Benchmarking - ITIL Tutorial

- The fourth assessment method we have is known as benchmarking. Benchmarking is the act of measuring the performance of an organization's products, services, or practices against those of a similar organization. So here you're comparing an organization to one that performs better, and this may highlight change initiatives that could yield tangible improvements. For instance, if I compare my company to another company like ours, that's ahead of us in the marketplace, we can use us against them as a benchmark and see if we're meeting the standards they're setting, or if we can improve and even beat those standards. Benchmarking should be a regular exercise as part of the continuous improvement process, because it's going to allow organizations to match or surpass their competitors performance. It's also a valuable tool for motivating cultural change, because if you can become the organization that everybody else sets the standard against, then you and now have a place that everybody's going to want to work at because you are the baseline, you are the best, right? And so although benchmarking is generally done at the organizational level, it can also be done in specific areas of a high performing organization. For example, a problem manager may want to understand what another organization with a lower major incident rate is doing in their problem management practice so they can benchmark against that practice and not the overall organization. Now, if you talk to counterparts in similar roles, this can provide you valuable insights which may lead to worthy improvement initiatives. Now, before we enact a benchmark comparison, it's important to ensure that the organization being compared against are truly comparable. Now, what I mean by that is you can't just take two organizations in different industries and compare them. The two organizations need to be in the same industry. And even if they're in the same industry, you need to make sure they're serving the same markets and that way, the comparison is going to be more relevant and more valuable. Now, as we look at benchmarking, I want you to remember that you need a place to focus on the ideas that we can find from it as means of improvement. We also want to provide quantitative and explicit standards for organizations to compare themselves against and that's one of the great things that we can do by using benchmarks because these are industry standards or industry competitors. Additionally, benchmarking can provide a means for competitive analysis and potential partnering, because you may see a competitor and you may decide you want to start partnering with them or you and another smaller competitor might partner up against the larger competitor. Additionally, benchmarking can examine multiple different industries as well. So maybe you want to compare your service desk in an IT organization against a service desk in, I don't know a hospital. They're two different industries, but maybe you can get some good ideas of how they do business and bring those into your world as well. Now, there are some drawbacks during benchmarking. One is that it doesn't always transfer well between organizations, if you don't have the right context. Just because I have another company that teaches idol curriculum doesn't mean they do it the same way we do. So we may not be measuring the same things. And so we may not be able to compare ourselves against each other. That would be one of those things we have to think about. Another thing is it doesn't always measure effectiveness. You're looking at raw metrics when you look at these benchmarks. You're not looking at the why behind it, and that can become an issue. It can also introduce industry bias based on revenue, rather than practice. These guys are making more money doing it. Does that mean they're doing it better? Not necessarily, they may be doing it worse, but they're doing it more efficiently and so they're making more money at it. So do we want to replicate that? These are things your organization has to decide. Finally, the last thing that can be bad about benchmarking is that it's often used to identify industry leaders. Now, this sounds like a great thing, right? Well, it can be, but when you identify an industry leader, oftentimes their ways of working become assumed by others as a best practice even if those ways of working are not truly ideal. This can cause those less than ideal practices to become commonplace because others start to mimic the industry leader. Then those less than ideal practices can become the standard practices that everyone else starts following instead of following the best practices. For a good example of this, just consider the 2008 housing crisis that occurred because all the large banks in the United States started following one industry leader's way of doing mortgages and mortgage backed securities. Now, this quickly became a house of cards that fell down and caused a lot of damage. This is the idea of following the industry leader right off a cliff. And so you want to be careful about that when you're using benchmarking.