Hindsight Is 2020: Tips for Growing Your Business with a Benchmarking Practice
Establishing a Benchmarking Practice
It’s a new year. We’ve got fresh business plans. A portfolio of new business to execute on. A great outlook ahead. So why look back, some would say? Because hindsight is indeed 20/20. In fact, the best-run organizations in the world rely on benchmarking – or comparing themselves to an industry standard – to compete, and stay a front-runner for the long term.
There are plenty of examples of benchmarking practices that have had a profound impact on operational success and bottom lines. Xerox, for example, discovered in the 1980’s that their Japanese competition could both produce and sell its machines – for the same cost as just the manufacturing of Xerox machines. By carrying out their “Leadership Through Quality” initiative, Xerox used benchmarking to find areas where they could exceed the standards of their Japanese competition. In the end Xerox cut manufacturing costs by 50%, and improved parts quality and inventory costs at the same time.
Many business leaders know that the best way to gain marked business and project improvement is to step back from execution of current projects, take a look at the recent past, and shine a light on what can be gained through improvement. But to start, how do you know what to measure? And are you collecting any data that can be measured?
Luckily, the answers to these and many other questions lie within industry-specific benchmarking reports commercially available from a variety of research organizations and analyst firms that focus solely on collecting industry research. Some examples of these include The SPI Professional Services Maturity Benchmark Report, for one, which annually collects and publishes benchmarking data from hundreds of professional services firms, and The Deltek Clarity Architecture and Engineering Industry Study, which has provided analysis and benchmarking for the architecture and engineering industries for the last 40 years.
Deltek’s own professional services group, an organization of 400+ employees, uses the SPI Benchmark annually to maintain a culture of improvement and measure themselves against over 150 specific benchmarks. The result is, not surprisingly, a year-over-year performance and maturity improvement, across-the-board leadership support when change is needed, and continued client effectiveness.
You can hear more about the process of establishing a benchmarking practice and culture at Deltek on our upcoming webinar, in which we reveal the 2020 SPI Benchmark results.
SPI Benchmark Reveal
But before you dig into those reports, identifying the ways in which your business could improve should be the priority. According to the Global Survey on Business Improvement and Benchmarking, the main reasons for undertaking benchmarking projects are several:
- To improve the performance of processes
- To address major strategic issues
- To learn what other organizations are doing
- To improve financial performance
- To develop new products/services necessary for business excellence
To encourage a shift to a learning culture
“Some organizations choose to hire an industry analyst to collect data and create benchmarks against their Key Performance Indicators, but you know your business better than anybody,” said Natasha Engan, Deltek’s SVP of Global Consulting and owner of Deltek’s services benchmarking practice. “If you can establish the buy–in, build a template for what to measure, and spend time pouring over the data, benchmarking can be transformational.”
Natasha offers a few tips to using benchmarks that have helped her organization each year:
Tip #1: Get buy-in on what to measure (and don’t over-measure). Avoid measure-mania, even if you have the data to support it. Get executive leadership buy-in on what should be measured so your organization can handle the results from your analyses. Keep it simple to start, and enjoy incremental improvements in a number of areas as a result.
Some smaller organizations may not be collecting the project and business-level data they need to analyze, and are not sure how to leverage the metrics to improve in a programmatic way. According to Engan, “The best approach for these organizations might be to pick two things that will move the needle (or even one), measure that first, and then grow incrementally from there year over year.”
Tip #2: Don’t measure success on internal improvements alone. To actually keep pace with the competition, we can’t just measure our own success, but must jump into the ring with the best-in-class organizations leading the pack. Yes, measure against the competition – and learn from them.
Tip #3: Use an industry benchmarking tool to get a beat on best-in-class organizations. Understand what best-in-class organizations (top 20% of the industry) measure, how they optimize performance based on results, and how they remain in the best-in-class year over year.
Tip #4: Be ready to name and identify flaws revealed by benchmarks, and take action to correct them. Some organizations are overambitious in their benchmarking and measure things they aren’t ready to address when the results come back. For others, benchmarking can fall by the wayside because the organization may not be strong enough to bear the resulting changes needed.
“There’s no question that measuring your organization against your own recent past as well as that of your industry’s leaders can put an organization on the fast path to improved growth and profitability,” according to David Hofferberth, Managing Partner of SPI Research. “Benchmarking helps organizations choose realistic and achievable milestones for themselves, and choosing a few benchmarks to improve at a time allows them to make room for the resulting organizational change that might be needed in order to improve.”
Join SPI Research for a thought leadership webinar on February 25 as we reveal key findings from the 2020 Professional Services Maturity Benchmark Report, just released this month. Gain insight into growth and profitability rates across the professional services industry, learn the best ways to compete and grow in a changing market, and discover the role of technology in talent retention, knowledge capture and improved productivity.
About Natasha Engan
As Deltek's Senior Vice President of Global Consulting, Natasha Engan is responsible for leading the company’s services business, Deltek Global Consulting. A 20+ year veteran of the software and services business, Natasha has a strong background in managing cross-functional, customer-facing teams in a global workforce. Connect with Natasha Engan on LinkedIn.
- Customer Experience
- Customer Spotlight
- Data and Analytics
- Deltek Cares
- Deltek Insight
- Deltek News
- Deltek Project Nation Community
- Digital Transformation
- Diversity in the Workplace
- Executive Spotlight
- Financial Management
- Industry Analysis
- MVP Awards
- Organization and Culture
- Partner Spotlight
- Project Management
- Risk Management
- Small Business
- Team Deltek
- Transformational Trends
- User Experience
- User Experience Innovations