What is Benchmarking supposed to be telling you

“So do you do benchmark studies or do you have access to any benchmark studies?”

It’s compound question that I dread.  Obviously there is a significant consulting market out there that deals almost exclusively in benchmarks.  Acquity Group has also done our fair share of studies to show everything from

  • IT spending trends
  • to headcount distributions across various parts of IT
  • to the breakdown between strategic projects and keep the lights on activities.

Obviously there is value in understanding trends in these areas, but how is a company supposed to interpret this information?

The problem I constantly see is that most organizations believe that the sweet spot in a benchmark is the middle of the bell-curve.  That belief is flat out wrong.  What the middle of the bell curve shows is that you have no competitive advantage against your peer group.  The middle of the pack typically have invested just enough to encourage a settling effect that neither harnesses the creativity required for IT organizations that have limited funding or the true ability to drive corporate innovation through information technology.

Does this mean that all underfunded organizations are able to succeed in with scrappy ingenuity or that all companies that make a significant investment in IT always see a solid return?  Of course not.  However, the organizations on the edges of the benchmark curve have made real choices on investments that will maximize corporate value.

As equally important to benchmarking statistics are five basic cultural factors of your company:

Process Orientation: Is the organization a sales-driven culture with a high tolerance for risk and variability? Does the organization emphasize structured discipline more similar to engineering or manufacturing environments?

Business Complexity: How sophisticated and variable is the nature of the organization’s business? Is business performed on an exception-basis or are business rules consistent and repeatable?

Market Conditions: Is the nature of the business market in a steady-state mode, is there market consolidation/retraction occurring or are there significant growth opportunities? How aggressively does the organization respond to new opportunities?

Technology Strategy: Does IT generate ideas to help the business or does business drive technology direction? Is technology seen as a critical element to business strategy or as a necessary cost of doing business? Is the organization an early-adopter of technology?

Organizational Change Behavior: How ready is the organization to adopt behavioral change? Are there preconceived ideas of how IT & business should engage? What are the current perceptions of IT by the business organization?

These factors along with a view into what peers are doing can help an organization decide if they want to use IT to activate the full power of their business or if IT should simply keep the lights on and funding should go elsewhere to create a competitive advantage.

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