published.
Market price benchmarks are an indispensable tool in provisiondermanagement and are usually contractually agreed with the provider as a fixed component during the contractterm. However, the three-party market price benchmark is also used to extend the contract. The customer is satisfied with the provider's services and wants to ensure that the contract is extended at market prices.
Users and stakeholders should be surveyed regularly on their satisfaction with IT services. The presentation in the time series makes it possible to show developments - do good and talk about it - a discipline in which IT organisations usually still have room for improvement. Benchmark values support the interpretation of the different answers in customer satisfaction surveys.
The qualitative and quantitative IT cost and performance analysis provides detailed facts in a company comparison, which CIOs and financial experts can use to optimise the cost-performance ratio of their IT organisation in a targeted manner and make the necessary strategic decisions.
The appropriate organisation as well as the appropriate IT skill and staffing level can be derived and optimised by comparing them with the current values of other companies. Strategic corporate goals and planned changes can also be included in the benchmark in order to determine appropriate personnel deployment and the future-proof and market-compliant organisation - whether for high production depth or for a retained organisation in single or multi-sourcing.
Also triggered by the NIS2 Directive, the EU-wide legislation on cybersecurity that came into force in 2023, those responsible regularly scrutinise the efficiency and appropriateness of their investments in informationsecurity. A benchmark of IT security costs supports this assessment and uses adequate reference values to identify weak points and potential for optimisation in order to maintain IT security at a high, but also economically justifiable level.
The maturity and performance of IT processes is managed at different levels depending on the company in question. An independent determination of the current level is part of a well-founded IT assessment. Corresponding benchmark values from the market help to define the company's own aspiration level. Process performance indicators from the market objectify the company's own management of IT processes.
